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[2013] ZASCA 94
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Peter Taylor & Associates v Bell Estates (Pty) Ltd and Another (558/12) [2013] ZASCA 94; 2014 (2) SA 312 (SCA) (4 July 2013)
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Case no
:
558/12
REPORTABLE
In the matter between:
PETER TAYLOR &
ASSOCIATES
.............................................................
APPELLANT
and
BELL ESTATES (PTY) LTD
.........................................................
FIRST
RESPONDENT
RENASA INSURANCE
COMPANY (PTY) LTD
......................
SECOND
RESPONDENT
Neutral citation:
Peter Taylor & Associates v Bell Estates & another
(558/12)
[2013]
ZASCA 94
(04
July 2013)
Coram:
Mpati P,
Tshiqi and Pillay JJA and Plasket and Saldulker AJJA
Heard: 6 May 2013
Delivered: 04 July
2013
Summary: Prescription
– whether service of a Rule 10(3) notice constitutes process as
envisaged by
s 15(1)
and (6) of the
Prescription Act 68 of 1969
.
_____________________________________________________________
ORDER
__________________________________________________________________
On appeal from:
KwaZulu-Natal High Court, Durban (Madondo J sitting as court of
first instance):
1 The appeal is upheld
with costs.
2 The order of the court
below is set aside and replaced with the following:
‘
The
application is dismissed with costs’.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
TSHIQI JA (MPATI P,
PILLAY JA AND PLASKET AND SALDULKER AJJA CONCURRING):
[1] The narrow issue in
this appeal is whether service of a notice of joinder, in terms of
rule 10(3)
of the uniform rules of court, on the appellant (Taylor)
interrupted prescription as envisaged by s 15(1) of the Prescription
Act
68 of 1969 (the Act).The court below (KwaZulu Natal
High Court, per Madondo J) found that it did and that the claim of
the first respondent (Bell Estates) against the appellant had not
prescribed. This appeal is with the leave of that court.
[2] Bell Estates, duly
represented by Taylor, an insurance broker, insured its motor vehicle
with the second respondent, Renasa
Insurance Company (Pty) Ltd
(Renasa), against, inter alia, theft, loss and damage for the amount
of R240 000. The vehicle was stolen
on 6 July 2006 and was never
recovered. Bell Estates lodged a claim but Renasa repudiated. On 8
May 2007 Bell Estates issued a
summons against Renasa as the insurers
of the vehicle, claiming compensation for the loss of its vehicle. In
its plea, dated 19
June 2007, Renasa disputed liability. It pleaded,
inter alia, that it was a term of the contract that, where the value
of the insured
vehicle exceeded R150 000, the vehicle must be
fitted with one of certain types of tracking devices specified in the
insurance
agreement. As the vehicle was not fitted with any of those
devices, Renasa averred that it was entitled to repudiate liability
and that Bell Estates could not recover the compensation claimed.
[3]
On 30 September 2009
1
Bell Estates served a
rule 10(3) joinder application on Taylor, seeking an order that:
‘
(a)
Peter
Taylor and Associates be joined as second defendant in the action;
(b)
Bell Estates serve the pleadings on Peter Taylor and Associates
within 10 days; and
(c)
Bell Estates be given leave to amend its particulars of claim to make
provision for the inclusion of Peter Taylor and Associates.’
It was alleged in the
founding affidavit, in support of the joinder application, that if
the vehicle had to be fitted with a tracking
device for it to be
covered, then Taylor, as the insurance broker who represented Bell
Estates, was privy to this requirement and
thus owed the latter a
duty to convey the information, but failed to do so.
[4]
On 5 October 2009 Taylor served, on Bell Estates’ attorneys, a
notice of intention to oppose the application. The answering
affidavit was deposed to on 31 May 2010. The point was raised
therein that the claim had prescribed as more than three years
had
elapsed since Bell Estates acquired knowledge of Renasa’s
repudiation of its claim (on 11 November 2006). Reference was
also
made to a letter from Bell Estates’ attorneys to Taylor, dated
24 January 2007, in which it was stated that the latter
had ‘failed
in its duty as our client’s broker’ and that it would
‘therefore be liable for damages which
our client has
suffered’. It was accordingly alleged, in the answering
affidavit, that prescription against Taylor had commenced
to run as
from 24 January 2007, (the date on which Bell Estates’
attorneys came to the conclusion that Taylor had failed
in its duty
as insurance broker and was thus liable for the damages suffered by
Bell Estates) and the action would thus be a fruitless
exercise as
the claim against him had prescribed.
2
[5] Section 15(1) and (6)
of the Act provide:
‘
Judicial
interruption of prescription
(1) The
running of prescription shall, subject to the provisions of
subsection
(2)
, be interrupted by the service on the debtor of any process
whereby the creditor claims payment of the debt.
…
(6) For
the purposes of this section, “process” includes a
petition, a notice of motion, a rule
nisi
, a pleading in
reconvention, a third party notice referred to in any rule of court,
and any document whereby legal proceedings
are commenced’.
Section 15(5) deals with the situation
where a person applies to be joined as a defendant in an action. It
says:
‘
If any
person is joined as a defendant on his own application, the process
whereby the creditor claims payment of the debt shall
be deemed to
have been served on such person on the date of such joinder’.
In its judgment the court
below defined the issue in the case to be whether a notice of joinder
in terms of rule 10(3) ‘constitutes
a process’ for
purposes of s15(1) of the Act and, consequently, whether the service
of the notice of joinder interrupted
the running of prescription.
[6] The contention on
behalf of Taylor was that the rule 10(3) notice was not a ‘process
whereby the creditor claims payment
of the debt’ and that
therefore its service did not interrupt prescription. Bell Estates
contended, on the other hand, that
the notice was such a process and
that its service had the effect of interrupting prescription. Rule
10(3) provides:
‘
Several
defendants may be sued in one action either jointly, jointly and
severally, separately or in the alternative, whenever the
question
arising between them or any of them and the plaintiffs depends upon
the determination of substantially the same question
of law or fact,
which, if such defendants were sued separately, would arise in each
separate action’.
As has been mentioned
above, the notice of joinder served on Taylor sought an order (a)
joining Taylor as a defendant; (b) allowing
service of the pleadings
on it within 10 days; and (c) granting Bell Estates leave to amend
its particulars of claim.
[7]
In the court below Madondo J correctly stated that s 15(1) of the Act
entails three requirements for prescription to be interrupted.
They
are: (a) a process; (b) served on the debtor; and (c) by means
of which the creditor claims payment of the debt. In considering
whether these requirements have been met in the present matter, the
learned judge was faced with two high court decisions in which
conflicting views are expressed on whether prescription had been
interrupted by service of a rule 10(3) notice on the party sought
to
be joined. In
Naidoo
& another v Lane & anothe
r
1997 (2) SA 913
(D) the court (Meskin J) held that a joinder
application was not a process by which a creditor claims payment of a
debt as contemplated
by s 15(1) of the Act and that its service had
therefore not interrupted the running of prescription. In
Waverley
Blankets Ltd v Shoprite Checkers (Pty) Ltd & another
2002
(4) SA 166
(C) the court (Comrie J) rejected that view and held that
the joinder application was a process whereby a creditor claimed
payment
of a debt and that its service had interrupted prescription.
Both courts sought to place reliance on
Cape
Town Municipality & another v Allianz Insurance Co Ltd
1990
(1) SA 311 (C)
.
3
The
court
a
quo dealt with both decisions and preferred the view expressed in
Waverly
Blankets.
[8]
It would be helpful to deal with the facts and the nature of the
issue raised in
Allianz
in
order to understand the dichotomy. That case concerned two
consolidated actions, the essential relief claimed by each plaintiff
being an order declaring that
Allianz
was
liable to indemnify the plaintiffs in terms of an insurance policy in
respect of all loss or damage suffered as a result of
two storms. The
issue for determination was whether service of a process whereby the
creditor claimed a declaratory order that
the debtor was liable to
indemnify it, rather than a claim for payment of a debt, interrupted
the running of prescription. Howie
J stated (at 334H-I):
‘
1
It is sufficient for 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
a debt.
2
A creditor prosecutes his claim under that process to final,
executable judgment, not only when the process and the judgment
constitute the beginning and end of the same action, but also where
the process initiates an action, judgment in which finally disposes
of some elements of the claim, and where the remaining elements are
disposed of in a supplementary action instituted pursuant to
and
dependent upon that judgment’.
[9] It appears that the
plaintiffs in that case intended, should it be necessary, to
institute further action for payment of sums
of money. In this regard
Howie J said:
‘
If
further proceedings are instituted by plaintiffs in due course to
exact payment from defendant pursuant to judgement in the present
case, such further action will be necessary by reason of the fact
that the present action is only concerned with the issue of
liability, and the further action will cover elements of plaintiffs’
claim not canvassed in the current action. Conversely,
those elements
of the claim covered in the present matter will be
res
judicata
hereafter.
But the two actions together will still deal only with one cause
of action….
Therefore
the cause of action on which the present action is based is the same
cause of action as that on which the supposed further
litigation will
be founded’.
4
(My
emphasis)
The
learned judge held further that the connection between the action in
which the declarators were sought and a second claim for
payment of
the debt was sufficiently close to interrupt prescription. He
reasoned, citing
Murray & Roberts
Construction (Cape) (Pty) Ltd v Upington Municipality
1984
(1) SA 571
(A) at 578H, that the issue of summons for the declarators
amounted to taking judicial steps to recover the debt, thereby
removing
all uncertainty as to its existence.
[10]
In
Waverly Blankets
Comrie
J recognised that the joinder order in that case did not resolve any
issue of liability, but stated (at 175C-E):
‘
It
appears to me, however, that there is still a sufficiently close link
between the joinder application and a final judgment sounding
in
money in the plaintiff’s favour, if such should be granted on
the merits. Thus the joinder application led to the joinder
order,
which in turn led to further pleadings and eventually to trial. But
for prescription, it is open to the plaintiff to prove
its case on
the merits and to secure a final judgment’.
In that case the second
defendant had been joined in the action between the plaintiff and the
first defendant by consent. The second
defendant thereafter raised
prescription as a defence. Comrie J’s reasoning seems to be
that the joinder application was
sufficiently closely related to the
claim for damages against the defendant to be joined (who was there
joined) and that it therefore
qualified as a process whereby the
creditor claimed payment of the debt.
[11]
It seems to me that Comrie J’s approach may have been
influenced by a misreading of Howie J’s judgment in
Allianz
.
The basis for the finding in
Allianz,
that the connection between the action in which the
declarators were sought and the second claim for payment of the debt
was sufficiently
close to interrupt prescription, was that the
judgment in the action for the declarators would finally dispose of
some elements
of the claim, the remaining elements to be disposed of
in a supplementary action. That was not the case in
Waverly
Blankets
. The joinder order did not dispose
of any element of the claim to which the second defendant was joined.
[12] The crux of Howie
J’s reasoning appears in the following passage in his judgment
in
Allianz
(at 333I-334B):
‘
What,
then, would the situation be if plaintiffs succeeded “under the
process” served in the present action and then
had to initiate
further proceedings in order to secure an order for payment? Could it
then be said that the order for payment had
been obtained “under”
the process in question, i.e under the present summons? As a matter
of direct cause and effect
the answer must be in the negative. On the
other hand, the finding establishing liability would undoubtedly have
been obtained
under the present process, i.e “under the process
in question”, and it would unquestionably be an essential link
between
that process and the final executable judgment,
notwithstanding that some further process will be required to
initiate the supplementary
proceedings. Not only that, but it would
not defeat any objective which the present prescriptive Act sought to
attain if one were
to construe the contemplated final executable
judgment as obtained by prosecuting the claim “under the
present process”’.
[13]
Howie J gave three further reasons why his view was consistent with
the purpose underpinning the
Prescription Act. The
first was that
there was no basis for an inference that the plaintiffs’
actions for the declarators were intended to be no
more than a means
of obtaining an ‘advisory opinion’. Rather, he said, the
actions were ‘instituted as steps
in the enforcement of [the
plaintiffs’] rights to an indemnity, that is to say, with the
eventual object to get defendant
to implement the indemnity’,
and not ‘as “foot in the door” manoeuvres to keep
prescription at bay’.
Secondly, the plaintiffs’ cause of
action ‘is the self-same cause of action as that which would
found any subsequent
related litigation aimed specifically at
obtaining an order for payment of money’. Thirdly, the steps
taken by the plaintiffs
in respect of the indemnity were taken
expeditiously - within 18 months of the storm damage.
5
[14]
In
Naidoo,
Meskin
J accepted Howie J’s conclusion in
Allianz
that
for the purposes of interrupting prescription it is sufficient ‘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’.
6
The two plaintiffs in
Naidoo
had
sought to join the Minister of Safety and Security as second
defendant in an action they had instituted against the first
defendant.
Having accepted Howie J’s conclusion, Meskin J
stated that neither plaintiff (in
Naidoo
)
purported to enforce, by means of the joinder application
per
se,
‘
the
right co-relative to the obligation to pay damages allegedly owed to
such plaintiff by the proposed second defendant’.
7
He said further:
‘
No
judgment directing the second defendant to pay the damages
claimed by each plaintiff could be obtained “under”
the
application. Such a judgment could be obtained only “under”
the amended summons and the amended particulars of
claim as amplified
by any further pleadings, the delivery of which the exigencies of the
litigation might entail. If such a judgment
were to be obtained, the
application itself in no way would have grounded such judgment:
it would exist simply as a preliminary
process by means of which the
plaintiffs had placed themselves in a position by means of the
subsequent service of the process
constituted by the amended summons
and the amended particulars of claim to claim payment of the damages
suffered by them’.
8
[15]
I agree with the sentiments expressed by Meskin J. And when the
joinder application in the present matter is analysed in the
context
of the
Allianz
case, it appears to me
that it would be stretching the interpretation of the Act a little
too far to say that the application constitutes
a ‘process
whereby the creditor claims payment of the debt’ and that its
service therefore interrupted prescription.
First, it cannot be said
that judgment in the joinder application (assuming it to be in favour
of the applicant) ‘finally
disposes of some elements of the
claim’. Indeed, it would finally dispose of no elements of the
claim, but would merely make
it possible, from a procedural
perspective, for the plaintiff to institute a claim against the
defendant who had been joined. Second,
the causes of action in the
joinder application and the claim for damages have nothing in common.
It certainly cannot be said that
the two processes involve the
self-same, or substantially the same,
9
cause of action.
[16]
It is true that there is reference to the cause of action in the
founding affidavit in support of the joinder application,
but in
terms of the order sought, Bell Estates would be able to claim
payment of a debt from Taylor only once the court had granted
the
application in its favour. In the event of the court refusing the
application, it would not be possible for Bell Estates to
proceed
against Taylor for payment of a debt on the basis of that notice. It
follows from what has been said above that
Waverly
Blankets
was,
with respect, wrongly decided.
[17] In the result, I
make the following order:
1. The appeal is upheld
with costs.
2. The order of the court
below is set aside and replaced with the following:
‘
The
application is dismissed with costs’.
__________________
Z L L TSHIQI
JUDGE OF APPEAL
APPEARANCES:
For Appellant: A.J Boulle
Instructed by
Norton Rose South Africa,
Durban
Webbers, Bloemfontein
For Respondent: A.C Camp
Instructed by
Truter, James, De
RidderInc, Empangeni
Naudés,
Bloemfontein
1
At
that stage it was already two years and four months after the
summons was served on Renasa.
2
It
is not in dispute that when the rule 10(3) notice was served, the
three-year prescription period had not yet expired. However,
on 31
May 2010, when Taylor raised the plea of prescription in his
affidavit three years had already expired.
3
Counsel
for the respondent also referred to the recent decision of
Wessels
v Coetzee
[2013]
ZAGPPH 82, where Victor J aligned herself with the reasoning in
Waverley
Blankets
.
4
Cape
Town Municipality v Allianz a
t
332B-333.
5
Cape
Town Municipality v Allianz a
t 334C-F.
6
Naidoo
& another v Lane & another
1997 (2) SA 913
(D) at
919G-H.
7
At
919G-H.
8
At
921B-D.
9
See
Neon and Cold Cathode Illuminations (Pty) Ltd v Ephron
1978
(1) SA 463
(A) at 470H-471D.