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[2018] ZASCA 55
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Kelbrick and Others v Nelson Attorneys and Another (307/2017) [2018] ZASCA 55 (16 April 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 307/2017
LEONIE
LOGIE
KELBRICK
FIRST
APPELLANT
ANTONIUS
GERHARDUS VAN DEN BERG
SECOND
APPELLANT
MARGIE
VAN DEN
BERG
THIRD
APPELLANT
and
NELSON
ATTORNEYS
FIRST
RESPONDENT
PIERRE
KITCHING
ATTORNEYS
SECOND
RESPONDENT
Neutral
citation:
Kelbrick
& others
v
Nelson Attorneys & another
(307/2017)
[2018]
ZASCA
55 (16 April 2018)
Coram:
Shongwe
ADP, Wallis, Dambuza and Van der Merwe JJA and Makgoka AJA
Heard:
12
March 2018
Delivered:
16
April 2018
Summary:
Prescription
: attorney sued for negligence : Prescription begins to run as soon
as the creditor acquires knowledge of the facts
necessary to
institute action: whether knowledge of delay in constructing a
sectional title scheme constituted knowledge of facts
constituting
a complete cause of action.
ORDER
On
appeal from:
Eastern
Cape Local Division, Port Elizabeth (Tshiki J sitting as court of
first instance).
1.
The
appeal is upheld with costs, including costs attendant upon the
employment of two counsel.
2.
The
order of the court a quo is set aside and replaced with the
following:
‘
The first
defendant’s special plea of prescription is dismissed with
costs’.
JUDGMENT
Makgoka
AJA (Shongwe ADP, Wallis, Dambuza and Van der Merwe JJA concurring)
[1]
The
appellants sold their immovable properties to a property developer,
Headline Trading 124 CC t/a Status Homes (Status Homes).
They
concluded written agreements on 4 September 2006, in terms of which
they sold their immovable properties to Status Homes,
each for a
purchase price of R1 400 000. Status Homes was not able to comply
with the terms of the agreements. It was eventually
liquidated, and
its sole member was sequestrated. The appellants instituted a claim
for damages based on negligence against the
first respondent as the
attorneys who had drawn the agreements and acted as conveyancers in
the transaction. The first respondent
raised a special plea of
prescription which was upheld by the court a quo. The appeal is with
leave of the court a quo.
[2]
The
second and third appellants are husband and wife. Where it is
necessary to refer to them separately from the first appellant,
they
are referred to as ‘the Van den Bergs’. The second
respondent, Pierre Kitching Attorneys, another firm of attorneys,
was
joined to the proceedings as a second defendant on 4 June 2013. The
special plea did not affect it, and it is therefore not
part of this
appeal. Accordingly, for the sake of convenience, the first
respondent is henceforth referred to in this judgment
as ‘the
respondent’.
[3]
In
terms of the agreements, the appellants’ properties and that of
another seller, Jonker, would be transferred to Status
Homes and
consolidated into one property. Status Homes would build 16 upmarket
townhouses in a sectional title development on the
consolidated
property. This entailed that the homes of the appellants and Jonker
built on their respective properties had to be
demolished. In lieu of
payment of the purchase price for the properties, Status Homes would
build townhouses for the appellants
- one for the first appellant and
two for the Van den Bergs. The appellants were apparently
attracted to the transaction
by the fact that although their
properties were worth approximately R500 000 each, the new townhouse
units were expected to be
worth approximately R1 400 000 each.
[4]
In
order for the construction to proceed, the properties had to be
re-zoned and consolidated; and certain restrictive conditions
reflected in the title deeds of the properties, had to be removed.
The municipality under which the properties fall, the Nelson
Mandela
Metropolitan Municipality, consented to the re-zoning of the
properties on 28 June 2006. This was subject to, among others,
the
properties being consolidated and the restrictive conditions being
removed. The properties were transferred to Status
Homes on 27
July 2007, and were simultaneously consolidated.
[5]
The
process of removing the restrictive conditions commenced on 15
January 2008 when the respondent, on behalf of Status Homes,
launched
an application in the Eastern Cape Local Division, Port Elizabeth
(the court a quo) for their removal. A provisional order
was issued
on 15 July 2008, with a return date of 26 August 2008, on which date
a final order was made for the removal of the restrictive
conditions.
The construction of the dwelling units in the development
commenced in October 2008, but the development came
to a halt in
February 2009 when the financiers of the development refused to allow
further drawings against the development bond.
[6]
As
stated already, the appellants instituted action in the court a quo
against the respondent, claiming payment of the amounts they
could
not recover from Status Homes. The combined summons was served on the
respondent on 30 August 2011. In its particulars of
claim, the
appellants alleged that the respondent owed them a duty of care
because it had drafted the sale agreements, and had
acted as the
conveyancer in the transaction. The appellants alleged that the
respondent had breached the said duty of care by failing
to advise
them of the risks inherent in the transaction and the development of
the sectional title scheme. In its plea to
the appellants’
particulars of claim, the respondent admitted that it owed the
appellants a duty of care in the terms pleaded
by the appellants, but
denied having breached it.
[7]
In
addition, the respondent raised a special plea, contending that the
appellants’ claim had prescribed. The essence of the
special
plea was the following: the properties were transferred to Status
Homes on 27 July 2007. As no construction had taken place
for a
period of a year since registration, it alleged that it must have
been apparent to the appellants that no construction was
going to
commence and that Status Homes was in material breach of the
agreement and that they (the appellants) would suffer damages
as a
result.
[8]
In
the circumstances, the first respondent contended that by 27 July
2008 the appellants had a completed cause of action. Accordingly,
prescription commenced to run from that date and was completed on 26
July 2011. As the combined summons was served on 30 August
2011, more
than three years after 26 July 2008, the appellants’ claims had
prescribed. In the alternative, the first respondent
contended that
the appellants’ claims prescribed on 3 September 2009, three
years after the signing of the agreements. This
alternate contention
was not pursued with any vigour in argument.
[9]
The
special plea was argued before the court a quo on 15 November 2016.
It is trite that t
he
respondent, as the debtor who invoked the special defence of
prescription, bore the onus of establishing ‘both the date
of
the inception and the date of the completion of the period of
prescription’. See
Gericke
v Sacks
1978
(1) SA 821
(A) at 827H-828A;
Van
Staden
v Fourie
1989 (3) SA 200
(A) at 216B;
Santam
Ltd v Ethwar
[1998] ZASCA 102
;
1999 (2) SA 244
(SCA) at 256G.
[10]
In
its endeavour to discharge the onus, the respondent presented the
evidence of Mr Charles Nelson (Nelson), an attorney and a member
of
the respondent. The essence of his evidence was the following. He
informed the appellants at length of the risks involved in
the
transaction and took steps to protect their interests. When the
property market crashed, Status Homes found itself in a difficult
financial position in that purchasers were cancelling their
agreements to purchase units in the development. Status Homes was
unable to proceed with the development, as the financing bank refused
to release further funds from the development bond.
[11]
According
to Nelson, as early as May 2007, approximately two months before the
transfer of the properties into the name of Status
Homes, the Van den
Bergs were already expressing concerns and were contemplating
cancelling their agreement. He referred to correspondence
between the
Van den Bergs and the respondent in the period May 2007 to October
2007 in which the Van den Bergs expressed frustration
at the lack of
progress in the development. He referred, in particular, to a letter
dated 26 October 2007 in which the Van den
Bergs stated that they
would seek independent legal advise.
[12]
Nelson
further testified that indeed, on 1 September 2008, Pierre Kitching
Attorneys on the instructions of the Van den Berg, demanded
a written
undertaking from Status Homes that the townhouses meant for them
would be ready for transfer and occupation within four
months. He
understood the correspondence from, and on behalf of the appellants
to show that the appellants considered Status Homes
to be in breach
of the agreements, and that they were suffering damages, as a result
of which they would be obtaining independent
legal advice in order to
protect their interests.
[13]
Nelson
repeated the assertion in the respondent’s special plea that by
27 July 2008 it should have been apparent to the appellants
that
Status Homes was in breach of the agreements, and that the
development would not occur. They were therefore aware that there
were problems with the transaction, as evidenced by the
correspondence. According to him, the appellants had a completed
cause
of action against the respondent by 26 October 2007, by virtue
of the letter written by Pierrie Kitching Attorneys, referred to
above.
[14]
Mr
Henry Fontini (Fontini) testified on behalf of the appellants. He was
the building supervisor of the development. The upshot
of his
evidence is that the construction of the units could not commence
until the restrictive conditions in the title deed were
removed.
Consistently with this, Nelson conceded under cross-examination that
the removal of the restrictive conditions was a pre-requisite
for the
construction of the dwelling units to commence. According to Fontini,
the first order for materials was made in October
2008 and
construction commenced shortly thereafter until February 2009. By the
time they left the construction site in February
2009, four units had
been built but not completed.
[15]
In
a judgment delivered on 2 March 2017, the respondent’s primary
contention – that the appellants had a completed cause
of
action by 27 July 2008 – found favour with the court a quo. In
the result, it held that the appellants’ claims had
prescribed,
and accordingly dismissed those claims with costs. The issue in the
appeal is whether the court a quo was correct in
finding that the
appellants’ claims had prescribed.
[16]
A
convenient starting point is s 12 of the Prescription Act 68 of 1969
(the
Prescription Act), the
relevant parts of which read:
‘
(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.’
[17]
In
Truter
& another v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA) para 15 this court held that:
‘
For
the purposes of the Act, the term ‘debt due’ means a
debt, including a delictual debt, which is owing and payable.
A debt
is due in this sense when the creditor acquires a complete cause of
action for the recovery of the debt, that is, when the
entire set of
facts which the creditor must prove in order to succeed with his or
her claim against the debtor is in place or,
in other words, when
everything has happened which would entitle the creditor to institute
action and to pursue his or her claim’.
(Footnote omitted.)
[18]
This
court therefore has to determine the nature of the claim being
advanced by the appellants and when it arose, before considering
whether the appellants had actual knowledge of ‘the facts from
which the debt arises’ from 27 July 2008 as alleged
by the
respondent. In my view, the court a quo failed to have regard to the
evidence before it. Had it done so, it would have been
apparent to it
that the removal of the restrictive conditions was a critical
consideration. This aspect received no attention at
all in the
judgment of the court a quo.
[19]
That
the construction of the townhouses could not commence without the
removal of the restrictive conditions on the title deed of
the
consolidated property, was common cause. As stated earlier, Nelson
conceded that much during cross-examination. The restrictive
conditions were only removed on 26 August 2008. Therefore, on 28 July
2008, the date on which the respondent contended was the
inception
date of the prescriptive period, the construction could not have
commenced. Nelson conceded further that in view of this
fact, had the
appellants approached him before 26 August 2008 with complaints about
the development not commencing, he would have
informed them to be
patient as it was Status Homes’ intention to commence
construction once the restrictive conditions had
been removed.
[20]
Indeed,
that intention is manifest from objective sources. For example, on 13
August 2008, Nelson wrote a letter to a landowner
whose property
adjoins the consolidated property, and conveyed Status Homes’
intention to erect the townhouses on the consolidated]
property. He
further mentioned a need to remove the restrictive conditions for the
development to proceed. Also, on 20 August 2008
Nelson deposed to an
explanatory affidavit in support of a final order for the removal of
the restrictive conditions, explaining
the steps he had taken to give
effect to the provisions of the provisional order. Once the
restrictions were removed, the construction
commenced shortly
thereafter.
[21]
In
the founding affidavit in support of the application, the sole member
of Status Homes stated that the removal of the restrictive
conditions
was necessary for the development to commence on the consolidated
property. The application culminated in the order
of 26 August 2008.
According to Nelson, he attended to, and secured the removal of the
restrictive conditions within a reasonable
time after the conclusion
of the agreements.
[22]
I
have gone to great length, perhaps unnecessarily, on the removal of
the restrictive conditions. This is to demonstrate the importance
of
this issue for the determination of the special plea. It must also be
borne in mind that the provisional order for the removal
of the
restrictive conditions was granted at the instance of the respondent,
incidentally, on 15 July 2008, just over a week before
27 July 2008 -
the respondent’s chosen date for the prescriptive period to
commence.
[23]
The
respondent’s main difficulty is this: during July and August
2008 it was engaged in efforts to remove the restrictive
conditions
so that construction could commence. It is therefore difficult to see
how a court can hold that by 27 July 2008, notwithstanding
those
efforts, there was no prospect that construction would go ahead and
that the appellants had a completed claim against the
respondent for
alleged negligence. Even if the court could reach that conclusion, on
the basis that the application to remove the
restrictive conditions
was a desperate last attempt by the developer, there is no basis on
which it could be concluded that the
appellants would have had
knowledge of that fact. On the contrary, the
respondent’s efforts would have
given assurance to the
appellants that once the restrictions were removed, construction
would commence. This is in fact what happened.
It is an
untenable proposition, which in my view, exposes the flawed premise
of the respondent’s argument.
[24]
As
a matter of fact, construction could not legally commence on 27 July
2008. As a result, the removal of the legal impediment occurred
after
the respondent’s ‘cut-off’ date. Nelson could not
adduce any evidence that on 27 July 2008 the appellants
had actual
knowledge of all the requisite facts contemplated in
s 12(3)
of the
Prescription Act. Indeed
, as the very existence of the claims
depended upon the failure of the development project, it is debatable
whether the pleaded
claims could have arisen before the conditions
were removed, but if they did there is no reason to think that the
appellants were
aware of the facts giving rise to that claim.
[25]
As
already stated, the issue is whether the claims advanced in the
particulars of claim have prescribed. These claims are in summary
that the negligent and wrongful conduct of the respondent caused the
appellants to suffer loss as a result of the breach by Status
Homes
of its obligation to construct the dwellings and make them available
to the appellants. Therefore, the appellants would only
have a claim
against Status Home when they became aware that it would not
construct the dwellings. Their claim against the respondent
could not
arise any earlier. From the perspective of prescription it was
therefore necessary for the respondent to prove that by
27 July 2008
Status Homes would not construct the development and that the
appellants were aware of the fact. Working backwards,
by February
2009, when construction ceased, they would have known that the
development would not go ahead, but in July 2008 they
were still
awaiting the outcome of the application to remove the restrictive
conditions. The respondent did not prove that by July
2008 the
development would not proceed, nor that the appellants were aware of
that fact. Accordingly, the respondent failed to
prove that
prescription started to run on 28 July 2008 and that the period of
prescription had passed before the service of summons
on 30 August
2011.
[26]
In
sum therefore, I take a view that the respondent’s allegation
in the special plea that it must have been apparent to the
appellants
by 28 July 2008 that no construction was going to commence, is
unsustainable. The court a quo ought to have found that
the
respondent had not acquitted itself of the onus to establish the
defence of prescription.
[27]
Before
I conclude, I have to address one aspect. The special plea was
adjudicated separately in terms of rule 33(4) of the Uniform
Rules of
Court in terms of an order made by Beshe J on 15 July 2014, following
a substantive application. It is regrettable
that this court
has, once again, to give guidance on how the procedure set out in
rule 33(4) of the Uniform Rules of Court should
be applied.
[1]
The process of dealing
with a matter under rule 33(4) was clarified in
Denel
(Edms) Bpk v Vorster
2004
(4) SA 481
(SCA) para 3:
‘
Rule
33(4) of the Uniform Rules - which entitles a Court to try
issues separately in appropriate circumstances - is aimed at
facilitating the convenient and expeditious disposal of litigation.
It should not be assumed that that result is always achieved
by
separating the issues. In many cases, once properly considered, the
issues will be found to be inextricably linked, even though,
at first
sight, they might appear to be discrete. And even where the issues
are discrete, the expeditious disposal of the litigation
is often
best served by ventilating all the issues at one hearing,
particularly where there is more than one issue that might
be
readily dispositive of the matter. It is only after careful thought
has been given to the anticipated course of the litigation
as a whole
that it will be possible properly to determine whether it is
convenient to try an issue separately. But, where the trial
Court is
satisfied that it is proper to make such an order - and, in all
cases, it must be so satisfied before it does so
- it is the duty of
that Court to ensure that the issues to be tried are clearly
circumscribed in its order so as to avoid confusion.’
See
also
ABSA Bank Ltd v Bernert
2011 (3) SA 74
(SCA) para 21
where the following was stated:
‘
I[f]
for no reason but to clarify matters for itself a court that is asked
to separate issues must necessarily apply its mind to
whether it is
indeed convenient that they be separated, and if so, the questions to
be determined must be expressed in its order
with clarity and
precision.’
[28]
It is by no means
clear that these principles informed the decision to separate issues
in this matter. In my view, the issue raised
in the special plea is
inextricably linked with the separated issues of duty of care,
negligence, and
causation.
It seems that Nelson would be a relevant witness in respect of each
of the issues in dispute. This should have been clear
to the court a
quo at the commencement of the hearing of the special plea. In the
circumstances, these issues could, and should
have been ventilated in
one hearing with the special plea, had a vigilant examination of the
pleadings been undertaken. An order
of separation should not have
been made.
I
appreciate that the decision was made by a different judge. But to my
mind, there was nothing that precluded the court a quo from
re-visiting the earlier determination by another Judge, if it was of
the view that the special plea should be heard in one hearing
with
the other issues. Had it done so, the inconsistency between Nelson’s
evidence as to the scope of the legal duty resting
on his firm and
the admission of a general and unspecific duty in the pleadings could
have been clarified.
[29]
For
the reasons set out above, the appeal should succeed. In the
result the following order is made:
1.
The
appeal is upheld with costs, including costs attendant upon the
employment of two counsel.
2.
The
order of the court a quo is set aside and replaced with the
following:
‘
The
first defendant’s special plea of prescription is dismissed
with costs’.
____________________
T M Makgoka
Acting Judge of Appeal
APPEARANCES
For Appellant: OH
Ronaasen SC (with him A Frost)
Instructed
by:
Roelofse
Meyer Inc, Port Elizabeth
Kramer
Weihmann & Joubert, Bloemfontein
For 1
st
Respondent: P E Jooste (with him T J D Rossi)
Instructed
by:
Joubert
Galpin & Searle, Port Elizabeth
Honey
Attorneys, Bloemfontein
[1]
See for example,
Firstrand
Bank v Clear Creek Trading
[2015]
ZASCA 6
paras 9-10;
Feedpro
Animal Nutrition v Nienaber
[2016]
ZASCA 32
para 15;
Cilliers
& others v Ellis & another
[2017]
ZASCA 13
paras 12-14; and
Transalloys
v Mineral-Loy
[2017]
ZASCA 95
para 6.