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[2021] ZASCA 80
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Van Heerden & Brummer Inc v Bath (356/2020) [2021] ZASCA 80 (11 June 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
no: 356/2020
In
the matter between:
VAN
HEERDEN & BRUMMER INC
APPELLANT
and
HARRY
MARK DEON BATH
RESPONDENT
Neutral
citation:
Van
Heerden & Brummer Inc v Bath
(356/2020)
[2021] ZASCA 80
(11 June 2021)
Coram:
PETSE DP and MBHA
and ZONDI JJA and KGOELE and PHATSHOANE AJJA
Heard:
3 May 2021
Delivered:
This judgment was
handed down electronically by circulation to the parties’ legal
representatives by email, publication on
the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is
deemed to be 09h30 on 11 June 2021.
Corrected:
17 June 2021
Summary:
Prescription Act 68
of 1969
– firm of attorneys sued for damages arising out of
drafting of an ante-nuptial contract subsequently found to be invalid
– date of commencement of the running of prescription –
meaning of the expression ‘debt is due’ –
s 12(3)
requires knowledge of the identity of the debtor and facts necessary
to institute action – knowledge of legal conclusion
not
required by
s 12(3).
ORDER
On
appeal from:
In
the Gauteng Division of the High Court, Pretoria (Van der Schyff J
sitting as court of first instance):
1
The appeal is upheld with costs.
2
The order of the high court is set aside and replaced with the
following:
‘
2.1
The first defendant’s special plea is upheld with costs.
2.2
The plaintiff’s claim against the defendant is dismissed with
costs.’
JUDGMENT
Kgoele
AJA (Petse DP and Mbha and Zondi JJA and Phatshoane AJA concurring)
:
[1]
This appeal originates from an action instituted by the respondent,
Mr Harry Bath, against the appellant,
Van Heerden and Brummer
Incorporated, a firm of attorneys, in the Gauteng Division of the
High Court: Pretoria (the high court),
for damages in respect of a
breach of mandate and professional negligence arising out of drafting
an antenuptial contract subsequently
found to be invalid by the
court. In the proceeding before the high court, the appellant, who
was the first defendant, raised a
special plea of prescription. The
high court (Van der Schyff J) made an order in terms of rule 33(4) of
the Uniform Rules of Court,
in terms of which the special plea of
prescription was decided separately from the other issues raised by
the parties. After hearing
evidence, the high court dismissed the
special plea. This appeal is against that order, with leave having
been granted by the high
court.
[2]
The appeal turns primarily on the interpretation of s 12(1) of the
Prescription Act 68 of 1969 (the
Act) and in particular, the phrase
‘debt is due’. The question to be determined is
therefore, whether the high court
correctly found that the
respondent’s claim had not become prescribed at the time the
summons was served on 2 February 2017.
[3]
What follows are the material facts which are necessary for the
determination of the sole issue before
us which are largely common
cause, or not seriously disputed. On 21 October 2005, the respondent
gave the appellant a mandate to
draft an antenuptial contract in
contemplation of his marriage to his now ex-wife, Mrs Juanita Bath.
Ms Nunes, the Notary Public
employed by the appellant at that time,
and who does not feature in this appeal, drafted the antenuptial
contract which was subsequently
registered in the Deeds Office on 9
November 2005.
[4]
During February 2010, the respondent instituted divorce proceedings
against his ex-wife. Mr Brummer,
an attorney and a director of the
appellant and Ms Hartman, who served as counsel, represented the
respondent in the divorce action.
Mrs Bath defended the divorce
action. In her amended plea and counterclaim, she alleged that the
antenuptial contract was void
for vagueness. The divorce action came
before Louw J in the Gauteng Division of the High Court, Pretoria.
Pursuant to the agreement
between the parties, the validity of the
antenuptial contract was determined first as a separate issue. In a
judgment delivered
on 3 September 2012, Louw J held that the
antenuptial contract was
void ab initio
due to vagueness, and
that the marriage between the parties was in community of property.
[5]
Dissatisfied with the outcome, the respondent was, on 22 November
2012, granted leave to appeal to this
Court. The appeal was heard on
24 February 2014, and subsequently dismissed on 24 March 2014.
[1]
Thereafter, a decree of divorce was granted on 13 October 2015
incorporating a deed of settlement in terms of which, the respondent
and his ex-wife agreed,
inter
alia
,
to appoint a liquidator to distribute their joint estate, arising
from the erstwhile marriage in community.
[6]
On 24 January 2017 the respondent instituted the current action for
damages against the appellant and
Ms Nunes and, on 2 February 2017,
the summons was served on them. No relief was sought against Ms Nunes
who was cited purely out
of caution as the second defendant. Thus,
the second defendant took no part in this litigation both in the high
court and this
Court. In this action, the respondent asserted that
the appellant had negligently breached its mandate because the Notary
Public
employed by it failed to draft a valid antenuptial contract.
According to the respondent, the net result of this was that he
became
liable to pay his ex-wife substantially more money than would
have been payable had the antenuptial contract been valid.
[7]
The appellant defended the action essentially on the basis that the
claim had become prescribed on 25
September 2015. As already
indicated, this special plea was heard separately from the merits of
the action. In support of this
defence, the appellant led the
evidence of Mr Brummer and Ms Hartman. Their evidence mainly
comprised an exposition of an uncontested
factual account of their
interaction with the respondent with specific reference to a series
of dates in order to demonstrate that
the respondent had knowledge of
all the facts necessary to institute his claim, at the latest, on 26
September 2012.
[8]
The summary of their evidence which forms the factual matrix for this
appeal is that subsequent to the
filing of the amended plea and
before the commencement of the divorce trial, they held a
consultation with the respondent on 6
August 2012 where the
implications of the amended plea and the counterclaim were
extensively discussed and explained. Provisional
financial values
were drawn up to illustrate the likely consequences of a marriage in
community of property. This discussion continued
during the period 13
to 17 August 2012, when the evidence regarding the validity of the
antenuptial contract was heard in court.
After the judgment was
delivered on 3 September 2012, Mr Brummer informed the respondent
telephonically that the trial court had
declared the antenuptial
contract void. He further explained to him that as a result, the
parties’ marriage was regarded
as one in community of property
and arranged a consultation with the respondent.
[9]
The consultation took place on 21 September 2012 during which the
judgment, its consequences, who was
liable to be sued, the conflict
likely to arise if the appellant were sued, including prescription of
the respondent’s claim,
were thoroughly discussed with the
respondent. The respondent, despite being disappointed and upset by
the result, persisted with
his desire to appeal against the judgment
which declared the antenuptial contract void, whilst retaining the
same legal team. This
prompted a further consultation on 25 September
2012, to which Mr Brummer invited Ms Hartman. At this consultation,
the respondent’s
intention to sue crystallised and the possible
withdrawal of Mr Brummer was further discussed with the respondent.
The time lapse
pending the appeal which might affect prescription of
his claim was reiterated, including the advice to the respondent to
seek
an independent legal practitioner to represent him for this
claim. It was ultimately agreed that the appellant’s firm would
remain the attorneys of record for the purposes of appealing the
decision of Louw J. On 26 September 2012 an email confirming the
discussion of 25 September 2012 was sent to the respondent.
[10]
The respondent elected not to testify at the trial. Thus, there was
no countervailing evidence to controvert the
version of the
appellant. The upshot of the appellant’s evidence was
succinctly set out in the judgment of the high court.
For present
purposes a chronological exposition of the crucial dates and facts
will suffice. More pertinently, the respondent,
in his heads of
argument, acknowledged that it cannot be disputed that he was advised
by both Mr Brummer and Ms Hartman about the
consequences of the
finding made by Louw J that the antenuptial contract was void. The
respondent also did not dispute, as rightly
noted in paragraph 9 of
the judgment of the high court, that Ms Hartman explained to him that
he had a claim against the appellant
and the impact that the running
of prescription might have on the claim.
[11]
The submission of the appellant before the high court, which was
persisted with before us, is that on one of these
dates, prescription
began to run. They are: (a) 6 August 2012 – a consultation
where the consequences of the amended plea
raised in the divorce
action was explained to the respondent in detail using provisional
financial values; (b) 13 to 17 August
2012 – the period during
which the validity of the antenuptial contract was heard and evidence
thereof continuously raised
with respondent; (c) 3 September 2012 –
when Mr Brummer informed the respondent telephonically that the high
court declared
the antenuptial contract void and that their marriage
was regarded as one in community of property including the fact that
the
Notary Public was to be blamed for the finding; (d) 21 September
2012 – a consultation with Mr Brummer wherein the judgment,
its
consequences, who to sue, the apparent conflict, including
prescription of his claim, were thoroughly discussed with the
respondent;
(e) 25 September 2012 – a consultation with Mr
Brummer and Ms Hartman wherein the intention to sue, the onset of
prescription
and possible withdrawal of Mr Brummer were explained to
the respondent; or (f) 26 September 2012 – when an email
confirming
the discussion of 25 September was sent to the respondent.
[12]
As already indicated, before the high court the appellant, relying on
these dates, argued that the respondent’s
claim arose and
became due on any one of the dates mentioned in the preceding
paragraph but not later than 26 September 2012, when
the appellant
addressed an email to the respondent in which it recorded the issues
dealt with during the consultation on the previous
day, 25 September
2012. The respondent, in his defence, contended that the prescription
commenced to run from the date on which
judgment in his appeal was
handed down by this Court on 24 March 2014. In elaboration, the
respondent’s counsel placed much
emphasis on what he perceived
as the need to distinguish between the ‘coming into existence’
of a debt and ‘the
recoverability’ thereof, to bolster
the argument that the judgment of the SCA constituted an essential
fact in support of
the respondent’s cause of action (ie the
so-called last fact) as opposed to ‘obtaining legal certainty’
as argued
by the appellant. According to him, the respondent’s
damages manifested or materialised on 24 March 2014, because his
patrimonial
loss would not have eventuated had his appeal been
upheld. Thus, so the argument continued, instituting his damages
claim against
the appellant before the final determination of his
appeal to this Court would have been premature.
[13]
The high court was somewhat persuaded by these contentions and, as a
result, it found in favour of the respondent
and concluded that the
respondent’s claim had not prescribed. This, despite the fact
that it made the following remarks in
its judgment:
‘
The
plaintiff’s damages consist of the
diminution
of his estate
caused by the breach and
this
constituted a debt that was immediately payable when the antenuptial
contract was declared void, irrespective of whether the
damages were
already quantified
.’
(My emphasis.)
In
coming to this conclusion, it reasoned that the respondent’s
damages manifested or materialised only on 24 March 2014,
when the
appeal was dismissed by this Court, although the full extent thereof
was not determinable at that stage. Furthermore,
the high court held
that ‘[b]efore 24 March 2014 there was no basis for any claim
based on the invalidity of the antenuptial
contract that was either
claimable by the [respondent] or payable by the [appellant]’.
[14]
Accordingly, the issue in this appeal is crisp and in essence,
relates to a question of law. It pertinently concerns
the
determination of the date on which the three-year period of
prescription commenced to run in respect of the respondent’s
claim, which is the fundamental point of difference between the
parties.
[15]
Directly relevant to this enquiry is s 12 of the Act which provides
that:
‘
(1)
Subject to the provisions of subsections (2) and (3), prescription
shall commence to run as soon
as the debt is due.
(2)
If the debtor wilfully prevents the creditor from coming to know of
the existence
of the debt, prescription shall not commence to run
until the creditor becomes aware of the existence of the debt.
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity
of the debtor and of the facts from which the debt
arises: provided that a creditor shall be deemed to have such
knowledge if he
could have acquired it by exercising reasonable
care.’
[16]
The words ‘debt’ including ‘debt is due’ are
not defined in the Act. There are numerous
judgments which have dealt
with the meaning of these words and the law is settled in this
regard. One such seminal judgment which
is relevant on the facts of
this matter is
Mtokonya
v Minister of Police.
[2]
[17]
To my mind, the following remarks by Moseneke J in
Eskom
,
[3]
which were quoted
with approval in
Mtokonya
bear
emphasis as they neatly set out a sound foundation for several
decisions that followed thereafter. There, the court said the
following:
“
In
my view, there is no merit in the contention advanced on behalf of
the plaintiff that prescription began to run only on the date
the
judgment of the SCA was delivered. The essence of this submission is
that a claim or debt does not become due when the facts
from which it
arose are known to the claimant, but only when such claimant has
acquired certainty in regard to the law and attendant
rights and
obligations that might be applicable to such a debt. If such a
construction were to be placed on the provisions of section
12(3)
grave absurdity would arise. These provisions regulating prescription
of claims would be rendered nugatory and ineffectual.
Prescription
periods would be rendered elastic, open ended and contingent upon the
claimant’s subjective sense of legal certainty.
On this
contention, every claimant would be entitled to have legal certainty
before the debt it seeks to enforce becomes or is
deemed to be due.
In my view, legal certainty does not constitute a fact from which a
debt arises under s 12(3). A claimant cannot
blissfully await
authoritative, final and binding judicial pronouncements before its
debt becomes due, or before it is deemed to
have knowledge of the
facts from which the debt arises.”’
[18]
Consistent with the principles propounded in the various judgments,
most recently this Court rejected similar arguments
as raised by the
respondent in this matter in
McMillan
v Bate Chubb
[4]
and held:
‘
The
period of prescription begins to run against a creditor when the
creditor has the minimum facts which are necessary to institute
action. As this Court recently held in
Fluxmans
Incorporated v Levenson
:
“
Knowledge
that the relevant agreement did not comply with the provisions of the
Act is not a fact which the respondent needed to
acquire to complete
a cause of action and was therefore not relevant to the running of
prescription. This Court stated in
Gore
NO
para 17 that the period of prescription begins to run against the
creditor when it has minimum facts that are necessary to institute
action. The running of prescription is not postponed until it becomes
aware of the full extent of its rights nor until it has evidence
that
would prove a case “comfortably”. The “fact”
on which the respondent relies for the contention that
the period of
prescription began to run in February 2014, is knowledge about the
legal status of the agreement, which is irrelevant
to the
commencement of prescription. It may be that before February 2014 the
respondent did not appreciate the legal consequences
which flowed
from the facts, but his failure to do so did not delay the date on
which the prescription began to run. Knowledge
of invalidity of the
contingency fee agreement or knowledge of its non-compliance with the
provision of the Act is one and the
same thing otherwise stated or
expressed differently. That the contingency fees agreements such as
the present one, which do not
comply with the Act, are invalid is a
legal position that obtained since the decision of this court in
Price
Waterhouse Coopers Inc
and is therefore not a fact which the respondent had to establish in
order to complete his cause of action.
Section
12(3)
of the
Prescription Act requires
knowledge only of the material
facts from which the prescriptive period begins to run – it
does not require knowledge of
the legal conclusion (that the known
facts constitute invalidity).
(
Claasen
v Bester
[2011] ZASCA 197; 2012 (2) SA 404 (SCA).”
Section 12
requires
knowledge only of the material facts from which the prescriptive
period begins to run – it does not require knowledge
of the
legal consequences. Accordingly, the appellant’s cause of
action was complete as soon as he was informed on 9 May
2014 of the
potential conflict of interest arising from the fact the respondent’s
directors may have drafted the antenuptial
contract incorrectly.
There is no reason in logic or in law, why he could not successfully
have joined the respondent as a third
party in the divorce
proceedings at that stage, claiming payment from it of any sum which
he may be ordered to pay to his former
wife as a result of the
respondent’s negligence.’ (Emphasis added.)
[19]
It is important to highlight at the onset that
McMillan
[5]
is on all fours with the present appeal as it dealt with almost
similar facts and exactly the same legal point raised in this matter.
Despite the fact that both counsel were aware of this decision, the
submissions of the parties remained diametrically opposed.
Counsel
representing the appellant, relying on
McMillan
,
argued that the respondent’s claim became prescribed, at the
very latest on 26 September 2012. The respondent’s counsel
on
the other hand, relying on
Trinity
v Grindstone,
[6]
submitted that the
McMillan
decision did not affect the soundness of his contention because
McMillan
is clearly wrong.
[20]
In elaboration, counsel argued that in
McMillan
this Court failed to appreciate that although the date on which a
debt arises usually coincides with the date on which it becomes
due,
this is not always the case. The difference, argued counsel, relates
to the coming into existence of the debt on the one hand
and its
recoverability on the other.
[7]
Therefore, whilst the legal principles dealt with by the court in
McMillan
are correct, it erred in its application of these legal principles to
the facts, as the dates on which the debt arose and when
it became
due did not coincide both in
McMillan
and in this matter.
[21]
Furthermore, respondent’s counsel relied on
Umgeni
Water v Mshengu
[8]
wherein it was said:
‘
[5]
. . . Stated another way, the debt must be one in respect of which
the debtor is under an obligation
to pay immediately.
[6]
. . . In order to be able to institute an action for the recovery of
a debt a creditor
must have a complete cause of action in respect of
it. The expression “cause of action” has been held to
mean:
“
[E]very
fact which it would be necessary for the plaintiff to prove . . . in
order to support his right to judgment of the Court.
It does not
comprise every piece of evidence which is necessary to prove each
fact, but every fact which is necessary to be proved.”
Or
slightly differently stated:
“
.
. . [T]he entire set of facts which give rise to an enforceable claim
and includes every fact which is material to be proved to
entitle a
plaintiff to succeed in his claim. It includes all that a plaintiff
must set out in his declaration in order to disclose
a cause of
action. Such cause of action does not ‘arise’ or ‘accrue’
until the occurrence of the last of
such facts and consequently the
last of such facts is sometimes loosely spoken of as the cause of
action.”’
[22]
Counsel for the respondent also submitted that the ‘last set of
facts’ necessary to complete the respondent’s
cause of
action was the appeal judgment of this Court delivered on 24 March
2014. Therefore, if the judgment of Louw J was overturned
on appeal,
any action instituted before the appeal judgment, would have been
premature. In relation to the second leg of his argument,
counsel
relied on
African
Products v Venter
,
[9]
in which it was held that not only must there be an obligation to pay
immediately, but there must also be no valid or bona fide
defence
open to the debtor.
[23]
Counsel’s contentions are without merit for at least two
reasons. First, it is not correct that in
McMillan
this Court was not alive to the distinction as espoused by the
respondent’s counsel. The fact that the distinction was not
mentioned does not necessarily mean that the Court was oblivious to
it. It is trite that no judgment can ever be perfect and
all-embracing,
and it does not necessarily follow that, because
something has not been mentioned, therefore it has not been
considered.
[10]
But to lay
this matter to rest, I can do no better than quote the following
paragraph in
McMillan,
which in my view is more telling:
‘
[34]
The appellant challenged the findings of the court a quo on two main
grounds. It was submitted by the appellant
firstly, that the court a
quo erred in holding that the appellant had a complete cause of
action for professional negligence against
the respondent on 12 May
2014 in circumstances where the antenuptial contract was only
declared invalid by Plasket J in the divorce
proceedings in October
2016. Before then, so ran the argument, nobody could have anticipated
a problem. Both the appellant and
his former wife had considered the
antenuptial contract to be valid. It was accordingly submitted by the
appellant that prescription
could not have commenced running before
the judgment of Plasket J in October 2016. The appellant, it was
argued, could not have
sued the respondent. Secondly, it was
submitted by the appellant that, as the respondent’s directors
disputed that there
was a claim against the respondent for
professional negligence, he could not have known that the antenuptial
contract was invalid.
Thus, prescription only began to run once
Plasket J delivered his judgment on 18 October 2016 regarding the
validity of the antenuptial
contract. Before then, he did not have
the necessary facts upon which to formulate a claim against the
respondent.
[35]
I reject the appellant’s contention that, prior to the
declaration of invalidity of the
antenuptial contract by Plasket J in
October 2016, he could not have had
knowledge of all the material
facts
he needed before he could institute legal proceedings
against the respondent. In order to succeed in
an action for
damages against an attorney for professional negligence,
a
plaintiff is required to allege and prove: (a)
a mandate given to
and accepted by the attorney; (b) a breach of the mandate; (c)
negligence in the sense that the attorney did
not exercise the degree
of skill, knowledge and diligence expected of an average practising
attorney; (d) that he had suffered
damages; and (e) that damages were
within the contemplation of the parties when the mandate was
extended.
In this case there can be little dispute about (a),
(b), (c) and (e).
As to (d), the appellant had been sued by his
wife for half of his estate. He had approached the respondent to
defend the claim
when they advised him that there was a problem with
the drafting of the antenuptial contract. It was manifest at that
stage that
he had suffered damages as a result of the error.
[36]
. . .
[37]
As I have said, the appellant had acquired knowledge
of
all necessary facts on which to sue
the respondent on 9 May 2014, when he attended a consultation at the
respondent’s offices.’
(
Emphasis
added
.)
[24]
Second, the facts of this case go far beyond what happened in
McMillan.
The appellant was and is, in my view, too generous
in its contention that 26 September 2012 is the date, at the very
latest, when
the claim prescribed. In my view, each one of the
respective dates relied upon by the appellant which predates 26
September 2012,
enumerated in paragraphs 8, 9 and 11 of this
judgment, is in fact dispositive of this appeal. The undisputed facts
reveal that
by 6 August 2012 (when a discussion about the amended
plea took place), the respondent fully understood from tentative
calculations
provided that he would be worse off financially if the
antenuptial contract turned out to be invalid. It is therefore clear
that
the appellant had knowledge of the fact that there was a problem
with the validity of the antenuptial contract (and at all material
times thereafter), and that patrimonial loss would result from a
finding that the antenuptial contract is void. The effect of this
is
that the date on which the debt arose, namely 3 September 2012 when
Louw J declared the antenuptial contract void, coincided
with the
date when it became due.
[25]
It is manifest from the uncontested evidence before the high that the
respondent already had knowledge of all the
facts from which the debt
arose on 6 August 2012 and at all relevant times thereafter but, in
adopting a conservative approach,
at the latest, on 26 September
2012. Accordingly, it goes without saying that on 26 September 2012,
the respondent already possessed
adequate facts as required by the
Act. This conclusion therefore means that when summons was served on
the appellant on 2 February
2017 a period of over three years had
elapsed since the debt became due.
[26]
In the result, the following order is made:
1
The appeal is upheld with costs.
2
The order of the high court is set aside and replaced with the
following:
‘
2.1
The first defendant’s special plea is upheld with costs.
2.2
The plaintiff’s claim against the defendant is dismissed with
costs.’
A M KGOELE
ACTING
JUDGE OF APPEAL
APPEARANCES:
For
the appellant:
G F Heyns SC
Instructed by:
Ditsela
Incorporated, Pretoria
Honey
Attorneys, Bloemfontein
For
the respondent:
A M Heystek SC
Instructed
by:
Kraljevich
& Janse van Vuuren Inc, Centurion
Phatshoane
Henney Attorneys, Bloemfontein.
[1]
Bath v Bath
[2014]
ZASCA 14.
[2]
Mtokonya v Minister of Police
2018 (5) SA 22
(CC);
[2017] ZACC 33
;
2017 (11) BCLR 1443
(CC);
2018
(5) SA 22
(CC) (
Mtokonya
).
See also:
Truter and
Another v Deysel
[2006] ZASCA 16
;
2006
(4) SA 168
(SCA);
Minister
of Finance and Others v Gore
N O
2007 (1) SA 111
(SCA) para 17;
Yellow
Star Properties 1020 (Pty) Ltd v MEC, Department of Development
Planning and Local Government, Gauteng
2009 (3) SA 577
(SCA);
Claasen
v Bester
2012 (2) SA
404
(SCA);
Fluxmans
Incorporated v Levenson
2017 (2) SA 520 (SCA).
[3]
Eskom v Bojanala Platinum
District Municipality and Another
2003 JDR 0498 para 16.
[4]
McMillan v Bate Chubb and
Dickson Incorporated
[2021] ZASCA 45
para 38.
[5]
Ibid.
[6]
Trinity Asset Management
(Pty) Ltd v Grindstone Inv 132 (Pty) Ltd
[2017] ZACC 32
;
2018 (1) SA 94
(CC);
2017 (12) BCLR 1562
(CC) para
38.
[7]
List v Jurgens
1979 (3) SA 106
(A) at 121C-D.
[8]
Umgeni Water
v Mshengu
[2009] ZASCA 148
;
[2010] 2 All SA 505
(SCA) para 5-6.
[9]
African Products (Pty) Ltd v
Venter NO and Others
[2007] 3 All SA 605
(C);
[2006] ZAWCHC 32
para 24.
[10]
R v Dhlumayo
and Another
1948 (2) SA 677
(A).