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[2015] ZAWCHC 55
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Old Mutual Life Assurance Company (South Africa) Limited v Revere Properties (Pty) Limited (2948/2011) [2015] ZAWCHC 55 (6 May 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
Case No 2948/2011
DATE: 06 MAY 2015
In the matter between:
OLD MUTUAL LIFE ASSURANCE COMPANY
(SOUTH AFRICA)
LIMITED
....................................................................................................
Plaintiff
(Registration number:
1999/0046543/06)
And
REVERE PROPERTIES (PTY)
LIMITED
..........................................................................
Defendant
(Registration number:
2005/021744/07)
JUDGMENT
DELIVERED ON 06 MAY 2015
RILEY AJ:
[1] This matter comes before me for
hearing in terms of paragraph 1.1 of the Minutes of the second
Pre-trial Conference held on
11 February 2014 in terms of which the
parties agreed that the issue raised by the defendant in its special
plea, i.e. whether
plaintiff’s claim against defendant has
prescribed, should be tried separately and shall proceed to trial
before any
of the other issues in the matter. It was further agreed
that in the event of the special plea failing, all the remaining
issues
would be determined at the trial of the matter.
[2] The parties further agreed that:
2.1 Save in the event of the issue
prescription being heard separately that Plaintiff will bear the duty
to begin in respect of
the factual issues in its claim against
defendant, save for any factual issues relating to the alleged
impossibility of performance
pleaded by defendant in paragraph 4 of
its plea;
2.2 Defendant bears the onus in respect
of the factual issues in its plea of prescription and (if this is to
be determined separately)
it will bear the duty to begin;
2.3 Plaintiff and defendant shall
compile a bundle of documents to be used at the trial and shall be
admitted as evidence without
further proof, on the basis that the
documents contained therein are what they purport to be, but without
admission as to the truth
of the contents thereof. In the case of
correspondence and communications, the documents in the bundle shall
be deemed to have
been sent by the addressor and received by the
addressee on or about the dates appearing thereon, unless evidence to
the contrary
is led.
[3] At the trial of this matter
plaintiff called three witnesses, namely Carla Delaney (“Delaney”),
David Falck (“Falck”)
and Helga Pheiffer (“Pheiffer”).
The defendant elected not to call any witnesses.
Background facts
[4] It is common cause that the
defendant purchased a rental enterprise from Knysna Mall (Pty) Ltd in
2007 and, before taking transfer,
on-sold it to the plaintiff. The
plaintiff concluded a written agreement of sale with the defendant on
18 June 2007 in terms of
the which the defendant sold to plaintiff a
rental enterprise comprising Erfs 2851 and 6704 Knysna, movable
assets, the right to
the existing lease agreements and goodwill
attending to the rental enterprise at a purchase price of R170
million.
[5] It is further common cause that in
terms of the agreement, payment of the purchase price was due on
registration of the property
into the name of the plaintiff.
Registration of the property into the name of the plaintiff was
effected on 13 September 2007.
This was also the date when plaintiff
took possession of the rental enterprise and from which date all risk
passed.
[6] The plaintiff issued summons
against the defendant on 15 February 2011 for payment of R1 786
060-87 in terms of the adjustment
account delivered on 9 September
2008. The important parts of the plaintiff’s particulars of
claim which sets out the essence
of plaintiff’s case read as
follows:
‘8. The plaintiff, in accordance
with the aforegoing, prepared the adjustment account and forwarded
such account to the defendant.
On or about 9 September 2008, the
adjustment account reflected that the defendant was indebted to
plaintiff in the sum of R1 786
060-87. A copy of the adjustment
account together with the covering email and letter of demand is
annexed hereto, marked “OM2
– 1 to 15”.
9. The sum reflected in the adjustment
account, annexure “OM2” hereto was accordingly due and
payable by the defendant
within ten business days of the receipt of
the adjustment account prepared on its behalf and accordingly fell
due for payment on
23 September 2008.
10. In the circumstances the defendant
is liable to effect payment of the sum of R1 786 060-87 to the
plaintiff, but despite demand,
fails and refuses to do so.’
[7] In its special plea to the
plaintiff’s particulars of claim, the defendant pleads that in
terms of Clause 7.4 of the agreement
of sale, annexure OM1, the
adjustment account had to be delivered within 90 days from the date
of transfer, which it averred was
the 13th September 2007. Defendant
avers further that payment of any amount had to be made within 10
days of delivery of the adjustment
account in terms of Clause 7.4.8
of the agreement of sale.
The adjustment account
[9] The relevant clauses of the
Agreement of Sale relating to preparation of the adjustment account
provide as follows:
"2. Introduction
2.1 The Seller warrants that it will be
the beneficial owner of the total Rental Enterprise at the transfer
date.
2.2 The Seller has agreed to sell the
Rental Enterprise as a going concern to the Purchaser who has agreed
to purchase the said
Rental Enterprise on the terms and conditions
contained herein.
…
Possession, risk and benefit
7.1 Possession of the Rental Enterprise
and occupation, subject to the Lease Agreements, Contracts and Rules
shall be given to the
Purchaser on the Possession Date, from which
date the risk in and to the Rental Enterprise shall pass to the
Purchaser and from
which date the Purchaser shall become entitled to
all the income of the Rental Enterprise and shall be liable for the
payment of
rates, insurance premiums and all other outgoings in
respect of the Rental Enterprise.
…
7.4 Within a period of ninety days from
the Transfer Date, the Seller shall cause an adjustment account to be
prepared to reflect
the amount payable by the Seller to the
Purchaser, or by the Purchaser to the Seller, as the case may be, in
respect of prepaid
and accrued expenses and income. The items
appearing on the adjustment account will include, but shall not be
limited to…’
Clause 7.4.7 provides that ‘…
as soon as possible after completion of the adjustment account, and
prior to the expiry
of the aforesaid ninety day period referred to in
7.4 …the Seller shall deliver to the Purchaser the adjustment
account
together with the copies of the documents used by the Seller
in preparation thereof…’
In terms of clause 7.4.8 ‘the
amount payable by the Seller to the Purchaser or by the Purchaser to
the Seller as the case
may be, shall be paid within ten business days
of the presentation to the Purchaser of the adjustment account but
not later than
ten days after the period referred to in 7.4 above’.
[10 It is clear that in order to
establish and allocate payments and expenses made in the course of
the rental enterprise to the
party entitled thereto or liable
therefor from and before the transfer date, the parties agreed that
the defendant would cause
an ‘adjustment account’ to be
prepared to reflect the amount payable by the defendant to the
plaintiff or by the plaintiff
to the defendant as the case may be.
[11] It is not in dispute that the
defendant did not comply with its obligation to cause the adjustment
account to be prepared within
ninety days from the transfer date.
Defendant claimed that it did not have the necessary information to
prepare the adjustment
account. It is further not disputed that at a
meeting held to resolve several outstanding issues, including the
adjustment account,
the defendant informed the plaintiff that it had
still not received the information necessary to draw the adjustment
account and
requested the plaintiff to obtain the necessary
information from Knysna Mall (Pty) Ltd’s accountants. The
parties agreed
that plaintiff would prepare the adjustment account on
defendant’s behalf and the defendant undertook to pay the
amount so
determined. In my view this is borne out by what is
contained in the defendant’s reply to plaintiff’s request
for
trial particulars and the evidence presented by plaintiff at the
trial on this issue. In accordance with the agreement between
the
parties the plaintiff accordingly obtained the necessary information
as aforesaid and prepared the adjustment account and delivered
it to
the defendant on 9 September 2008.
[12] I agree with the submission of Mr
Tainton for the plaintiff that what had in effect occurred is that by
obtaining the necessary
information and by preparing the adjustment
account and delivering it to the defendant, the plaintiff had caused
the defendant
to comply with its obligation in terms of the
agreement. This is borne out by the wording of the defendant’s
plea that:
‘Plaintiff undertook to draw the
adjustment account as required in terms of the Deed of Sale, annexure
‘OM1’ to
plaintiff’s particulars of claim.’
And further:
‘Defendants’ Mark
Barnaschone made sure that the Knysna Mall, who had the information
and plaintiff were in contact
with each other enabling the delivering
of the adjustment account and hence complied with their
responsibilities in terms of the
agreement’.
[13] Ms Dicker for the defendant
contended strongly that on a plain reading of the agreement of sale,
which had not been varied
or amended by way of rectification or in
any other way, plaintiff’s claim for payment of the amount due
in terms of the adjustment
account fell due on 22 December 2007, as
in her view plaintiff’s claim arose at the latest ten days
after the ninety day
period referred to in clause 7.4 [i.e. the 90
day period commencing from the transfer date]. She submitted that
plaintiff then
had three years within which to sue the defendant, for
a debatement of account and payment of the amount determined. She
contended
further that plaintiff is not entitled to rely on its own
conduct in order to delay the running of prescription.
The approach to interpretation
[14] In the circumstances the crucial
question to decide is when the amount became payable in terms of the
agreement as it impacts
directly on the issue of prescription. In my
view this will require an interpretation of the agreement of sale
(and in particular
the provisions hereinbefore referred to) so as to
determine the intention of the parties when they entered into the
agreement.
[15] It is accepted law that the
earlier approach to the interpretation of contract is to the effect
that the apparent literal meaning
of the words must be read in the
context of the agreement as a whole and may by modified in the
process of interpretation to avoid
absurdity, or a result repugnant
or inconsistent with the contract as a whole. In his quest to
persuade me that the interpretation
suggested by defendant would
result in absurdity and a result repugnant and inconsistent with the
rest of the agreement of sale,
Mr Tainton placed reliance on the
following cases which I deem appropriate to refer to at this stage as
the principles applied
are equally applicable in the present matter.
In Scottish Union & National
Insurance Co Ltd v Native Recruiting Corp Ltd
1934 AD 458
, where
Wessels CJ held at 465 - 6 that:
“If, however, the ordinary sense
of the words necessarily leads to some absurdity or to some
repugnance or inconsistency with
the rest of the contract, then the
Court may modify the words just so much as to avoid the absurdity or
inconsistency but no more”.
In Gravenor v Dunswart Iron Works
1929
AD 299
at 303 Stratford JA held at 303 that:
“But the qualification to that
rule is equally well established, namely, that if to give words their
ordinary meaning would
lead to an absurdity or to something which,
from the instrument as a whole it can clearly be gathered the parties
could not have
intended, then a Court of law is justified in
departing from the literal meaning of words so as to give effect to
the true intention
of the parties”.
O K Bazaars (1929) Ltd v Grosvenor
Buildings (Pty) Ltd and Another
[1993] ZASCA 56
;
1993 (3) SA 471
(A), concerned the
interpretation of the word “party” in a contract which in
its natural or literal meaning was not
restricted to any particular
party.
Grosskopf JA held as follows at 477E:
“In view of these considerations,
the word “party” in clause 3.3.2 cannot, I believe, be
accorded its natural
meaning. In the context the parties must have
intended the provision to apply to one party only, namely the
tenant.”
And at 478C - E:
“The prime reason why the
landlord’s interpretation cannot in my view be accepted is not
that it is foolish or that
it lacks business efficacy, but that it is
repugnant to clause 3.2 and to the whole scheme of ascertaining a
market rental laid
down in the contract.
For the reasons I have given, I
consider that “a party” in clause 3.3.2 should be
interpreted as referring only to the
tenant. It was not disputed in
argument that such a result could legitimately be reached by a
process of interpretation if the
parties’ intention appeared
clearly enough from the contract as a whole. See Gravenor v Dunswart
Iron works
1929 AD 299
at 303; Scottish Union & National
Insurance Co Ltd v Native Recruiting Corporation Ltd
1934 AD 458
at
465-6; Swart en n Ander v Cape Fabrix (Pty) Ltd
1979 (1) SA 195
(A)
at 202 C. In view of this conclusion it is not necessary to consider
the tenant’s claim for rectification”
[16] Mr Tainton contended that the
reference to the matter of Swart en n Ander in the above judgment is
to the following well known
statement of Rumpff CJ where he stated at
202 C:
“Wat natuurlik aanvaar moet word,
is dat, wanneer die betekenis van woorde in ‘n kontrak bepaal
moet word, die woorde
onmoontlik uitgeknip en op ‘n skoon stuk
papier geplak kan word en dan beoordeel moet word om die betekenis
daarvan te bepaal.
Dit is vir my vanselfsprekend dat ‘n mens na
die betrokke woorde moet kyk met inagneming van die aard en opset van
die kontrak,
en ook na die samehang van die woorde in die kontrak as
geheel”
[17] Mr Tainton contended that based on
these cases the interpretation suggested by the defendant would
result in both absurdity,
inconsistency and repugnancy with the rest
of the agreement of sale, which he submitted provides for the debt to
be determined
by the adjustment account and paid within ten business
days after presentation of such account. In his view the
interpretation
favoured by the defendant could never have been the
intention of the parties at the time of the conclusion of the
agreement.
[18] In KPMG Chartered Accountants (SA)
v Securefin Ltd and Another 2009(4) SA 399 (SCA) at paras [39] –
[40] and Natal Joint
Municipal Fund v Endumeni Municipality 2012(4)
SA 593 (SCA) at para [18] the SCA adopted the view that in
interpreting any document
the starting point is inevitably the
language used but it falls to be construed in the light of its
context, the apparent purpose
to which it is directed and the
material known to those responsible for its production. In my view
it is clear that the context,
the purpose of the provision under
consideration and the background to the preparation and production of
the document in question
are fundamental to the process from the
outset. It is clear that those factors referred to are not secondary
matters which are
introduced to resolve linguistic uncertainty. It
is now clear that context is determined by both the internal context,
namely
the language, words, grammar and syntax of both the provisions
in question and the documents as a whole, and also by the external
context provided by the factual matrix in which the document finds
its setting, which includes both the background and surrounding
circumstances.
[19] I am accordingly mindful as has
been emphazised in the authorities hereinbefore, that situations may
arise where it may be
necessary to correct an apparent error in the
language used in a document in order to avoid an identified
absurdity. It is however
also clear that courts should be slow to
alter the words actually used, and as was stated in Natal Joint
Municipal Fund supra
at para [18], courts must guard against the
‘temptation to substitute what they regard as reasonable,
sensible or businesslike
for the words actually used’. In
Natal Joint Municipal Fund supra the court aptly summarised the
position as follows when
it held at para [18] that:
‘A sensible meaning is to be
preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent
purpose of the document’.
[20] The position with regard to the
approach to be adopted in the process of interpretation is now
decisively dealt with in the
dicta of Wallis JA in Bothma-Batho
Transport (EDMS) Bpk v S Bothma & Seun Transport (EDMS) Bpk
2014(2) 494 (SCA) where, after
referring to the previous approach in
regard to interpretation, the learned judge of appeal held at para
[12] that:
‘… The former distinction
between permissible background and surrounding circumstances, never
very clear, has fallen
away. Interpretation is no longer a process
that occurs in stages but is ‘essentially one unitary
exercise’’.
[21] It is clear that Ms Dicker has
attached a very narrow and or restrictive interpretation to the
clauses in the agreement of
sale. In my view such an approach is not
in accordance with the present SCA approach with regard to
interpretation. Accordingly,
if I regard the process of
interpretation as ‘essentially one unitary exercise’ and
I apply the principles adopted
and applied by the SCA to the present
matter, then I come to the following conclusions:
1. It is clear that the words ‘amount
payable by the seller to the purchaser or by the purchaser to the
seller as the case
may be’ in clause 7.4.8 are repeated
verbatim in clause 7.4 and ‘the amount payable by the seller to
the purchaser
or by the purchaser to the seller as the case may be’
referred to in clause 7.4.8, must be a reference to the amount
payable
as determined by the adjustment account;
2. This is borne out by the fact that
this amount is to be paid in terms of clause 7.4.8 after
‘presentation to the purchaser
of the adjustment account’;
3. It cannot be, as contended on
behalf of the defendant, that the defendant was obliged to pay the
amount payable in the terms
of the adjustment account on 22 December
2007, i.e. approximately nine months before the adjustment account
was delivered;
4. It is clear that the defendant
conveniently wishes to ignore the words in clause 7.4.8 which provide
that, ‘the amount
payable …shall be paid …not
later than ten days after the ninety day period referred to in 7.4
above’. To
ignore these words, in my view, is impermissible
and should it be allowed it would do violence to the process of
interpretation.
5. If I were to accept the
contentions made on behalf of the defendant, then it will result in
what the SCA has described as insensible
and / or unbusinesslike
results, which would undermine the purpose of the agreement the
parties entered into. In my view the conduct
of the parties leading
up to the conclusion of the agreement, their conduct subsequent to
the signing of the agreement are all
indicative of and point to the
fact that they were very much aware that the preparation of the
adjustment account was decisive
to give effect to the terms of the
agreement and consequently their intention. It is for this reason
that they effectively assisted
and cooperated with each other in
their quest to bring the adjustment account to fruition. The
insensibility and or absurdity
of defendants contentions are aptly
illustrated by Mr Tainton in the following examples illustrated in
his heads of argument as
follows:
“This absurdity can be
illustrated by the following questions:
5.10.1 What amount does defendant say
it was obliged to pay plaintiff on 22 December 2007?
The only rational answer to this (it is
submitted) is no amount, as the process agreed in terms of clause 7.4
to determine who the
debtor and who the creditor was and in what
amount, had not yet been followed.
5.10.2 Does defendant aver that it was
obliged to pay plaintiff the sum of R1 786 060-00 as claimed on 22
December 2007?
The only rational answer to this (it is
submitted) is no, as the process agreed to in terms of clause 7.4.
which determined that
that was the amount owing had not yet been
followed.” (my emphasis).
6. It must accordingly be that, “the
amount payable” referred to in clause 7.4.8, is the amount
payable as determined
by the adjustment account referred to in clause
7.4. It is clear that only once the amount payable by the seller to
the purchaser
or the purchaser to the seller ‘as the case may
be’ has been determined in accordance with the agreed process
in clause
7.4, that the amount payable referred to in clause 7.4.8
exists. In short the amount payable does not exist until it has been
determined. Only once that amount has been determined by the process
agreed to in clause of 7.4, can there be any talk of a debt
in
existence which can become due and payable. (my emphasis)
7.In my view the interpretation that
the defendant seeks to employ results in the untenable situation that
‘the amount payable’,
is payable at a time when the
identity of the creditor and or the debtor and the amount of the debt
have not been determined.
This could surely not have been intended
by the parties.
8. I am satisfied that what the parties
did in fact intend was a situation where the defendant would comply
with the obligation
in terms of clause 7.4 at the same date within
the ninety day period, in which event ‘the amount due and
payable’ would
have to be paid, at the latest, no more than ten
days after the ninety day period.
9. It could never have been the
intention of the parties that defendant does not comply with its
obligation in terms of clause 7.4
timeously. It therefore follows
that until the defendant has complied with the obligation in terms of
clause 7.4, no enforceable
monetary debt existed.
[22] In any event, the conduct of the
defendant seems to me to point to the fact that it always intended to
pay the plaintiff what
it was entitled to in terms of the adjustment
account but that it was having difficulties in sorting out its
accounts with Knysna
Mall (Pty) Ltd, which ultimately resulted in the
delay in it paying the plaintiff.
[23] I now turn briefly to deal with
certain principles developed by our courts in relation to the issue
of prescription that further
confirm, and more so enforces the
finding that the interpretation which defendant seeks to attach to
the agreement between the
parties cannot be sustained and must
accordingly fall to be dismissed.
The Principles
Prescription commences to run, not when
a debt arises, but on the date which it became due
[24] In Farocean Marine (Pty) Ltd v
Minister of Trade & Industry of the RSA 2007(2) SA 324 (SCA),
Malan AJA held at 340 E
– F that, “Prescription commences
to run ‘as soon as the debt is due’ (s 12(1)). Although
the ‘date
on which a debt arises usually coincides with the
date on which it becomes due’ this need not always be the case.
The question
‘is thus when the debt the respondent seeks to
recover arose and when it became due.’ If this principle is
applied
to the present matter, the defendant’s plea that
prescription in respect of the plaintiff’s claim for payment of
the
amount referred to in the adjustment account, commenced to run on
22 December 2007, should fail. It is clear that it was an express
term of the agreement of sale that an adjustment account would be
prepared to determine who was indebted to whom and in what amount.
The debt could not have become due before the adjustment account was
drawn, irrespective of when any contractual obligation to
draw the
account arose.
The debt has to be one which is
immediately claimable and which the debtor is under an obligation to
perform immediately
[25] In Deloitte Haskins & Sells
Consultants (Pty) Ltd v Bowthorpe Hellerman Deutch (Pty) Ltd 1991(1)
SA at 532H, Van Heerden
JA, in commenting on S12(1) of the Act, made
it clear that the debt has to be a debt which is immediately
claimable and which the
debtor is under an obligation to perform
immediately. In the present matter the debt which plaintiff claims
is the amount reflected
in the adjustment account which is required
in terms of clause 7 of the agreement of sale. On this principle such
debt only becomes
claimable by the plaintiff and payable by the
defendant ten business days after the presentation of the adjustment
account on or
about 9 September 2008. It is clear that prior to that
date the debt was not ‘one which is immediately claimable and
which
the debtor is under an obligation to perform immediately’.
A debt is not due until the entire set
of facts which the creditors must prove in order to succeed with his
or her claim against
the debtor have occurred
[26] In Truter and Another v Deysel
2006(4) SA 168 (SCA) Van Heerden JA held at 174 C - D that: “…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’.
[27] In Evins v Shield Insurance Co Ltd
1980(2) SA 814(A) at 838g Corbett JA in considering the meaning of
the expression “cause
of action”, referred with approval
to the dicta of Watermeyer J in Abrahamse & Sons v SA Railways
and Harbours
1933 CPD 626
, where the learned judged stated that:
“The proper legal meaning of the
expression ‘cause of action’ is the entire set of facts
which gives rise to an
enforceable claim and includes every act 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.”
[28] If the aforesaid principle is
applied to the present matter then the amount payable would be
determined by the adjustment account
and would be due and payable
within ten days of the presentation of the adjustment account.
Accordingly ‘the facts’
as referred to in the judgments
hereinbefore only occurred on 23 September 2008, and the debt could
not have become due prior to
that date. (my emphasis)
Where the debt is for payment of an
amount pursuant to a contractual obligation there must be a
liquidated monetary obligation presently
claimable by the creditor
for which an action could presently be brought against the debtor
[29] A further important principle to
be considered in the context of this matter is that our SCA has
clearly held that where the
debt is for payment of an amount pursuant
to a contractual obligation there must be a liquidated monetary
obligation presently
claimable by the creditor for which action could
be brought against the debtor. See Farocean Marine (Pty) Ltd v
Minister of Trade
and Industry supra at para [12] and the authorities
cited in foot note 25, in that matter, Singh v Commissioner, South
African
Revenue Service 2003(4) SA 520 (SCA) at 533D - E. If this
principle is applied to the present matter then the liquidated
monetary
obligation only arose in the present matter when the
adjustment account was prepared. On this score too the defendant’s
contention that the debt to plaintiff fell due on 22 December 2007
must fail.
Where a contractual debt is conditional
on the performance of some act or the happening of some event that
debt is due upon the
fulfilment of the condition
[30] It is further clear from the
authorities and the cases that where a contractual debt is
conditional on the performance of some
act or the happening of some
event, the debt is due upon the fulfilment of the condition. See
Laubser Extinctive Presciption p.53
para 4.3.2., Rodger NO en ‘n
Ander v Erasmus NO en Andere 1975(2) SA 59 (TPD); Van Vuuren v
Boshoff 1964(1) SA 395(T) at
401. Applying the above principle to
the present case, the contractual monetary debt was contingent on the
preparation of the
adjustment account and the lapse of ten business
days thereafter.
[31] Finally I am also not persuaded
that the defendant (on whom the onus rests) has proved the date when
the plaintiff acquired
knowledge of the material facts constituting
the cause of action for recovery of the monetary claim, including
knowledge of the
determination of who owed what, pursuant to the
adjustment account. See S12(3) of the Act.
[32] Accordingly for the reasons set
out hereinbefore the defendant’s special plea, averring that
the monetary debt claimed
by plaintiff pursuant to the adjustment
account fell due on 22 December 2007, and that it has prescribed,
cannot succeed.
Interruption of prescription
[33] In the alternative it is necessary
to consider whether or not prescription has been interrupted by the
acknowledgement of liability
and the undertaking given by Mr Nick
Barnaschone that the defendant had every intention to pay the debt
due to plaintiff. It is
trite law that the plaintiff bears the onus
to prove that prescription is interrupted. According to Section 14
of the Act, the
running of prescription shall be interrupted by an
express or tacit acknowledgement by the debtor. If the running of
prescription
is interrupted as contemplated in subsection (1),
prescription shall commence to run afresh from the day on which the
interruption
takes place. In this matter the plaintiff called
Pheiffer to testify in its quest to show that prescription was
interrupted when
Nick Barnaschone, the defendant’s attorney,
acknowledged liability and indicated that defendant had every
intention to pay
the debt.
[34] Ms Dicker contended strongly that
the evidence presented by the plaintiff in regard to the interruption
of prescription had
to be disregarded and that no reliance could be
placed on it. She submitted that since the acknowledgement of
liability must be
made by the debtor and that it must be made to the
creditor himself or his authorised agent, the plaintiff had failed to
prove
these crucial elements. In support of her contentions she
submitted that there was no evidence that Nick Barnaschone, if he
acted
as attorney for the defendant, was its authorised agent, with
express or implied authority to acknowledge liability on behalf of
defendant. She contended further that there is no evidence to the
effect that Pheiffer, who was employed by Old Mutual Group Properties
Investments (Pty) Ltd (OMIGPI), was the duly authorised agent of
plaintiff and or that she had express on implied authority to
acknowledge liability on plaintiff’s behalf. According to Ms
Dicker S12(1) of the Act requires an acknowledgement of liability
and
not merely an acknowledgement of indebtedness.
[35] In this regard it is necessary to
point out that in the context of the special plea of prescription,
the plaintiff avers as
follows:
“4. In the alternative and in
any event, the plaintiff pleads that on or about 16 December 2009 the
defendant represented
by Mr N Barnaschone, orally and expressly
acknowledged to the plaintiff, represented by Ms Helga Pheiffer that
the defendant was
liable to pay the adjustment account in terms of
the Agreement of Sale. The running of prescriptions was accordingly
interrupted
by such acknowledgement of liability in terms of
section14 of Act 68 of 1969”.
[36] It is now accepted law that ‘for
an acknowledgment of debt to be effective as an interruption of
prescription it is not
necessary that is should be quantified in
figures. It is sufficient if it is capable of ascertainment by
calculation or extrinsic
evidence without the further agreement of
the parties’. See Benson v Walters 1984(1) SA 73(A) at 90G.
[37] In Erasmus v Grunow en ‘n
Ander 1978(4) SA 233(OPA) at 244A - C Van Heerden J by way of the
following simple example,
crisply explains the concept of
acknowledgement of liability as follows:
‘...Na woordlui vereis art 14(1)
egter nie dat die skuldenaar ten volle aanspreeklikheid moet erken
nie. Die skuldenaar wat
erken dat hy vir ‘n gedeelte van die
skuld aanspreeklik is, erken dan ook steeds aanspreeklikheid vir of
ten opsigte daardie
skuld. Neem bv. die geval waarin dir
skuldenaar,wat ‘n motorkar vir R1000-00 aangekoop het, die
kooptransaksie erken maar
die houding inneem dat die koopprys slegs
R900 bedra. Die skuld voer ‘n objektiewe bestaan en word,
behalwe uit ‘n
bewysoogpunt, nie geraak deur die skuldenaar of
skuldeiser se siening of betwisting van die presiese omvang of terme
daarvan nie.
In die gegewe voorbeeld erken die skuldenaar die skuld
en betwis hy slegs die omvang daarvan. Anders gestel, erken hy
aanspreeklikheid
ten opsigte van die skuld, maar stel hy die omvang
van sy aanspreeklikheid in geskil...’
[38] In Cape Town Municipality v Allie
NO 1981(2) SA 1 (C) at 7 D – G Marais AJ as he then was held
that “full weight
must be given to the legislature’s use
of the word ‘tacit’ in section 14(1) of the Act. In
other words, one
must have regard not only to the debtor’s
words, but also to his conduct, in one’s quest for an
acknowledgement of
liability. That, in turn, opens the door to
various possibilities. One may have a case in which the act of a
debtor which is
said to be an acknowledgement of liability, is plain
and unambiguous. His prior conduct would then be academic. On the
other
hand, one may have a case where the particular act or conduct
which is said to be an acknowledgement of liability is not so plain
and unambiguous. In that event, I see no reason why it should be
regarded in vacuo and without taking into account the conduct
of the
debtor which preceded it. If the preceding conduct throws light upon
the interpretation which should be accorded to the
later act or
conduct which is said to be an acknowledgement of liability, it would
be wrong to insist upon the later act or conduct
being viewed in
isolation. In the end, of course, one must also be able to say when
the acknowledgement of liability was made,
for otherwise it would not
be possible to say from what day prescription commenced to run
afresh.”
[39] It is clear from the evidence that
after the adjustment account had been prepared, there were delays on
the part of the defendant
in paying the amount due in terms of the
adjustment account to the plaintiff. It is not disputed that the
defendant was, at the
time when its obligation was due to plaintiff,
having its own difficulties with its seller. It is clear that
defendant was still
in the process of resolving outstanding issues
with its seller and that this was the reason causing defendant’s
delay in
making payment to plaintiff.
[40] On 3 November 2009, Pheiffer, in
her capacity as legal adviser of OMIGPI, sent a letter of demand to
Mark Barnaschone of the
defendant, demanding payment of the amount
due to plaintiff after defendant had failed, neglected and refused to
pay the amount
due in terms of the adjustment account. According to
Pheiffer’s evidence, she thereafter received a telephone call
from
Mr N Barnaschone on 16 November 2009, who, with reference to the
letter of demand, told her that there was no need to institute
action
as the defendant knew that there was an amount owing and that the
defendant had every intention to pay the debt. I am satisfied
that
N. Barnaschone in doing so had expressly acknowledged liability and
given an undertaking to pay.
[41] As a result of the acknowledgement
of liability and the undertaking to pay, Pheiffer on behalf of
plaintiff pended the matter
and the institution of action by
plaintiff against the defendant was averted. It is not disputed that
she immediately thereafter
notified her colleagues by email of the
defendant’s acknowledgement of liability. In my view it is not
fatal to the plaintiff’s
case that Mr N Barnaschone did not
acknowledge liability for a specified amount. I am satisfied that
the acknowledgement of liability
made by N Barnaschone falls squarely
within the ambit of and is of similar nature as in the case of
Erasmus v Grunow (supra).
Accordingly I am satisfied that N
Barnaschone in doing what he did, had expressly acknowledged
liability and given an undertaking
to pay on behalf of the defendant.
[42] On 10 and 11 November 2009,
defendant’s Mark Barnaschone, clearly concerned about the
letter of demand, called Pheiffer,
requesting her to call him
regarding the letter of demand and advised that defendant is in
discussion with Knysna Mall (Pty) Ltd
in order to resolve the
outstanding aspects of the sale, but that he needed certain
information from plaintiff to enable defendant
to do so.
[43] Can it be said that Mr Nick
Barnaschone had actual, implied or ostensible authority to call on
behalf of defendant, acknowledge
liability and give the undertaking
to pay the debt to plaintiff?
[44] It is clear that Mr Nick
Barnaschone and Mr Mark Barnaschone acted on behalf of and or
represented the defendant interchangeably
with regard to the present
matter as well as in relation to concluding agreements and ancillary
matters thereto on behalf of the
defendant. Examples of the
interchangeable representation by Mark and Nick Barnaschone in regard
to the affairs of the defendant
is illustrated by M Barnaschone
representing the defendant in the agreement of sale between defendant
and Knysna Mall (Pty) Ltd
and the fact that the addendum thereto was
signed by N Barnaschone. I am satisfied that, apart from the fact
that he has a very
close family relationship with Mr Mark Barnaschone
that Mr Nick Barnaschone was intimately involved in attempting to
find a resolution
with regard to the issues relating to the
adjustment account and other issues in relation to the agreement
between the plaintiff
and the defendant.
[45] On the evidence it is further
clear that after the letter of demand was sent by Pheiffer to the
defendant, both Mark and Nick
Barnaschone were in contact with her.
A conspectus of the evidence, including the correspondence and
documents in the evidence
bundle, points to the inescapable
conclusion that Nick Barnaschone had the necessary authority to
acknowledge liability on behalf
of the defendant and to give an
undertaking on behalf of defendant to the plaintiff’s
representatives that defendant would
pay the debt due to plaintiff.
On the whole I am accordingly satisfied that the plaintiff has
established prima facie, at the
very least, that Nick Barnaschone had
the actual, implied or ostensible authority of the defendant to make
the telephone call to
Pheiffer and make the statement on behalf of
the defendant. In any event, no evidence was presented to rebut the
evidence of Pheiffer
even though there was nothing that prevented the
defendant from presenting evidence to dispute that Nick Barnaschone
had the authority
to represent the defendant. Accordingly her
evidence regarding her discussions with Nick Barnaschone in regard to
defendant’s
acknowledgement of the debt due to plaintiff must
stand.
[46] I am further satisfied that on the
evidence presented, that all the employees of OMIGI, dealing with all
matters in relation
to the agreement of sale and the matters arising
therefrom, were duly authorised by the plaintiff to represent OMIGI
in such matters.
[47] In the premises I find that the
special plea of prescription as raised by the defendant cannot
succeed. In the alternative,
I am satisfied that prescription was
indeed interrupted when Mr N Barnaschone acknowledged liability in
respect of defendant’s
indebtedness to plaintiff and gave the
undertaking that the defendant would pay the debt owing to the
plaintiff.
[48] In the result I make the following
order:
1. The defendant’s special plea
of prescription is dismissed with costs;
2. The trial is postponed for a hearing
to a date to be agreed between the parties after consultation with
the Judge President.
RILEY, AJ