Blaauwberg Meat Wholesalers CC v Anglo Dutch Meats (Exports) Ltd. (442/2002) [2003] ZASCA 144; [2004] 1 All SA 129 (SCA) (28 November 2003)

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Blaauwberg Meat Wholesalers CC v Anglo Dutch Meats (Exports) Ltd. (442/2002) [2003] ZASCA 144; [2004] 1 All SA 129 (SCA); 2004 (3) SA 160 (SCA) (28 November 2003)

IN THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
REPORTABLE
Case no:
442/2002
In
the matter between
BLAAUWBERG MEAT WHOLESALERS CC APPELLANT
and
ANGLO
DUTCH MEATS (EXPORTS) LIMITED RESPONDENT
Coram:
HARMS, FARLAM, BRAND, HEHER JJA
and MLAMBO AJA
Heard:
18
November 2003
Delivered: 28 November
2003
Summary:
Prescription – s 15(1) of
Prescription Act 1969
– whether
prescription interrupted by service of summons in which the creditor
is wrongly described but which is rectified after
prescriptive
period.
_____________________________________________________________________
JUDGMENT
__________________________________________________________________
HEHER JA
HEHER JA:
[1]
The
issue in this appeal is whether an action mistakenly instituted in
the name of A as creditor served to interrupt prescription
where it
appeared, after the prescriptive period, that B was the true
creditor, and the summons was duly amended.
[2]
On
12 April 1996 a summons was served on the appellant in which
Anglo-Dutch Meats (UK) Limited claimed payment of the price of beef
flanks allegedly sold and delivered by it to the appellant during
March to June 1995, the last due date for the payment of the price
by
instalments, being 23 August 1995. The appellant claimed in
reconvention for return of an amount said to have been overpaid and
for payment of damages for breach of contract. Since the claim in
reconvention was dismissed at the trial and leave to appeal was
refused it will be unnecessary to refer to this aspect again.
[3]
During
November 1998, while evidence in the trial was being taken on
commission in England, the South African legal representatives
of the
plaintiff became aware that the ‘true’ seller of the meat had
been Anglo-Dutch Meats (Exports) Limited, (the present respondent),
a
wholly-owned subsidiary of the plaintiff. (For purposes of
distinction between the two companies in this judgment I shall refer
to them simply as ‘UK’ and ‘Exports’.) By then more than
three years had already passed since the cause of action arose.
[4]
An
application was brought to amend the citation of the plaintiff to
reflect the reality. The appellant opposed the application
but
Cleaver J granted the relief and the respondent was substituted as
the plaintiff in the action on 10 December 1998. Cleaver
J granted
the amendment because he found that the plaintiff had been wrongly
described in the summons. Prescription, he said
‘will
not be a consideration if the amendment is granted on the basis that
the plaintiff was incorrectly described or that the description
of
the plaintiff amounted to a misnomer, for in such event the service
of the summons on the defendant will have interrupted prescription’.
[5]
Various
amendments were effected to the pleadings, by one of which the
appellant raised a special plea of prescription against the
respondent’s claim.
[6]
The trial
proceeded before Hodes AJ in the Cape Provincial Division. At its
conclusion the learned judge ruled that he was entitled
to reconsider
the application for the amendment of the citation of the plaintiff.
Having done so, he concluded that Cleaver J had
been clearly wrong in
granting the amendment because the summons did not constitute a
process whereby the creditor claimed payment
of the debt and,
accordingly, the running of prescription had not been interrupted by
service of the summons. He added,
‘I am, however, of
the opinion that it is not correct that the description of the
plaintiff amounted to a misnomer or that it was
incorrectly described
in the pleadings.’
He upheld the special plea of
prescription.
[7]
The
respondent appealed to the Full Court. Van Zyl J (Louw J and Ngwenya
J concurring) upheld the appeal. The judgment is reported
at
2002
CLR 292
(C).
[8]
The
brief summary of the facts which I have provided suggests a strong
similarity with those considered in
Associated Paint and Chemical
Industries (Pty) Ltd t/a Albestra Paint and Lacquers v Smit
2000(2)
SA 789 (SCA). It was there decided that where an action was
instituted on behalf of company A and it was proposed, after
the
onset of prescription, to substitute the plaintiff by company B, the
amendment could not be granted as the claim of B had prescribed
because B had not taken the steps contemplated by
s 15(1)
of the
Prescription Act 68 of 1969
to claim payment within the prescriptive
period. This precedent was relied on by the trial Judge and formed
the cornerstone of the
appellant’s submissions on appeal. The Full
Court distinguished it on the ostensible ground that
Albestra
concerned the introduction of a new plaintiff whereas, so it found,
the case before it was one of misnomer. The Court referred
particularly
to the judgments in
Dawson and Fraser (Pty) Ltd v
Havenga Construction (Pty) Ltd
1993 (3) SA 397
(B),
Devonia
Shipping Ltd v M V Luis (Yeoman Shipping Co Ltd Intervening)
1994
(2) SA 363
(C),
O’Sullivan v Heads Model Agency CC
1995 (4)
SA 253
(W) and
Du Toit v Highway Carriers and Another
1999 (4)
SA 564
(W), commenting that it was ‘most unfortunate’ that the
Court in the
Albestra
case was apparently not referred to
those judgments, and adding
‘
I
am of the respectful view that, if he [F.H. Grosskopf JA] had had
occasion to consider the judgments in these cases, he might well
have
come to a different conclusion on the facts. I say that with
particular reference to the fact that both parties at all relevant
times appear to have regarded the “proposed new plaintiff” as the
correct plaintiff. In terms of the said decisions this might
indeed
have been a case of an erroneous description of the correct
plaintiff, rather than a substitution of the correct plaintiff
for
the wrong one. This underscores once again the well-established
principle that each case must be considered on its own merits
and
with reference to its own peculiar facts and circumstances.’
[9]
Van
Zyl J continued
‘
If
it should be held that a plaintiff has been wrongly described and
that such description may be rectified, it follows that the wrong
description of the creditor, for the purposes of section 15(1) of the
1969 Act, may likewise be rectified. . . To non-suit a creditor
as
plaintiff because his description is not exactly correct would result
in a degree of formalism and inflexibility reminiscent of
the
ius
strictum
of ancient Roman Law. This would certainly not accord
with practical common sense or with the community’s perception of
justice
and its concomitant values. . . In view of his finding that
the amendment in the case before him had introduced a new plaintiff,
it was not necessary for F.H. Grosskopf JA to consider what the
position would have been if he had held that it had merely rectified
an incorrect description of the plaintiff.’
[10]
The
learned Judge discussed and considered
Embling and Another v Two
Oceans Aquarium CC
2000 (3) SA 691
(C), a judgment to which I
shall return in due course. He proceeded to assess the facts of the
appeal before the Court
a quo
taking into account as material
that
(a) the relevant invoice and proof of payment showed that the
defendant had paid Exports and thereby acknowledged that company as
its creditor;
(b) Exports gave the instructions to institute action against the
defendant;
(c) the South African attorney, Mr. van Gend, had been understandably
confused by the relationship between the companies and the
fact that
both had the same registered address;
(d) as a result of Van Gend’s
bona fide
error, Exports, the
true creditor, was not cited as plaintiff in the summons and
subsequent pleadings.
(As I
understand the evidence given by Mr. van Gend during the trial, the
error arose from the receipt of instructions from Exports
under cover
of a fax sheet bearing the name of UK; his supposition was that the
names had become transposed during the preparation
of the
instructions to counsel to settle the particulars of claim. To this
extent the correctness of (c) may be debatable, but as
will be seen,
the difference is immaterial in the decision of the appeal.)
[11]
Van
Zyl J criticized the approach of Hodes AJ as not taking cognizance of
‘the fact that the rectification of a misnomer of the plaintiff is
not, and cannot be, restricted by the wording of s 15(1) of
the 1969
Act. This was an aspect not considered in the
Associated Paint
case.’
He
concluded:
‘
After
consideration of the various arguments and authorities in support of
the opposing approaches to the current issue, I respectfully
incline
to the view that Cleaver J was indeed correct in finding that the
citation of ADM (UK) as plaintiff in the summons and subsequent
pleadings was no more than a misnomer for ADM (Exports). This was
the legal persona identified and accepted by both parties as the
seller of the meat products and hence as the true creditor and
plaintiff. The correction of its description does not mean that it
was being substituted as plaintiff and creditor by a different entity
or persona. In principle it is irrelevant whether it was wrongly
described as an existing entity or as a non-existent one. In either
case the question is simply whether the summons served on the
defendant was a “process whereby the creditor claims payment of the
debt”.’
[para 45]
‘
I
am in respectful disagreement with Hodes AJ as to the points of
distinction raised by him between the present case and those relied
on by Cleaver J. It is, in my view, irrelevant whether the misnomer
relates to a plaintiff or a defendant. The applicable principles
remain the same. It is likewise irrelevant whether prescription is
an issue raised by the defendant. It is merely a factor to be
taken
into account in deciding whether or not an amendment will cause the
opposing party prejudice or injustice.’ [para 46]
‘
Accepting
the incorrect citation as a misnomer accords, in my respectful view,
with the need to take cognizance of the substance rather
than the
form of the process (
Neon and Cold Cathode Illuminations (Pty) Ltd
v Ephron
1978(1) SA 463(A) 471B). It also accords with
consideration of justice, fairness and reasonableness, while giving
due regard to the
requirement of good faith between contracting
parties and to the policy considerations underlying the justice
system. . . Peace-loving
and justice-seeking members of the
community do not take kindly to what they perceive as “technical”
defences that allow debtors
to escape liability and accountability.’
[para 47]
[12]
The
approach adopted by the Court
a quo
reveals confusion. There
seems to have been no consideration of whether a difference in
approach is called for between applications
for amendment of
pleadings and the determination of whether there is compliance with a
statutory provision such as s 15(1). The
cases referred to in
paragraph [8], which related to the first problem, were willy-nilly
applied to the second. It is clear that
there are fundamental
differences between the two situations. Amendments are regulated by
a wide and generous discretion which leans
towards the proper
ventilation of disputes and are granted according to a body of rules
developed in that context. Whether there
has been compliance with a
statutory injunction depends upon the application of principles
wholly unrelated to the rules just mentioned
and without the exercise
of a discretion, principles which were expressed by Van Winsen AJA in
the well-known passage from
Maharaj and Others v Rampersad
1964
(4) SA 638
(A) at 646C-E as follows:
‘
The
enquiry, I suggest, is not so much whether there has been “exact”
or “substantial” compliance with this injunction but
rather
whether there has been compliance therewith. This enquiry postulates
an application of the injunction to the facts and a
resultant
comparison between what the position is, and what according to the
requirement of the injunction it ought to be. It is
quite
conceivable that a court might hold that, even though the position as
it is is not identical with that which it ought to be,
the injunction
has nevertheless been complied with. In deciding whether there has
been compliance with the injunction the object
sought to be achieved
by the injunction and the question of whether the object has been
achieved are of importance. Cf
J.E.M. Motors Ltd v Boutle and
Another
1961 (2) SA 310
, at pp. 327-8.’
[13]
For obvious practical reasons the legislature ordained certainty
about when and how the running of prescription is interrupted. That
certainty is of importance to both debtors and creditors. It chose
an objective outward manifestation of the creditor’s intentions
as
the criterion,
viz
the service on the debtor of process in
which the creditor claims payment of the debt. That is not a
standard which allows for reservations
of mind or reliance on
intentions which are not reasonably ascertainable from the process
itself. Nor does it, as a general rule,
let in, in a supplementation
of an alleged compliance with s 15(1), the subjective knowledge of
either party not derived from the
process, such as, for example, the
content of a letter of demand received by the debtor shortly before
service of the process. Cf
Standard Bank of SA Ltd v Oneanate
Investments (Pty) Ltd
1995 (4) SA 510
(C) at 553E-G. The
question whether this general rule allows for an exception where both
parties have been
ad idem
at all times as to the true identity
of the plaintiff, does not arise on the facts of this case.
[14]
Applying
these considerations to the facts of the case, the question which
requires answering is ‘Was a summons served on the defendant
before
prescription in which the creditor who asked for judgment,
viz
Exports, claimed payment?’ That there was no exact compliance
is beyond dispute because the original plaintiff was not the creditor
and did not seek judgment. Of course the identity of a creditor does
not depend only on its name. Place of residence or business,
registered office, occupation or nature of business, details of some
or all of which one would expect to find in a process, may also
serve
to establish identity or clarify an ambiguous or incorrectly-stated
name. (There may be other indicators, such as a previous
name of a
company, company registration details or an identity number, which
are sometimes encountered.) In the present instance,
however, the
only possibly pertinent details in the summons are that UK was ‘a
company with limited liability registered in accordance
with the laws
of England with registered office at Arkwright Road, Highfield
Industrial Estate, Eastbourne, East Sussex, United Kingdom’.
When
Exports was later introduced into the summons exactly the same
description was applied to it. Of itself that is insufficient
to
assist Exports. The fact remains that the summons served on the
appellant failed entirely to communicate to it the intention
of
Exports to claim payment. The summons did not, therefore, achieve
the objects of s 15(1) and was not effective to interrupt
prescription.
[15]
From
what I have said it will be apparent that the importance attached to
a misnomer or misdescription by all three of the Courts
which
previously considered this matter, while appropriate in the context
of an amendment, was misplaced in relation to the interruption
of
prescription.
[16]
There
is no unfairness in this conclusion, as the Court
a quo
seemed
to think. Prescription penalizes negligence and inactivity. Judged
according to the legislative intention the respondent
remained absent
and inert for more than three years. Both shortcomings are
ascribable to the failure to take reasonable precautions
from the
time of preparing the summons to the belated awakening. The power of
correction always lay with the respondent.
[17]
There
are, no doubt, a great variety of factual possibilities which may
arise in the context of deciding whether s 15(1) has been
complied
with. It is, however, unnecessary to go beyond the facts of this
appeal in order to decide its fate.
[18]
It
is, nevertheless, desirable, because of the approach adopted by the
Court
a quo
, to allude to certain other considerations. The
first is that, in the context of s 15(1), though not necessarily in
relation to
the amendment of pleadings, the existence of another
entity which bears the same name as that wrongly attributed to a
creditor in
a process is irrelevant. That is not the creditor’s
concern or responsibility. Second, an incorrectly named debtor falls
to be
treated somewhat differently for the purposes of s 15(1). That
that should be so is not surprising: the precise citation of the
debtor is not, like the creditor’s own name, a matter always within
the knowledge of or available to the creditor. While the entitlement
of the debtor to know it is the object of the process is clear, in
its case the criterion fixed in s 15(1) is not the citation in
the
process but that there should be service on the true debtor (not
necessarily the named defendant) of process in which the creditor
claims payment of the debt. The section does not say ‘. . . claims
payment of the debt
from the debtor
’. Presumably this is so
because the true debtor will invariably recognize its own connection
with a claim if details of the creditor
and its claim are furnished
to it, notwithstanding any error in its own citation. Proof of
service on a person other than the one
named in the process may thus
be sufficient to interrupt prescription if it should afterwards
appear that that person was the true
debtor. This may explain the
decision in
Embling supra
where the defendant was cited in the
summons as the
Aquarium Trust CC
whereas the true debtors were
the trustees of the Aquarium Trust. Service was effected at the
place of business of the Trust and
came to the knowledge of the
trustees. In the light of what I have said such service was relevant
to proof that s 15(1) had been
satisfied and was found to be so by
Van Heerden J (at 700D, 701D).
[19]
The
third matter relates to the judgment of this Court in
Albestra
,
supra
. The Court
a quo
, in impliedly criticizing the
conclusion and the manner in which it was arrived at (of which more
below) overlooked the clear dichotomy
in the judgment between issues
of amendment and prescription. Discussion of the former concluded in
para [11] of the judgment.
The Court then proceeded to deal with the
question of interruption of prescription. The test which it applied
(at para [18]) was
a purely objective one consistent with what I have
set out in this judgment: it concluded that the claim made in the
summons was,
on a plain reading, not that of the true creditor, a
conclusion which was binding upon the Court
a quo
.
[20]
With
regard to the criticism of the conclusion arrived at in
Albestra
expressed by the Court
a quo
, this Court has only recently
had reason to administer a gentle rebuke to a Judge of the High Court
who to use the words of Schutz
JA ‘considered that this Court
should be given the opportunity of mending its earlier judgment’:
S v Kgafela
2003 (5) SA 339
(SCA) at 341A-D, and, with
reference to the judgment of the House of Lords in
Cassell and Co
Ltd v Broome and Another
[1972] AC 1027
at 1054E, to remind
courts on a lower tier of the necessity ‘to accept loyally the
decision of the higher tiers’. It is unfortunate
that the occasion
to repeat this admonition has occurred again. Also relevant to the
misplaced criticism by the Court below are
the remarks of Cloete J in
Dischem Pharmacies (Pty) Ltd v United Pharmaceutical Distributors
(Pty) Ltd v United Pharmaceutical Distributors (Pty) Ltd
2003 CLR
9
at para [13] concerning the very judgment now under appeal:
‘
In
the absence of a constitutional challenge, to which other
considerations would apply, perceived equities are not a legitimate
basis
to depart from a decision of a higher court or to avoid the
strictures of a statute’.
See
also
Ex parte Minister of Safety and Security and Others
:
In
re S v Walters and Another
[2002] ZACC 6
;
2002 (4) SA 613
(CC) at para
[61]
,
Afrox Healthcare Bpk v Strydom
2002 (6) SA 21
(SCA) at paras
[25]-[26] and
Credex Finance (Pty) Ltd v Kuhn
1977 (3) SA 482
(N) at 485F.
[21]
The
result is that:
(1) The
appeal succeeds with costs.
(2) The
order of the Court
a quo
is set aside with costs and
substituted with
an
order dismissing the appeal from the trial Court with costs.
____________________
J
A HEHER
JUDGE OF APPEAL
HARMS
JA )Concur
FARLAM
JA )
BRAND
JA )
MLAMBO AJA )