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[2000] ZASCA 173
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Lieberman v Santam Ltd (168/98) [2000] ZASCA 173; 2000 (4) SA 321 (SCA) (29 May 2000)
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
CASE
NO: 168/98
In the
matter between :
DAVID
ISRAEL LIEBERMAN
Appellant
and
SANTAM
LTD
Respondent
Before:
VIVIER,
MARAIS, ZULMAN, STREICHER JJA and FARLAM AJA
Heard:
18
MAY 2000
Delivered:
29
MAY 2000
Special
Plea of prescription misdirected. Appellant's cause of action not
based upon the Multilateral Motor Vehicle Accidents Fund
Act 93 of
1989 but upon a new agreement between the parties
J U D G M E N T
VIVIER JA
VIVIER JA:
[1] This is an appeal against the
judgment of the Court
a
quo
upholding a
special plea of prescription.
[2] On 13 October 1989 a collision involving two motor
vehicles occurred in Main Road, Green Point near Cape Town. The
appellant
and one Melissa Meyer (“Meyer”) were
passengers in one of the vehicles which was driven by one Christoff
Norwie (“Norwie”).
The driver of the other vehicle
was one Ian Carter-Smith (“Carter-Smith”). Both the
appellant and Meyer sustained
bodily injuries and suffered damages
as a result of the collision. On 3 October 1991 the appellant duly
lodged a claim for
compensation with the respondent as the duly
appointed agent in terms of Article 62, read with Article 40, of
the Schedule to
the Multilateral Motor Vehicle Accidents Fund Act 93
of 1989 (“the Act”). It was subsequently agreed between
the
parties that the respondent would not plead prescription on or
before 30 November 1994.
[3] Meyer had in the meantime
instituted an action for damages against the respondent in terms of
the Act in respect of the injuries
sustained by her as a result of
the said collision. This action was settled in terms of a written
agreement concluded on 19
September 1994 ("the agreement")
which was made an order of Court. In clause 1 of the agreement the
respondent undertook
to pay Meyer the sum of R25 000-00 in respect
of its liability arising from Norwie’s negligence (for which
the respondent’s
liability was limited under the Act). In
respect of its liability arising from Carter-Smith’s
negligence (which was not
limited under the Act), the respondent
admitted in clause 2 that it was liable for 50% of such loss or
damages as may be agreed
between the parties or ordered by the
Court. Clause 3 of the agreement provided that the provisions of
clauses 1 and 2 would,
mutatis
mutandis
, be
binding on the respondent so that he would likewise be entitled to
payment of R25 000-00 in respect of Norwie’s negligence
and
50% of such loss or damages as may be agreed between him and the
respondent or ordered by the Court in respect of his claim
arising
from the negligence of Carter-Smith. In terms of clause 4 of the
agreement the respective attorneys of the appellant
and the
respondent warranted that they were authorised to bind their clients
in terms of the agreement which would,
mutatis mutandis
,
constitute an agreement and order of court in respect of the
"pending action" between the appellant and the respondent.
[4] The respondent duly paid to the
appellant the sum of R25 000-00 in respect of Norwie’s
negligence. In respect of Carter-Smith’s
negligence the
parties were unable to reach agreement on the
quantum
of the appellant’s damages and the appellant consequently, on
18 October 1995, instituted action in the Cape Provincial
Division
against the respondent. The summons was served on the same day. In
this action the appellant claimed 50% of the amount
of R2 130 631-00
being the loss or damages he alleged he had suffered as a result of
his injuries.
[5] The respondent filed a special plea of prescription
to the particulars of claim alleging that the appellant’s
claim
arose from the Act and that in terms of Article 55 read with
Article 57 of the Schedule to the Act the claim had become
prescribed
since more than five years had elapsed from the date upon
which the claim arose.
[6] The appellant excepted to the
special plea as not disclosing a defence to the claim on the ground
that the claim was not brought
in terms of the Act but was based on
the agreement which constituted a novation of the original claim
under the Act and which
was not subject to the prescriptive periods
under the Act but was governed by the provisions of the Prescription
Act 68 of 1969
("the
Prescription Act"
;) in terms of which
it had not become prescribed. The exception to the special plea
was dismissed by
Selikowitz J
on
the ground that it was not clear on the papers before him that the
parties had intended to discharge the respondent's obligations
under
the Act by the creation of new obligations.
[7] The appellant thereupon filed a replication to the
special plea in which it was alleged, for the first time, that on or
about
10 November 1994 the parties had concluded a verbal agreement
in terms whereof the respondent had undertaken not to plead
prescription
to a summons issued and served before 31 December 1995.
Based on this undertaking, it was alleged that the respondent was
estopped
from pleading that the claim had become prescribed,
alternatively that the respondent had waived the right to plead
prescription.
In the further alternative the appellant alleged that
the agreement constituted an express or tacit acknowledgment of
liability
by the respondent which had the effect of interrupting the
running of prescription in terms of
sec 14(1)
of the
Prescription
Act.
[8
] At the trial on the special plea
before
Van Zyl J
the evidence was confined to the alleged undertaking of 10 November
1994 not to plead prescription. The learned Judge found
against
the appellant on this issue and this finding has not been challenged
on appeal.
[9]
Van
Zyl J
held that
the agreement was not a novation or compromise and that it did not
affect the respondent’s original obligation
under the Act,
save for the issue of negligence. He also held that the agreement
did not constitute an express or tacit acknowledgment
of liability
in terms of
sec 14(1)
of the
Prescription Act. The
special plea of
prescription was accordingly upheld and the appellant’s claim
dismissed with costs. With the leave of
the Court
a
quo
the appellant
appeals to this Court.
[10] The agreement, insofar as it was made applicable
to the appellant, was certainly a most unusual one. It fixed the
respondent
irrevocably with liability for whatever damages could be
agreed or be proved to have been suffered and precluded the
appellant
from claiming more. It provided for the appellant to
obtain a court order in his favour for the payment of money before
he
had even issued summons. It resulted from the respondent’s
clear intention to settle the appellant's claim at the same
time
and on the same terms as Meyer's action in order to avoid costs.
For purposes of the settlement no distinction was made
between
Meyer’s action and the appellant’s claim which was
treated as if summons had already been issued. So, for
example,
clause 4 provided for the agreement to constitute “an
agreement and order of court in respect of the pending action”
between the appellant and the respondent. In the agreement the
respondent admitted liability and undertook to pay the claims
of
both Meyer and the appellant, not only in respect of the negligence
of Norwie but also in respect of Carter-Smith's negligence.
The
agreement contained a full and final settlement in respect of the
claims based on Norwie's negligence, the respondent undertaking
to
pay the maximum amount of R25 000-00 payable under the Act to both
Meyer and the appellant. If the respondent had subsequently
failed
to pay the amount of R25 000-00 to the appellant there can be no
doubt that he could have recovered that amount in terms
of the
agreement. In respect of the appellant’s claim based on
Carter-Smith’s negligence clause 3 expressly stated
that the
appellant was entitled to payment of a sum equal to 50% of such loss
or damages in respect of Carter-Smith's negligence
as may be agreed
between the parties or ordered by the Court. From the references in
clause 3 to the appellant’s claim
arising from Carter-Smith’s
negligence and in clause 4 to the “pending action” it is
clear that the loss or
damages contemplated were those provided for
in the Act.
[11] Counsel for the respondent submitted that the
references in the agreement to the appellant’s claim under the
Act meant
that the original obligation arising under the Act
remained intact as the respondent’s only obligation and that
it was
unaffected by the agreement save for the element of
negligence. I do not agree. On a proper construction of the
agreement it
is clear, in my view, that it created a new contractual
foundation for a valid and enforceable obligation to pay which
existed
independently of any previous obligation under the Act.
According to the express wording of the agreement a new obligation
was
created i e to pay 50% of such losses and damages in respect of
Carter-Smith’s negligence as might be agreed between the
parties or ordered by the Court. This is not the language of
parties who were merely settling the issue of negligence and I
find
it inconceivable that the respondent would have undertaken such an
obligation to pay had it merely intended to agree that
Carter-Smith
was 50% to blame for the collision. In view of the express
acceptance of liability for such damages and the undertaking
to pay,
it was thereafter no longer open to the respondent to deny
liability. The new obligation created by the agreement was
to pay
50% of such loss or damages as the Act provided for. In other words
the obligation to pay was fixed, the only outstanding
issue being
the quantification of the obligation which had to proceed along the
statutory lines.
[12] I have already said that the intention of the
parties in concluding the agreement was to effect an overall
settlement of
the claims of both Meyer and the appellant leaving
only the issue of the quantum of the claims in respect of
Carter-Smith's negligence
for agreement or determination by the
Court. For this reason the agreement was made an order of Court.
It is not necessary
to express any view about the appropriateness of
such an order being made in respect of a party who was not yet
before the Court,
albeit with his consent. What is important is
that the parties dealt with the matter as if the appellant's
original claim were
already before the Court and equated it in that
respect with Meyer's claim which was in fact before the Court, going
so far as
to procure a Court order in respect of it. At the time of
the agreement and the Court order the appellant's claim under the
Act was due to become prescribed in approximately 2½ month's
time. I find it difficult to accept that the parties could
ever
have intended that prescription would continue to run against
appellant and not against Meyer in respect of the original
claim
while they were attempting to settle the quantum in terms of the
agreement and Court order, which raises the question whether
a plea
of prescription to the original action was potentially still
available as against the appellant. It is not necessary
for present
purposes to decide whether the agreement compromised the original
obligation arising under the Act in respect of
Carter-Smith's
negligence in the sense that it extinguished it or to decide to
what extent it altered that obligation. It is
sufficient to say
that the agreement provided the appellant with a contractual basis
upon which to found a cause of action for
payment which he was free
to invoke if he so chose. In my view the appellant was entitled to
found his claim upon the agreement
and it is clear from his
particulars of claim that his cause of action is based upon the
agreement. The contractual obligation
to pay 50% of the agreed or
proved damages represented a new debt. That it had its roots in the
old may be historically so but
that does not derogate from the fact
that it was a fresh obligation and that prescription could not begin
to run against a claim
to enforce it before it arose.
[13] Counsel for the respondent submitted that the
agreement to pay 50% of the loss or damages cannot be enforced as it
conflicts
with Article 43 of the Schedule to the Act which provides
for an undertaking to be given in certain circumstances. I do not
agree. An agent is not obliged to give a certificate and may elect
not to do so when settling a claim. This is what happened
in the
present case.
[14] For the reasons given I am of
the view that the plea of prescription was misdirected. The
appellant's cause of action as
pleaded was the agreement which was
governed by the provisions of the
Prescription Act. It
is common
cause that such a claim had not become prescribed by the time
summons was served. The Court
a
quo
accordingly
erred in upholding the plea of prescription. It follows that the
issue of the interruption of prescription does
not arise.
[15] Counsel for the appellant asked
us to make a special order as to costs in the Court
a
quo
in the event
of the appeal succeeding. The appellant had apparently, subsequent
to the institution of the present proceedings,
commenced an action
for damages for professional negligence against his attorney. At
the trial of the special plea the attorney
testified for the
appellant on the issue of the alleged agreement not to plead
prescription. According to counsel for the appellant
the attorney
insisted that the portion of the trial dealing with the alleged
agreement not to plead prescription be conducted
by his own team of
legal representatives, which resulted in the costs of two sets of
legal representatives being incurred. There
is no justification
for ordering the respondent to pay for two sets of counsel and
attorneys. If a conflict of interest was
feared different legal
representatives to conduct the whole trial on the special plea could
have been employed. Instead of which
the appellant retained his
original attorney at whose instance another set of legal
representatives was employed to protect
his personal interest.
[16] In the result the appeal is
allowed with costs. The order of the Court
a
quo
is set aside
and there is substituted an order in the following terms:
"The special plea of prescription is dismissed
with costs."
_________________
W VIVIER JA
AGREE:
MARAIS JA
ZULMAN JA
STREICHER JA
FARLAM AJA