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[2015] ZAKZDHC 8
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Seevnarayan v Garlicke and Bousfield Inc (15380/2010) [2015] ZAKZDHC 8; [2015] 2 All SA 503 (KZD) (17 February 2015)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
REPORTABLE
Case
no: 15380/2010
In
the matter between:
BEBINCHAND
SEEVNARAYAN
.............................................................................
PLAINTIFF
Vs
GARLICKE
AND BOUSFIELD
INC
....................................................................
DEFENDANT
JUDGMENT
MADONDO
J
[1]
The plaintiff is Bebinchand Seevnarayan, a businessman of […]
Drive, Westville, KwaZulu-Natal and the defendant is Garlicke
and
Bousfield Incorporated, carrying on business as the firm of
attorneys, notaries and conveyancers at 7 Torsvale Crescent, La
Lucia
Ridge, Umhlanga Rocks, KwaZulu-Natal.
[2]
In this action the plaintiff sues the defendant for damages arising
from the defendant’s failure to execute an attorney
–
client mandate, given to it by the plaintiff, to prosecute the
plaintiff’s action against Essack until it prescribed.
As a
consequence the plaintiff suffered damages in the global amount of
R1, 411, 443.60.
[3]
During the period from April 1999 to March 2002, there existed a
contract of mandate between the plaintiff and Ditz Incorporated
(Ditz
Inc.), a firm of attorneys. In accepting such a mandate from the
plaintiff Ditz Inc. was represented by Mr Colin Cowan (“Cowan”),
who is now deceased.
[4]
The essential terms of the contract were, firstly, that Ditz Inc.
would act as plaintiff’s attorneys. In so doing, it
would
exercise the skill, knowledge and diligence reasonably to be expected
of an average practising attorney. Secondly, Ditz Inc.
would, in
particular, take all steps necessary to prosecute any claim which the
plaintiff might have against Essack in relation
to the sum of R800,
000.00 the plaintiff had deposited with Essack prior to 21 November
1996. Thirdly, the plaintiff would pay
Ditz Inc. for its services at
its usual rates.
[5]
It was a term of the plaintiff’s mandate to Essack that he,
Essack, acting as the plaintiff’s agent, would lend
the
aforesaid sum of monies to third party borrowers on terms approved by
the plaintiff. It was further agreed between the plaintiff
and Essack
that the latter would not lend the said sum of R800, 000.00 to third
parties without the prior knowledge and consent
of the plaintiff, and
without first obtaining adequate security from such third parties.
However, Essack in breach of such mandate
lent the said moneys to
Bale Investments (Pty) Ltd and Aslam Cassim Peer, without the
plaintiff’s prior knowledge or consent
and without first having
obtained adequate security. This resulted in the plaintiff’s
claim for damages against Essack.
[6]
During March 2002, with the consent of the plaintiff, the defendant
firm assumed all the obligations of Ditz Inc. in terms of
the mandate
referred to above. In assuming the said obligations the defendant
firm was represented by Cowan, its then executive
consultant, who was
then acting within the course and scope of his employment with the
defendant firm or within his authority from
it.
[7]
At the time the plaintiff has a claim against Essack for damages in
the sum of R800,000.00 which had in terms of section 12(1)
read with
section 12(3) of the Prescription Act no. 68 of 1969 (the
Prescription Act) fallen
due during April or July 1999. In breach of
its mandate from the plaintiff, the defendant allegedly failed to
take steps necessary
timeously to prosecute the plaintiff’s
claim against Essack for damages in the sum of R800, 000.00. It only
caused an action
to be instituted against Essack under case no:
6082/2002 on behalf of the plaintiff on 2 October 2002. According to
the defendant
firm it had received the instruction from the plaintiff
to prosecute an action against Essack in September 2002 and at the
time
the plaintiff’s claim had already prescribed. However, it
is undisputed that on receipt of the mandate the defendant firm
did
not inform the plaintiff that his claim had prescribed and dissuade
him from instituting a worthless action against Essack.
[8]
The case came before Msimang JP on 21 September 2010 and the
plaintiff’s claim was dismissed with costs on the ground
that
it had prescribed.
[9]
As a result of the defendant’s breach of its mandate the
plaintiff had allegedly suffered the following damages which
he would
otherwise have recovered from Essack had the defendant firm not
permitted his claim against Essack to prescribe:
(a)
The sum of R700, 000;
(b)
The sum of R411, 443.60, being the legal costs and disbursements paid
by the plaintiff to the defendant firm in respect of his
claim
against Essack; and
(c)
The sum of R300, 000, being the costs which were due to Essack upon
taxation.
[10]
The bone of contention between the parties in the present case
relates to when the defendant firm took over the mandate from
Ditz
Inc. According to the plaintiff it was in March 2002, and to the
contrary, it had been argued on behalf of the defendant firm
that the
file of the plaintiff’s matter against Essack was opened by the
defendant firm on 11 September 2002, and it was
only then the
plaintiff became a client of the defendant firm. This is crucial for
the determination of the question whether or
not the defendant firm
allowed the plaintiff’s claim against Essack to prescribe.
[11]
Mr Troskie for the defendant firm has argued that the prescription of
the plaintiff’s claim against Essack is fundamental
to any
cause for action against the defendant. Without prescription the
plaintiff has no potential cause of action to advance against
the
defendant. The onus therefore rests on the plaintiff to prove the
prescription of the claim.
[12]
It is common cause that the plaintiff became aware during April 1999
that Essack had made loans to the borrower without the
security of
mortgage bonds registered against property. The borrower had failed
to repay the said loans or any part thereof. Also,
it is not in
dispute that in a letter dated 27 April 2002 Cowan advised the
plaintiff that any claim he might have against Essack
for damages
might prescribe sometime in April 2002 and that in which event it was
vital that summons should be issued against Essack
at least prior to
the end of March 2002 to prevent the claim from becoming prescribed.
Cowan went on to state in the said letter
that the plaintiff should
treat the letter as “a further reminder to take up the matter
with Essack without delay.”
The background to this letter
according to Cowan was that some months ago the plaintiff had told
Cowan to put a hold on the action
against Essack since he intended to
discuss the matter with him (Essack) personally. Cowan should wait
for the plaintiff to give
him a go ahead. The plaintiff has stated
that he telephoned Cowan and asked him why he wanted to hear from him
whether or not to
prosecute an action against Essack and when. He
then told him that as an attorney he should carry out his mandate and
prosecute
the action against Essack.
[13]
It is not clear from the evidence tendered before this court as to
why Cowan would ask a go ahead from the plaintiff if it
had not been
that the plaintiff had asked him to delay the prosecution of the
action against Essack until he had talked to him
personally. The
plaintiff merely told Cowan over the phone that he should proceed
with the prosecution on the action against Essack
though Cowan had
written him a letter. It would be more absurd for Cowan to ask the
plaintiff, a lay person, to say whether or
not he should proceed with
the action if the plaintiff had not asked him to delay the action.
The tone of the letter puts it beyond
question that the plaintiff had
asked Cowan to delay the action. In all probability the plaintiff had
asked Cowan to delay the
action against Essack until he had talked to
him personally. It does not appear in the papers before this court
and from the plaintiff’s
evidence as to when and how he had
told Cowan to proceed with the action, if he did.
[14]
It had been argued on behalf of the plaintiff that Cowan joined the
defendant firm at the end of February or early March 2002.
According
to the defendant Cowan started with it in April 2002 and the
plaintiff could not dispute this. Ms Boden, a director in
the
defendant’s firm, testified that she knew this because on 25
March 2002 the defendant firm moved offices from Durban
Bay House in
the CBD to a building that was built in La Lucia Ridge. Boden at the
time was the defendant’s representative
on the building
committee tasked with arranging and sorting out the move. Cowan
started with the defendant firm at the new premises
on 1 April 2002.
In the absence of the evidence gainsaying this, it should be accepted
as the fact that Cowan started with the
defendant firm on 1 April
2002.
[15]
The question arises whether at the time the plaintiff’s file
relating to his claim against Essack had been transferred
to the
defendant firm. According to the plaintiff he was then a client of
the defendant firm and his file in respect of his claim
against
Essack had been transferred to and got into the packages of the
defendant firm in March 2002. However, the plaintiff could
not tender
any concrete proof to that effect except his say so. On the other
hand, Ms Boden testified that for the client to be
accepted as the
client of the defendant firm in respect of any matter there are many
steps that have to be followed: The attorney
who wishes to take on
the matter on behalf of another client against another client has to
ensure that nobody in the firm is involved
in the matter. The second
step, depending on the type of the matter that is being accepted is
to comply with the Financial Intelligence
Centre Act (FICA) which
requires the attorney involved to obtain FICA documents from the
client and to load those documents into
the defendant firms records
and to create a FICA file of those documents, which has a number
assigned to it. It is only then, on
the assumption that the matter
raised no objection on a conflict search and that FICA has been
complied with, a matter is opened
in the defendant firm’s
bookkeeping department. In 2002 the taking on of matters and the
assigning of matter codes and client
codes were done at the
bookkeeping department.
[16]
According to Boden the matter against Essack was the fourth matter
taken on by the defendant on behalf of the plaintiff and
it was
entered on 11 September 2002. This finds confirmation in the
defendant firm’s records relating to the date of instruction
in
respect of each matter received or opened by the defendant firm in
September 2002 (exhibit “B”p12). Nonetheless,
it has been
argued on behalf of the plaintiff that this does not exclude an oral
or tacit mandate having been accepted by Cowan
as the defendant’s
duly authorised representative or by any other person of the
defendants firm’s professional staff
to act on behalf of the
plaintiff much earlier than 11 September 2002, and that the defendant
led no evidence by the person who
interviewed and opened the file for
the plaintiff’ but, the onus remained with the plaintiff to
show that the defendant firm
was given the mandate to prosecute his
action much earlier than 11 September 2002. Unless and until the
plaintiff established a
prima facie
case that the instruction
in question was received much earlier, before the action prescribed,
the defendant was under no duty
to give any explanation. See also
Steyn No. N Ronald Bobroff & Partners 2013(2) SA 311 (SCA) at
321F
.
The Plaintiff could not say with any degree of
certainty as to when the defendant firm became his attorney in his
action
against Essack. The only evidence available in this regard is
found in the records provided by the defendant firm.
[17]
That Cowan’s Consultancy Agreement with the defendant firm was
concluded on 27 February 2002 and Cowan started working
as an
attorney with the defendant firm on 1 April 2002, it does not
necessarily follow that the plaintiff there and then became
the
client of the defendant’s firm. But, Cowan had to transfer
plaintiff’s file to the defendant firm. Only once the
file
relating to this matter had been transferred to and entered into the
defendant firm recording system would plaintiff become
the client of
the defendant firm. Mr Boden’s evidence shows that a certain
process had to be followed before any matter from
Cowan had to be
taken on by the defendant firm. Cowan was at all times material
hereto possessed of the plaintiff’s instructions
relating to
the plaintiff’s claim against Essack when he joined the
defendant firm which assumed all the obligations of Ditz
Inc.
However, the evidence does not disclose why the plaintiff’s
claim against Essack had only been transferred to the defendant
firm
in September 2002. The possibility that the plaintiff delayed in
giving Cowan a go ahead with the matter, after Cowan’s’
letter dated 27 February 2002, cannot be excluded. More so, this was
not the only matter which the plaintiff had with Ditz Inc.,
there
were also other matters which were transferred much earlier than the
matter in question. Further, it is not in dispute that
the process of
transferring a matter from one attorney to another takes some time.
There are FICA requirements to be complied with
and it is only once
all this had been done the client becomes the client of a new firm of
attorneys. The delay could also be attributed
to this lengthy process
of transfer, it is not clear as to why Cowan did not start with the
file of the claim which was about to
prescribe, if it had not been
that the plaintiff had told Cowan to delay the claim against Essack
until he had discussed the matter
with him personally since there
were other plaintiff’s files which were transferred to this
defendant’s firm during
May 2002.
[18]
I now turn to determine when the plaintiff’s claim against
Essack prescribed. The plaintiff testified that he knew by
April 1999
that Essack had breached the contract of Mandate which had been
between the two relating to the investment of moneys.
When Cowan
joined the defendant company on 1 April 2002, the plaintiff’s
claim against Essack was still alive. According
to the plaintiff in
July 1999 Essack met him and Cowan and he, Essack, admitted
negligence on his part, and also that he had lodged
a claim with his
professional indemnity insurer. This is corroborated by Cowan’s
file note dated 15 July 1999, Exhibit “B”
p1. In Mr
Choudree’s submission the running of prescription against the
plaintiff’s claim was thereby interrupted in
July 1999, as
contemplated in
section 14(2)
of the
Prescription Act. In
the absence
of any evidence to the contrary, the inevitable conclusion is that
the plaintiff’s claim against Essack prescribed
in July 2002.
[19]
It is not in dispute that Cowan whilst in Ditz Inc. wrote the
plaintiff a letter dated 27 February 2002 informing him that
his
claim against Essack would prescribe in April 2002. The plaintiff
testified that he subsequently telephoned Cowan and told
him to
proceed with the institution of the action against Essack. However,
it has not been established whether at the time the
plaintiff’s
matter in question had got into the package of the defendant firm, or
when in relation to July 2002 that occurred.
[20]
In terms of
section 14(1)
of the
Prescription Act the
running of the
prescription is interrupted by an express or tacit acknowledgment of
liability by the debtor. See also
Benson and another v Walker and
others
1984 (1) SA 73
AD at 86.
As
it seems to be common cause that in July 1999 Essack acknowledged his
indebtedness to the plaintiff and that in order to make
that good he
had lodged a claim for indemnity with his professional insurers, this
had an effect of interrupting the running of
the prescription in
respect of the claim against Essack. Therefore, the claim had to
prescribe in July 2002.
[21]
It is apparent from the above and it is not in dispute that when the
defendant firm through Cowan accepted a mandate to prosecute
the
plaintiffs action against Essack on 11 September 2002 the plaintiff’s
claim against Essack had already prescribed, and
having no prospects
of success. In the premises, the defendant firm cannot be held liable
for the running out of the prescription
against the plaintiff’s
claim. It follows that the plaintiff’s claim that the defendant
firm allowed his claim against
Essack to prescribe cannot be
sustained and it, therefore, falls to fail. This also renders it
unnecessary for this court to consider
whether or not the plaintiff
has succeeded to discharge the onus resting on him to prove that but
for the prescription of his claim
against Essack, he would have
succeeded in his claim against Essack and what damages he suffered as
a consequence.
PLAINTIFF’S
MANDATE TO DEFENDANT FIRM
[22]
The unchallenged evidence by the plaintiff is that on accepting the
mandate from him to prosecute his claim against Essack,
the defendant
firm did not tell him that the claim had prescribed and, nor did it
dissuade him from pursuing a worthless action.
This is evidenced by
the subsequent conduct of the defendant firm thereto. An action for
the recovery of damages from Essack resulting
from his breach of a
contract of mandate with the plaintiff was instituted on 2 October
2002. Essack raised a special plea that
the claim against him by the
plaintiff had prescribed. However, Cowan assured the plaintiff that
Essack’s special plea of
prescription would not succeed. The
defendant firm filed a replication to Essack’s special plea.
The matter then came before
the then Msimang JP on 21 September 2010,
and it was dismissed on the ground of prescription.
[23]
Notwithstanding the dismissal of the plaintiff’s claim against
Essack, Cowan and McDonald assured the plaintiff that
he had good
prospects of success on appeal. Following such an assurance, an
opinion on the reasonable prospects was sought and
paid for by the
defendant firm from Ploos Van Amstel SC, as he then was. In an
opinion dated 5 October 2010 Ploos Van Amstel SC
indicated that there
were no prospects of success on appeal and advised that the plaintiff
could hold his attorneys liable for
damages under their professional
indemnity insurance scheme. It was only then the plaintiff understood
that his claim against Essack
had prescribed and that his attorneys
would lodge a claim with their professional insurers, so to recover
the losses. The plaintiff
had paid the defendant firm the sum of
R411, 443.60, being the legal costs and disbursements.
[24]
Mr Cowan and Mr McDonald in a telephonic conversation asked the
plaintiff to cool down since they had a professional indemnity
insurance policy and he would get his money back. They then advised
him to go and sue the defendant firm for damages. Nicholson,
Stiller
and Geshen compiled a file so that Mr Cowan would prepare a letter of
demand and send it to the defendant firm. Shortly,
thereafter, Mr
Cowan committed suicide in November 2010.
[25]
Nicholson and Stiller then told the plaintiff that there was nothing
forth-coming from the insurer of the defendant firm and
suggested
that he should proceed with the issue of summons. The present action
against the defendant firm was then instituted.
The plaintiff stated
that as he was dealing with a very big firm of attorneys, the
professional people, he expected the best advice.
Had the matter
prescribed, the defendant firm should have told him right away, he
could have accepted the settlement offer and
walked away. As a
reasonable successful businessman he was not prepared to throw good
money after bad one.
HAS
THE PLAINTIFF’S CLAIM AGAINST THE DEFENDANT FIRM PRESCRIBED?
[26]
Mr Troskie for the defendant firm has argued that the special plea
raising prescription of the claim against Essack was delivered
in
December 2002. By then the plaintiff knew or should have known, on
the facts pleading prescription, that Cowan had breached
his mandate,
to prosecute the plaintiff’s claim against Essack timeously.
The plaintiff’s claim against the defendant
firm arose in
December 2002, and the action in this matter was commenced in
December 2010, eight years later.
[27]
According to the defendant the plaintiff was informed by December
2002 when a special plea of prescription was filed, that
the claim
had prescribed. Mr Troskie for the defendant has therefore argued
that the plaintiff’s claim against the defendant
firm started
running from December 2002. The plaintiff should therefore, have
there and then proceeded against the defendant for
the recovery of
damages, but he waited until December 2010; by the time the plaintiff
instituted these proceedings any claim he
had against the defendant
firm had prescribed. He, therefore, has no claim against the
defendant firm at all. Mr Troskie
argued further, that
knowledge of the legal conclusion is not required before prescription
begins to run and neither the running
of the prescription postponed
until a creditor is aware of the extent of his rights.
[28]
The prescription begins to run as soon as the creditors had knowledge
of facts or information from which it will be possible
for him to
deduce or discover the identity of the debtor. See
Gericke v Sack
1978 (1) SA 821
(A) at 829C.
Section 12(3)
of the
Prescription
Act provides
that a debt not arising from the contract is deemed to
be due and that prescription consequently begins to run, when the
creditor
has knowledge of the “identity of the debtor”,
the alert creditor may interrupt the running of prescription by
causing
process to be served in terms of
section 15.
Section 15
(1)
of the
Prescription Act provides
that prescription will be
interrupted by the service on the debtor of any process whereby the
creditor claims payment of the debt.
Section 15
(4) provides that if
the creditor successfully prosecutes his claim to final judgment,
prescription will commence running afresh
from the day on which the
judgment of the court becomes executable.
[29]
Upon proper construction of
section 15
the court in
Cape Town
Municipality and Another v Allianz Insurance Company
1990(1) SA
311 (C) at 312B stated that it is sufficient for the purposes of
interrupting prescription if the process to be served
is one whereby
the proceedings begun thereunder are instituted as a step in the
enforcement of a claim for payment of the debt.
Essentially, claiming
payment of the debt is no different in principle from enforcing the
right to payment of the debt. In
Santam Insurance Co. ltd v
Vilakazi
1967 (1) SA 246
(A) at 254H, the majority of the court
held that the process envisaged was one whereby action was instituted
‘as a step in
the enforcement of a claim or right’
whereby the creditor formally involves his debtor in court
proceedings for the enforcement
of his claim.
[30]
Prescription begins to run against a creditor when it has knowledge
of the minimum facts that are necessary to institute an
action. See
Claassen v Bester 2012(2) SA 404 (SCA
). It is the defendant’s
contention in the present case that the plaintiff acquired knowledge
of the facts that were necessary
for it to institute an action
against the defendant at the time when a special plea of prescription
was raised to his claim against
Essack. However, in my view, for the
facts the plaintiff had at the time of the special plea to be said
that they were necessary
to institute an action against the defendant
firm, must have been sufficient for the plaintiff to make an informed
decision on
the matter. In
Santam Ltd v Ethwear
1999(2) SA 244
(SCA) at 252I it was held that a debt becomes due in terms of the Act
when the creditor acquires a complete cause
of action, and the cause
of action is the entire set of facts which a plaintiff must prove to
succeed.
[31]
In the present case the entire facts which the plaintiff had to prove
was that his claim had prescribed, the defendant was
responsible for
the running out of the prescription against his claim and that he had
no further recourse, other than claiming
damages, resulting from such
prescription. As Cowan and Smithers SC were dismissing Essack’s
special plea as delaying tactic
and assuring the plaintiff that he
had a strong winnable case against Essack, it cannot be said that the
plaintiff had acquired
a complete course of action. This was the case
even after the plaintiffs’ claim against Essack had been
dismissed by the
then Msimang JP on the ground of prescription. The
unchallenged evidence of the plaintiff is that Cowan and Mr McDonald
told him
that he had good prospects of success on appeal, and blamed
the dismissal of the action on the presiding Judge. It could not
therefore
be said that the plaintiff had at the time the entire set
of facts necessary for him to institute an action against the
defendant
firm.
[32]
Inquiry into what transpired from the time the plaintiff was told
about the special plea raised by Essack and the subsequent
conduct of
the defendant firm up until the plaintiff’s action was
dismissed by Msimang JP, will help to determine when
exactly
the plaintiff acquired the facts necessary to institute an action
against the defendant firm. The plaintiff testified
that Cowan
did not advise him that his claim against Essack had prescribed.
Notwithstanding, the fact that the claim against Essack
had
prescribed even before the defendant firm accepted the mandate of the
said action, the defendant firm through Cowan, McDonald
and Smithers
SC vigorously prosecuted the action against Essack. It remained
unexplained as to why the defendant firm caused the
issue of summons
against Essack, on a long prescribed claim. When the plaintiff talked
about the special plea raised by Essack,
Cowan dismissed it as a
delaying tactic on the part of Essack and that he need not worry
himself about it since it would not succeed.
This is evident from the
fact that after the receipt of the special plea by Essack, the
defendant firm caused the replication to
the said special plea to be
drafted and filed and in which prescription on behalf of the
plaintiff was denied.
[33]
Cowan in an email dated 17 September 2010 communicated the
defendant’s view and strong advice to the plaintiff that his
claim against Essack had not prescribed (Exhibit “A1”
p2). The belief of the defendant firm that the plaintiff had
good
prospects of succeeding at the trial is more apparent from the
conduct of Smithers SC when he dissuaded the plaintiff at the
trial
hearing from accepting an offer of settlement from Essack in the sum
of R170, 000.00. When Mr McDonald, of the defendant
firm, telephoned
the plaintiff, after the dismissal of the plaintiff’s claim by
Msimang JP, advising him that he had lost
the case against Essack,
she blamed Msimang JP for “messing up the case”.
Notwithstanding the fact that McDonald was
present in court during
the trial hearing in the present case she was not called to refute
this. Once against in Cowan’s
email dated 27 September 2010 the
defendant firm expressed its view that there were grounds of appeal
against the judgment of Msimang
JP.
[34]
After the receipt of the opinion of Ploos van Amstel SC that there
were no prospects of appeal against the judgment of Msimang
JP, Cowan
told the plaintiff to relax and that he would be covered by and paid
out from the defendant’s indemnity insurance.
Cowan then
advised the plaintiff to sue the defendant firm for damages and
referred him to Nicholson, Stiller and Geshen for that
purpose. Boden
confirmed that the opinion on the reasonable prospects on appeal was
sought and paid for by the defendant firm (exhibit
“A1”
p61) and that the defendant firm did lodge a professional indemnity
claim in respect of the prescribed action
against Essack.
[35]
The unchallenged evidence clearly establishes that at all times
relevant to this claim prior to the receipt of the opinion
of Ploos
Van Amstel SC on the reasonable prospects of success the plaintiff
was made to believe that he did not only have a case
against Essack
but a strong and winnable case. Dismissal of Essack’s special
plea of prescription by both Cowan and Smithers
SC as a delaying
tactic and the filling of replication to it coupled with the fact
that the opinion on reasonable prospects of
success on appeal after
the dismissal of the plaintiff’s action by Msimang JP on the
ground of prescription was sought and
paid for by the defendant firm,
provide sufficient proof that the defendant firm wrongly and
erroneously believed that the plaintiff
did not only have a case but
a strong winnable case against Essack and advised the plaintiff
accordingly. Being so misled, surely,
the plaintiff cannot be said
that he knew at the time that the claim had prescribed and that he
was then entitled to sue the defendant
firm for damages, resulting
from its breach of the mandate.
[36]
In terms of
section 12(1)
and (3) of the
Prescription Act the
prescription did not begin to run until the plaintiff was informed
that his claim had prescribed, he had no reasonable prospects
of
success on appeal and that he could proceed against his attorneys for
the recovery of losses he had suffered. The prescription
of the
plaintiff’s claim against Essack for the resulting damages
therefore commenced in October 2010. It was only then the
plaintiff
understood that his claim against Essack had prescribed and that the
defendant firm would lodge a claim with its professional
insurers, so
to recover the losses he had suffered.
DEFENDANT’S
BREACH OF CONTRACTUAL DUTY TO PLAINTIFF
[37]
The onus of establishing any other possible ground of liability rests
upon the plaintiff. It has been argued on behalf of the
defendant
firm that it has never been pleaded in the plaintiff’s
particulars of claim that the defendant was negligent in
any other
way in the execution of its mandate except by allowing the
plaintiff’s claim to prescribe. The evidence of
the
plaintiff in this regard is clear that had the defendant advised him
that his claim against Essack had prescribed, he would
have taken an
offer of R170, 000.00 made by Essack or negotiated a better offer
with Essack. In essence, he said that he would
not have pressured
such a worthless action. Such evidence is, in my view, sufficient to
cure a defect in the pleadings in this
regard.
[38]
The question then arises is what a reasonable attorney in the
position of the defendant, faced with a similar case under similar
circumstances, would have done. The attorney is by profession an
adviser upon litigation, and other contestations and it is his
duty
to advise the client upon the prospects of success or failure and
upon the impact of costs. See
Groom v Crocker
[1939] KB 194
;
Lewis in Legal Ethics PP
103-4 para 27.
[39]
The duties and obligations of an attorney to his/her client and the
circumstances under which an attorney can be liable for
want of
requisite care, skill and diligence which he/she is expected to
exercise in handling the affairs of his/her client was
considered in
Steyn No v Ronald Bobroff & Partners
2013(2)
SA 31 (SCA) at 320 C-H (para27), and it was held that in the
execution of his mandate an attorney must act with the skill,
diligence and care required from an ordinary attorney. Nienaber JA in
David Trust v Aegis Ins. Co. Ltd
2000(3) SA 289 (SCA) at
298G-H said the following:
“
It
is one of the naturalia of a contract of mandate in general, that the
mandatory is obliged, first, to perform his functions faithfully,
honestly and with care and diligence and, secondly, and of crucial
importance, to account to his principal for his actions.”
[40]
In
Steyn case supra,
at 320 para 27 the following was held:
“
It
is axiomatic that the conduct of a reasonable attorney concerning the
case he/she handles will primarily be determined, amongst
others by
the facts and circumstances of the case, the investigations which had
to be done, the nature and extent of the injuries
suffered and the
complexity of the matter.”
However,
the degree of negligence or want of prudence or useless work depends
on the nature of each case. The weight of authorities
shows that
negligence of the attorney in question can only be determined in
relation to the facts and exigencies of the case as
well as its
complexity. The claim against Essack was about damages resulting from
the breach of the contractual duty. This was
a relatively simple
matter, a reasonable attorney acting with the necessary care,
diligence and skill on receipt of an instruction
to prosecute a claim
that had prescribed, would have easily picked this up and advised his
client accordingly.
[41]
The circumstances of the present case clearly show that in carrying
out its mandate the defendant was obliged either personally
or
through others, to exercise the knowledge, skill and diligence to be
expected of an average practising attorney. However, the
unchallenged
evidence clearly establishes that the defendant firm failed to
maintain that standard in that, firstly, it negligently
accepted the
instruction to prosecute a prescribed claim, and secondly, it
prosecuted such claim notwithstanding the fact that
its prospects of
success were virtually nil. Instead of advising its client that his
claim had prescribed and dissuading him from
pursuing a worthless
litigation the defendant prosecuted the action against Essack and
assured the plaintiff that he had good prospects
of success. It
persisted in this even after the plaintiff’s action had been
dismissed by this Court. The negligence with
which the defendant firm
handled the matter for the plaintiff through Cowan and McDonald was
of a gross nature, bordering on dishonesty
or recklessness.
[42]
McDonald’s evidence was required to explain what transpired
between the plaintiff and her and Cowan after the dismissal
of the
plaintiff’s action. Surprisingly, she failed to throw light on
this aspect despite the fact that she was in attendance
at court. An
adverse inference can reasonably be drawn from her failure to
testify. This happened on the face of the evidence by
the plaintiff
that even before the dismissal of his claim she and Cowan assured him
that he had a strong winnable case. In the
result, I find that the
defendant failed to act with due diligence, care and skill as an
ordinary attorney would have acted.
PLAINTIFF’S
ACTUAL LOSS
[43]
It has been the defendant’s contention that no cause of action
is pleaded of the plaintiff being put to wasteful expense
due to
incorrect advice. It is accepted that the aggrieved party is the one
to formulate and to prove a claim for damages. See
Dominion
Earthworks v M J Greef Electrical Contractors (Pty) Ltd
1970(1)
SA 228(A) 235A. In my view, the defect in the plaintiff’s
particulars of claim has been cured by his unchallenged
evidence that
the result of the defendant’s breach of its contractual duty to
the plaintiff was the direct preliminary loss,
which the plaintiff
would not have suffered had the defendant properly advised him. The
plaintiff suffered damages in the sum of
R411, 443.60, being
legal costs and disbursements, and the sum of R300, 000.00 he paid to
Essack as costs on the dismissal
of the plaintiff’s action. I
am satisfied that the plaintiff has made out a case for the award of
actual loss he suffered
as a result of the defendant’s breach
of the mandate. Therefore, the plaintiff’s claim for his actual
losses must succeed.
ORDER
[42]
In the result I make the following order:
(a)
The plaintiff’s claim for the sum of R700, 000.00 as the
damages the plaintiff would have allegedly recovered had his
claim
not been permitted by the defendant to prescribe, is dismissed with
costs. Such costs to include the costs consequent upon
the employment
of a senior counsel;
(b)
The defendant is ordered to pay to the plaintiff the sum of R411,
443.60, being the legal costs and disbursements he paid to
the
defendant firm in respect of his claim against Essack, together with
interest thereon at the rate of 15,5% per annum from the
date of
judgment to the date of final payment;
(c)
The defendant is ordered to pay to the plaintiff the sum of R300,
000.00 together with interest thereon at the rate of 15,5%
per annum
from the date of judgment to the date of payment;
(d)
The defendant is ordered to pay the plaintiff costs of suit, and such
costs to include the costs consequent upon the employment
of a senior
counsel.
Date
of reserved: 5 September 2015
Date
delivered: 17 February 2015
Counsel
for Plaintiff: Adv Choudree
Instructed
by: David Randles
Ref:
D Randles 031-3128311
Counsel
for Defendant: Adv Troskie
Instructed
by: Garlicke & Bousfield
Ref:
V.J.M 031-5705300