Case Law[2024] ZACC 24South Africa
Rademeyer v Ferreira (CCT 184/2022) [2024] ZACC 24; 2025 (1) BCLR 73 (CC); 2025 (2) SA 1 (CC) (25 October 2024)
Constitutional Court of South Africa
25 October 2024
Headnotes
Summary: Prescription Act 68 of 1969 — sale agreement — same cause of action — breach of contract — specific performance — right to claim damages
Judgment
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## Rademeyer v Ferreira (CCT 184/2022) [2024] ZACC 24; 2025 (1) BCLR 73 (CC); 2025 (2) SA 1 (CC) (25 October 2024)
Rademeyer v Ferreira (CCT 184/2022) [2024] ZACC 24; 2025 (1) BCLR 73 (CC); 2025 (2) SA 1 (CC) (25 October 2024)
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sino date 25 October 2024
FLYNOTES:
CIVIL PROCEDURE – Prescription –
Interruption
–
Sale
agreement – Same cause of action – Breach of contract
– Specific performance – Right to claim
damages –
Specific performance lawsuit cannot be basis for judicial
interruption of running of prescription regarding
cancellation and
damages claim – Judicial interruption that occurred was of
debt relating to specific performance and
not in respect of
damages – Claim for damages has prescribed – Appeal
upheld –
Prescription Act 68 of 1969
,
s 15(1).
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 184/2022
In
the matter between:
DION
RADEMEYER
Applicant
and
THOMAS
IGNATIUS FERREIRA
Respondent
Neutral
citation:
Rademeyer v Ferreira
[2024]
ZACC 24
Coram:
Zondo CJ, Madlanga ADCJ, Bilchitz AJ,
Gamble AJ,
Majiedt J, Mathopo J, Mhlantla J and Theron J.
Judgments:
Mathopo J (minority): [1] to [56]
Majiedt J
(majority): [57] to [94]
Heard
on:
9 May 2024
Decided
on:
25 October 2024
Summary:
Prescription Act 68 of 1969
— sale agreement — same
cause of action — breach of contract — specific
performance — right to claim
damages
ORDER
On
appeal from the Supreme Court of Appeal (hearing an
appeal from the High Court of South Africa, Eastern Cape
Local
Division, Gqeberha):
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Supreme Court of Appeal
is set aside
and substituted with the following:
“
(a)
The appeal is upheld.
(b) The
order of the High Court dismissing the defendant’s special
plea is set aside and replaced with
an order upholding the special
plea.”
4.
The respondent is ordered to pay the costs
of the applicant in this
Court, the Supreme Court of Appeal and the High Court,
including the costs of two
counsel, where so employed.
JUDGMENT
MATHOPO J
(Bilchitz AJ concurring):
Introduction
[1]
This application for
leave to appeal raises the question whether the respondent’s
claim became prescribed under the
Prescription Act.
[1
]
The issues surface in the application for leave to appeal against the
judgment and order of the Supreme Court of Appeal.
That court upheld the decision of the High Court, Eastern
Cape Division, Gqeberha (High Court), which dismissed
a special
plea of prescription concerning a claim for damages resulting from
the cancellation of a written sale agreement (sale
agreement).
[2]
The application is brought by Dion Rademeyer (Mr Rademeyer),
a businessman who resides in Gqeberha. It is opposed by the
respondent, Thomas Ferreira (Mr Ferreira), a retired
businessman also residing in Gqeberha.
Background
[3]
Mr Ferreira was the
registered owner of Erf 723 Theescombe, Port Elizabeth.
[2]
Prior to 2008, Mr Ferreira was developing this property
(“mother erf”) by subdividing it into separate
erven
with the purpose of developing an upmarket residential estate to be
known as “Heatherbank Manor”.
[4]
Upon the successful subdivision, the mother erf was subdivided into
five separate
properties. On 27 August 2008, the
parties concluded a sale agreement for one of the subdivided
properties.
Mr Ferreira sold the property described as
Erf 4097, Theescombe, in the Nelson Mandela Metropolitan
Municipality, Port Elizabeth,
Province of the Eastern Cape, in
extent 1119 square metres (the property) to Mr Rademeyer.
[5]
The essential terms of the sale agreement, amongst others,
were as
follows:
(a)
The purchase price of the property was R950 000;
(b)
Mr Rademeyer would make payment of the deposit of R190 000
within seven days from
the date of signing the agreement;
(c)
The balance of the purchase price was to be paid by Mr Rademeyer
on date of registration
of transfer;
(d)
Mr Rademeyer would be liable for all transfer costs and duties
and was to sign all
required documents to give effect to the
registration of the transfer of the property; and
(e)
In the event that Mr Rademeyer failed to fulfil his obligations
under the sale
agreement, and failed to rectify any failure after
being given five days’ written notice to do so, Mr Ferreira
would
be entitled to sue for specific performance.
[6]
On 2 September 2008, Mr Rademeyer made payment
of
R190 000 as a deposit to Mr Ferreira’s attorneys
which was invested in an interest-bearing account. The interest
which accrued from this amount was paid to Mr Ferreira, in terms
of the sale agreement. However, Mr Rademeyer did
not
fulfil all the essential obligations of the sale agreement. In
particular, he did not sign all the transfer documents
required to
effect transfer; furnish guarantees for payment of the balance of the
purchase price, or pay the transfer costs and
duties.
[7]
During 2011, and upon major development of the property, Mr Ferreira
was in a position to proceed with the registration of transfer of the
property, as per the sale agreement. He communicated
with
Mr Rademeyer, requesting that he fulfil his obligations in terms
of the sale agreement. This was met with no success
and, as a
result, Mr Ferreira launched an application in the High Court
requesting, among others, an order for specific
performance, and in
the event of Mr Rademeyer failing to comply with his obligations
within five days of the service of the
specific performance order,
cancellation of the sale agreement and damages. In response
thereto, Mr Rademeyer filed
a counter-application seeking an
order that Mr Ferreira be ordered to pay him the sum of
R190 000, together with interest
thereon calculated at the
prevailing legal rate, from 3 September 2008 to date of
payment.
Litigation
history
High Court
[8]
Mr Ferreira sought a declaratory order compelling Mr Rademeyer
to comply with his obligations in terms of the sale agreement.
On 7 August 2012, Pickering J ordered Mr Rademeyer
to sign all transfer documents required to effect registration of
transfer of the property (Pickering J order). In the
event
that Mr Rademeyer failed to comply with the obligations of the
sale agreement after five days of the service of the
order upon him,
Mr Ferreira would be entitled to cancel the sale agreement and
claim damages. Relevant to these proceedings,
the following was
contained in the order:
“
That
in the event of the Respondent failing to comply with his obligations
within five days of service of this order upon the Respondent,
cancellation of the said agreement of sale and damages.”
Subsequent
to and in terms of the Pickering J order, Mr Rademeyer was
requested to execute the transfer documents and
pay the balance of
the purchase price, which he elected not to.
[9]
In July 2015,
Mr Ferreira cancelled the sale agreement and served a notice of
cancellation on Mr Rademeyer.
During 2016, under the same
case number as the Pickering J order, Mr Ferreira launched
a further application claiming
damages, as a result of Mr Rademeyer’s
failure to comply with the Pickering J order. In response,
Mr Rademeyer
filed a notice in terms of rule 30(1) of the
Uniform Rules of Court
[3]
and
submitted that the Pickering J order was a final order which had
disposed of all the relief set out in the first application.
Further, he contended that this application was distinct from the
initial application and ought to have been brought under a new
case
number as opposed to a continuation of the proceedings.
[10]
As a result, Mr Ferreira withdrew this application and
instituted action proceedings
in the High Court under a new case
number in which he sought damages in the sum of R854 182.20,
pursuant to the cancellation
of the agreement, and as a result of
Mr Rademeyer not complying with the Pickering J order for
specific performance.
[11]
Mr Rademeyer, in his defence, raised a special plea and
submitted on the basis
of the Pickering J order having been
served on him on 15 August 2012, and it being common cause
that he failed to
comply, that Mr Ferreira’s claim for
damages, if any, should then have begun to run on 23 August 2012.
He relied on
section 11(d)
of the
Prescription Act and
pleaded that Mr Ferreira should have instituted action
proceedings within three years from 23 August 2012, whereas
Mr Ferreira only instituted this action on 18 April 2016.
Further, in the plea, Mr Rademeyer contended
that the
cancellation of the sale agreement happened on 23 August 2012,
by virtue of the court order, and not on 1 July 2015,
which
is when Mr Ferreira opted to formally cancel the agreement.
[12]
Mr Rademeyer further pleaded that the claim for accrued interest
in the amount
of R422 466.30 was incompetent and denied
liability for that interest or any, at all. He argued that
Mr Ferreira
had a duty to mitigate his damages by selling the
property to another interested buyer.
[13]
Mr Ferreira then filed a replication to the special plea and
raised two defences
(in the alternative) namely; that the service of
the application papers in the Pickering J order interrupted
prescription
with regards to the claim for damages, and,
alternatively, that the right to claim damages stemmed from an order
of court which
constituted a judgment debt in terms of
section 11(a)(ii)
of the
Prescription Act, the
prescription
period thus being 30 years.
[14]
By agreement, and in
terms of the Uniform Rules of Court,
[4]
the parties agreed for the matter to be determined by way of a stated
case before Govindjee AJ. Mr Rademeyer contended
that, when interpreting the phrase “debt” in terms of
section 11(d)
of the
Prescription Act, the
court order did
not constitute a judgment debt in terms of
section 11(a)(ii).
On the contrary, Mr Ferreira argued that the Pickering J
order interrupted prescription and constituted a debt
in terms of
section 11(1)
of the
Prescription Act. However
, if
the court did not find for him on that score, then the Pickering J
order constituted a judgment debt in terms of
section 11(a)(ii)
of the
Prescription Act and
, thus, the claim for damages had not
prescribed.
[15]
After hearing argument,
the High Court dismissed the special plea of prescription and
held that “the action instituted
is to proceed in respect of
the computation of the Plaintiff’s damages”.
[5]
Dissatisfied with the judgment, Mr Rademeyer approached
the Supreme Court of Appeal for leave to appeal.
Supreme Court of Appeal
[16]
Before the Supreme Court of Appeal, Mr Ferreira
abandoned the
argument that the Pickering J order constituted a
judgment debt, with the result that there were only two issues for
determination
by that court, namely, (a) whether service of the
notice of motion in 2012 constituted “a process whereby the
creditor claims
payment of the debt” within the meaning of
section 15(1) of the Prescription Act and, (b) whether the
issuance
of summons under a different case number amounted to the
prosecution of “the process in question” as contemplated
by
section 15(4)
of the
Prescription Act. Section
15
of the
Prescription Act is
headed “Judicial interruption
of prescription” and reads as follows:
“
(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.
(2)
Unless the debtor acknowledges liability, the interruption
of
prescription in terms of subsection (1) shall lapse, and the
running of prescription shall not be deemed to have been interrupted,
if the creditor does not successfully prosecute his claim under the
process in question to final judgment or if he does so prosecute
his
claim but abandons the judgment or the judgment is set aside.
(3)
If the running of the prescription is interrupted as
contemplated in
subsection (1) and the debtor acknowledges liability, and the
creditor does not prosecute his claim to final
judgment, prescription
shall commence to run afresh from the day on which the debtor
acknowledges liability or, if at the time
when the debtor
acknowledges liability or at any time thereafter the parties postpone
the due date of the debt, from the day upon
which the debt again
becomes due.
(4)
If the running of prescription is interrupted as contemplated
in
subsection (1) and the creditor successfully prosecutes his
claim under the process in question to final judgment and the
interruption does not lapse in terms of subsection (2),
prescription shall commence to run afresh on the day on which the
judgment of the court becomes executable.
(5)
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.
(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.”
[17]
The
Supreme Court of Appeal, relying on its earlier
judgment in
Cadac
[6]
which endorsed
Allianz
,
[7]
made a number of findings:
(a)
it held that the basis for the action for damages is the same as the
application for specific
performance, because they stem from the same
facts.
[8]
Accordingly, the
right to claim damages was said to be part of that order;
(b)
Mr Ferreira sought to quantify the damages suffered as a
consequence of Mr Rademeyer’s
conduct, when he failed to
meet the obligations of the sale agreement;
(c)
it held further, that the service of the application constituted a
crucial “step”
in enforcing a claim for payment of a
debt;
(d)
it endorsed the ratio in
Allianz
to the effect that “to
return to the expression ‘under the process in question’,
clearly a final executable judgment
will be obtained ‘under’
a process where process and judgment constitute the beginning and the
end of one and the same
action.”;
[9]
and,
(e)
concluded that—
“
the
service of the notice of motion in the application for a declaratory
order, alternatively damages, in 2012 had the effect of
interrupting
the running of prescription as provided for
section 15(1)
of the
Act in relation to the damages claim in this case. Prescription
stands interrupted unless the judgment is abandoned
or set aside on
appeal. The judgment of Pickering J was never
abandoned.”
[10]
Consequently,
the Supreme Court of Appeal dismissed the appeal with
costs.
Before
this Court
Applicant’s
submissions
[18]
Mr Rademeyer submits that leave should be granted to appeal
against the whole
of the judgment of the Supreme Court of Appeal,
as there are reasonable prospects that this Court will come to a
different conclusion to that of the Supreme Court of Appeal,
and the application raises an arguable point of law
of general public
importance. Mr Rademeyer contends that the appeal concerns
the interpretation of the relevant provisions
of the
Prescription Act, which
have been held to play a vital role in
bringing certainty to the process of adjudication. Further, it
implicates the right
of access to courts and thus raises a
constitutional issue.
[19]
Mr Rademeyer emphasises that the High Court and the
Supreme Court
of Appeal incorrectly approached the matter
on the basis that essentially the same “cause of action”
was being
pursued in a subsequent action, as had been the case in the
original application. He submits that the new action was not
merely the same process under a different case number, but it
constituted entirely separate and new legal proceedings. He
argues that the effect of the ruling is that Mr Ferreira would
have had an indefinite period of time to institute the new
action,
which would effectively never become prescribed, provided it was
based upon the same cause of action. This is fundamentally
at
odds with established principles relating to the law of prescription.
[20]
Mr Rademeyer contends that
Allianz
and
Cadac
are
distinguishable and do not support Mr Ferreira’s case.
The contention advanced is that the distinguishing
feature in
this case is that the debt only arose subsequent to the judgment and
order of Pickering J, whereas, in
Allianz
and
Cadac
,
the relief sought was based on the same cause of action that was
instituted in the same proceedings. The contention continued
that, upon failure of Mr Rademeyer to perform in terms of the
order, a fresh breach of contract ensued as the basis for the
cancellation.
[21]
Mr Rademeyer interprets
section 15(2)
of the
Prescription Act to
provide for the interruption of prescription
and that such interruption shall lapse, and the running of
prescription shall not
be deemed to have been interrupted, if the
creditor does not successfully prosecute his claim under the process
in question to
final judgment. Mr Rademeyer says
Mr Ferreira did not pursue the relief claimed in the prior
application to final
conclusion because he abandoned and withdrew
that application. Therefore, the current proceedings were new
and not instituted
within the three year period and were thus
hit by prescription. In conclusion, Mr Rademeyer submits
that Mr Ferreira’s
claim has prescribed by virtue of the
provisions of
section 10(1)
read with
section 11(d)
of the
Prescription Act in
that a period of three years passed between
the date when the debt was due and payable, subsequent to
cancellation (five days after
service of the order on Mr Rademeyer)
and when Mr Ferreira instituted the action proceedings seeking
to recover the debt.
[22]
Mr Rademeyer
contends that the debt in this matter comprises the contractual
damages pursuant to cancellation of the contract
and that it only
arose at the earliest upon cancellation of the contract, as per the
definition of “debt” in
Makate
,
[11]
Desai N.O.
[12]
and
Off Beat
Holiday Club
.
[13]
He contends that where specific performance has been ordered
and not complied with, the innocent party may, either in the
same
proceedings or in subsequent proceedings, obtain relief that
cancellation and damages be ordered.
[23]
Mr Rademeyer took
issue with the “double barrelled approach”, a
procedural practice followed pertinently in
Shembe
,
[14]
and—
“
[P]ermits
a plaintiff-seller to elect to pursue the first of these rights,
i.e., to demand implementation of the agreement and obtain
judgment
therefor, but further permits him in the same action to ask the
Court, should the defendant fail to comply with the Court’s
judgment for implementation of the agreement, to set aside the
agreement and grant consequential relief.”
[15]
[24]
Mr Rademeyer argues that this approach, which has been followed
in many other
cases, is out of touch with reality and must be
jettisoned. In the alternative, he contends that this
procedural practice
ought to be limited to an order for cancellation
only and not extended to instances where a claim for damages is
sought.
Respondent’s
submissions
[25]
Mr Ferreira denies
that there are reasonable prospects that this Court will come to a
different conclusion. He asserts
that the
Supreme Court of Appeal was correct in applying
Allianz
and that the
interpretation put forward by Mr Rademeyer is incorrect.
He submits that the decisions in
Cadac
and
Peter
Taylor & Associates
[16]
support the findings of the Supreme Court of Appeal,
as there is an essential link between the two proceedings.
He
contends that the “debt” that served before the court in
the motion proceedings is the same in the action
for quantification
of damages.
[26]
Mr Ferreira contends that service of the notice of motion on
Mr Rademeyer
in the initial application interrupted prescription
in respect of Mr Rademeyer’s cause of action, including
the damages
claim. The claim for damages related to the same
cause of action which was interrupted by prescription in 2012.
[27]
Mr Ferreira therefore disputes Mr Rademeyer’s
assertion that his
cause of action was separate and distinct from the
cause of action in the previous application and should have been
brought under
a new case number, and not as a continuation of the
previous proceedings. He maintains that in the current action
he sought
to quantify and claim his damages, which was pleaded in the
following terms – “as a consequence of the cancellation”
and that, although the action was issued under a new case number, it
was linked to the original application of 2012, and arose
from
Mr Rademeyer’s non compliance with the order of
Pickering J.
[28]
Mr Ferreira contends that Mr Rademeyer misinterprets the
“debt”
as contemplated in the
Prescription Act,
which
was pertinently addressed in
Allianz
, and that the
judicial interruption of the debt in terms of
section 15(1)
of
the
Prescription Act occurred
when the original application was
instituted in 2012. He contends that the entire debt included
the claim for rectification,
specific performance, and the
alternative claim for cancellation and damages flowing from
Mr Rademeyer’s non compliance
with the court order.
[29]
Mr Ferreira does not dispute that the action proceedings were
instituted more
than three years after the order of Pickering J,
but emphasises that it was unnecessary to institute proceedings for
damages
within three years of non compliance. As judicial
interruption had already taken place in 2012, it was therefore
unnecessary
to interrupt prescription again.
[30]
Mr Ferreira submits that he could not have succeeded in his
damages claim without
first establishing Mr Rademeyer’s
liability for such damages by a declaratory order. Therefore,
the action proceedings
instituted in 2016, sought to quantify his
claim for damages consequent upon the cancellation of the deed of
sale and arising from
Mr Rademeyer’s non compliance
with the order of Pickering J. In essence, service of the
initial application
in 2012 constituted a “step” in the
enforcement of the debt.
Issues
[31]
The following issues arise in this application:
(a)
whether the basis of the claim in the application proceedings
in 2012
was the same as the basis of the claim in the current proceedings;
(b)
whether the application proceedings were a step in the enforcement
of
a claim for the payment of a debt; and
(c)
whether the application proceedings disposed of some element
of the
claim which arise in the current matter.
Jurisdiction
and leave to appeal
[32]
In order for this Court
to entertain this matter, the applicant must show that the matter is
a constitutional matter or that it
raises an arguable point of law of
general public importance which ought to be considered by this
Court.
[17]
The latter
subsection provides for three requirements which all need to be met
before the Court will have general jurisdiction
to hear a particular
matter.
[33]
This matter raises
important issues relating to the extent of the right of access to
courts in the context of extinctive prescription.
This means
that prescription laws ought to be interpreted and applied in a
manner that is consistent with constitutional principles,
more
specifically, the right of access to courts as enshrined in
section 34 of the Constitution, and as developed through
case
law culminating in the decision in
Mdeyide
.
[18]
Cases in which prescription laws, when applied strictly, will
infringe on the fundamental rights of a person to redress through
courts are those that will engage the jurisdiction of this Court.
These will be instances that involve an application of
the
periods of prescription in a disproportionate way between vulnerable
people or groups in society, drawing in broader constitutional
rights
related to more than mere procedure.
[34]
Extinctive prescription
limits the right of a party to pursue legal recourse under section 34
of the Constitution.
[19]
Therefore, to some extent, matters of this nature generally
engage this Court’s jurisdiction. It cannot be ignored,
though, that the questions that arise in this matter are not
necessarily novel and have already been established. However,
given the effect of extinctive prescription on the right of access to
courts, I am of the view that this matter engages this Court’s
constitutional jurisdiction.
[35]
Even if the matter raises
a constitutional issue or an arguable point of law, this Court has
previously pronounced that leave may
be refused if it is not in the
interests of justice for this Court to hear the appeal.
[20]
Further this Court has found that prospects of success are an
important factor in deciding whether to grant leave to appeal.
[21]
In considering leave to appeal, the prospects of success are of
crucial importance. In doing so, the different interpretations
of the relevant sections in Chapter III of the
Prescription Act,
as
submitted by the parties, must be interrogated.
[36]
Though it cannot be disputed that the point of law does not transcend
the narrow
interests of the parties, the interests of justice and the
constitutional implications bearing upon extinctive prescription, and
its relation to the right of access to courts, weigh in favour of
leave to appeal being granted by this Court.
Analysis
[37]
The crux of the matter is whether the initial proceedings are a step
in the enforcement
of debt payment and whether prescription is
considered to be interrupted at that point.
Section 15(1)
of the
Prescription Act provides
that the running of
prescription is interrupted by the service on the debtor of any
process whereby the creditor claims payment
of a debt. This
provision serves to avoid the extinction of a creditor’s claim
by the effluxion of time, on condition
that the creditor takes timely
legal action in enforcing his or her right. There is, in the
present matter, such a process
in the form of Mr Ferreira’s
initial application for specific performance, resulting in the
Pickering J order,
which required Mr Rademeyer to perform
in terms of the sale agreement. The subsequent litigation which
Mr Ferreira
has pursued is a step in pursuit of the self same
debt. For purposes of prescription, the question is whether
legal
proceedings were commenced which relate to the same set of
facts and flow from the same legal source. The initial
application
satisfies this requirement.
[38]
When the debt became due
in this case requires this Court’s attention, as it featured in
Mr Rademeyer’s argument
– this question requires a
consideration of when the damages were sustained. Mr Rademeyer,
relying on
Makate
,
[22]
Desai
N.O.
[23]
and
Off Beat Holiday
Club
,
[24]
argued that the damages were only sustained at the earliest upon
cancellation of the sale agreement and that the debt thus became
due
then. The meaning of “debt” was considered in
Allianz
,
[25]
and approved in judgments such as
Cadac
,
[26]
Makate
,
Desai
N.O.
,
and
Off-Beat
Holiday Club
.
These cases establish that a debt extends to any liability arising
under a contract, which includes both the primary performance
and the
subsequent damages claim. Mr Ferreira’s claim for
damages flows from precisely the same breach of contract
dealt with
in the original application for specific performance. It
follows that the damages were sustained as a result of
a breach of
the contract and not as a result of non compliance with the
Pickering J order. While a breach (that
is a failure to
comply with the contractual obligations after being called upon to do
so) triggers damages, a court order legitimises
a claim for damages.
Prescription was, therefore, interrupted by the service of the
original application because it was a
step taken to enforce the debt
owed by Mr Rademeyer in terms of the sale agreement.
[39]
As recognised above, prescription limits the right of access to
courts. Consequently,
circumstances in which individuals are
deprived of access to courts should be interpreted in a restrictive
manner. That,
in turn, requires that the notion of debt be
interpreted to extend to all causes of action that flow from the same
legal complaint.
This means recognising that any legal process
that was instituted from the same legal complaint and same facts
interrupts
prescription.
[40]
I accept as correct the submission that the declaratory order by
Pickering J
which established liability, and the potential
further action for the quantification of damages constitute one cause
of action
under a two stage process. Hence, the
interruption of prescription was effected. It is difficult to
visualise
it any other way. A valid agreement must be
established in the first place before one can proceed and succeed in
subsequent
proceedings for damages.
[41]
Mr Rademeyer’s interpretation of
section 15(2)
of the
Prescription Act, which
he argues mandates that the interruption
of prescription lapses if the creditor does not successfully
prosecute the claim to final
judgment, is misplaced. To
demonstrate the fallacy in Mr Rademeyer’s argument, one
has to look at the debt and
the process in terms of the act under
which the debt was pursued, since the underlying debt was not
altered. What accrued
to Mr Ferreira by virtue of the
Pickering J order was a claim in respect of which the running of
prescription had been
interrupted by the service of the application.
In my view, subsequent motion proceedings for claims for damages were
not
in any way affected.
The
applicability of Allianz and Cadac
[42]
It remains to consider
whether the Supreme Court of Appeal was correct in
following
Allianz
and
Cadac
.
Counsel for Mr Rademeyer advanced a number of arguments in
support of his main submission. They all flounder
because they
raise issues which are not supported by the authorities. The
submission as a whole indicates that counsel not
only sought to
distinguish the above cases as misplaced but stridently argued that
the double barrelled procedure outlined
in
Shembe
,
[27]
which Mr Ferreira followed, should be abandoned and be
jettisoned.
[43]
In
Allianz
, the facts were these
.
Allianz Insurance had concluded a contract with the Cape
Town Municipality and a company that was constructing an undersea
pipeline for the municipality. In terms of the contract,
Allianz Insurance agreed to indemnify the municipality and
the
company for any loss or damages suffered as a result of damage to the
pipeline. The pipeline was damaged on two different
occasions
as a result of stormy seas. The municipality and the company
instituted actions against Allianz Insurance,
seeking orders
declaring Allianz Insurance liable to pay them in respect of
loss or damages suffered as a result of the damage
to the pipeline.
The actions were instituted in the year after the damage occurred
(damage to pipeline occurred in May and
July 1984, and actions
were instituted in March and August 1985). Three years
elapsed before the matter could be
heard. Allianz Insurance
amended its plea and introduced a special plea, and by then three
years had elapsed since the
date of damage to the pipeline. The
effect of the special plea was that the debt to indemnify the
claimants for loss or damage
had since prescribed as the three-year
prescription period had expired.
[44]
Relying on the first part
of the dictum of Howie J, that the declarator action in
Allianz
was only concerned with
establishing liability and not exacting payment for the damages,
Mr Rademeyer contends that this invariably
means that a further
action must be instituted to cover elements of the claim that were
not previously considered in the declaratory
order. He urged
upon us that
Allianz
is distinguishable and
does not support Mr Ferreira’s case. It is important
to state that this submission is not
correct. A further reading
of
Allianz
indicates that Howie J
qualified the statement by stating that any further litigation for
the determination of damages would
be founded on the same cause of
action on which the declaration was based.
[28]
In essence, the court in
Allianz
held that a final
executable judgment obtained under a process constitutes the
beginning and the end of the same action.
[29]
Further—
“
1.
It is sufficient for the 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
the
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.”
[30]
The
principle supports Mr Ferreira’s contention that
subsequent actions for damages consequent upon an order for specific
performance are not separate proceedings, but a continuation of the
initial legal action.
[45]
The case of
Allianz
helps elucidate the
understanding of judicial interruption of prescription. In
Allianz
,
what was brought to the fore was that a process leading up to a final
judgment is a single continuum.
[31]
This view supports Mr Ferreira’s case where the initial
application for specific performance and the later claim
for damages
are all part of the same continuous legal process aimed at enforcing
the same debt.
[46]
Mr Rademeyer’s argument that
Cadac
is not relevant
also flounders in many respects. For context, the court in
Cadac
dealt with an urgent application to set aside a warrant
and for damages. The warrant was set aside and the damages
enquiry
was postponed
sine die
(indefinitely)
.
In
Cadac
, the court reasoned that connected legal proceedings
arising from identical contractual obligations and facts ought not to
be considered
different for purposes of prescription. This
judgment reinforces the notion that Mr Ferreira’s action
for damages
is essentially inextricably linked with the initial
application for specific performance as both emanate from actions to
redress
the breach of the same sale agreement.
[47]
The Supreme Court of Appeal confirmed that a plaintiff
may have the
issue of liability decided before pursuing the
quantification of damages. It held that the motion proceedings
for the setting
aside of the warrant were accordingly regarded as a
step in the enforcement of a claim for a debt. In the present
matter,
the Supreme Court of Appeal also confirmed the
ratio in
Cadac
that subsequent motion proceedings instituted
were a step in the enforcement of a claim for a debt
.
Tellingly,
Mr Ferreira did not seek an order postponing the determination
of quantum
sine die
in the declaratory action before
Pickering J.
[48]
The Supreme Court of Appeal thus correctly held that
the cause of
action for damages is the same as that of the
application for specific performance. Because both were based
on the same set
of facts, the right to claim damages was incorporated
in the initial order in favour of Mr Ferreira, and the service
of this
application was an element of executing a claim for the
payment of the same debt.
[49]
Any attempt by Mr Rademeyer to distinguish this matter from
Cadac
and
Allianz
should be rejected as the distinction
is purely artificial. Unlike in
Cadac
, what transpired
in this case is that the court confirmed that the plaintiff may have
the issue of liability decided before pursuing
a claim for the
quantification of damages. Subsequent motion proceedings
instituted were a step in the enforcement of a claim
for that debt.
[50]
The contention that the claim for damages was incomplete when the
declaratory application
was filed and, further, that the declaratory
action and the order of Pickering J did not interrupt
prescription, was based
on two misconceptions. Firstly, it was
argued that a judgment determining the existence of liability cannot
perpetually preserve
the plaintiff’s claim to determine the
quantum of damages in respect of that liability. Secondly, that
the failure
to comply with the Pickering J order resulted in a
new breach, and Mr Ferreira ought to have instituted fresh
proceedings
arising from the said breach.
[51]
This argument is misplaced. The double barrelled procedure
is still part
of our law. Mr Ferreira did not seek an
order postponing the determination of quantum
sine die
in the
declaratory application before Pickering J. Indeed, courts
routinely separate and adjudicate issues of liability
and postpone
the question of quantum which arose in the same litigation. This
is most often found in claims for personal
injury arising from motor
vehicle accidents and professional negligence. The fact that
the quantum determination will be
dealt with much later does not
affect the claim. What actually transpired in this case is not
novel, but is an enforcement
of the double barrelled procedure
enumerated in many cases. This procedure affords a defaulting
party the opportunity
to remedy the breach and perform according to
his or her contractual obligations. If, however, after this
opportunity the
defaulting party still refuses to perform, as in this
case, the aggrieved party is entitled to cancel the agreement and
claim damages.
A link between the two claims exists and cannot
be wished away.
[52]
The fact that Mr Ferreira sued for damages does not represent a
different cause
of action, but arises from the same obligation which
Mr Rademeyer undertook in terms of the written agreement of
sale.
Mr Rademeyer’s obligations are of the same
scope and nature. That he was sued for damages later in no way
detracts
from the basic cause of action, namely, that he was sued
based on the written agreement of sale. The effect of this is
that
the right sought to be enforced in the previous application was
substantially the same as the one which is the subject matter of
the
present proceedings, in that the parties were the same, the amount
claimed was the same, and the liability, therefore, arose
out of the
same cause of action and written agreement of sale. I think it
is necessary to underscore that Mr Ferreira’s
cause of
action was not only foreshadowed, but clearly comprehended and
specifically pleaded in the previous litigation and, therefore,
could
not have prescribed. Mr Rademeyer could not have been
under any misapprehension that it was a completely new cause
of
action based on an entirely new set of facts. The service of
the application interrupted the running of prescription.
[53]
In the present case, Mr Rademeyer is still being sued on the
self-same agreement.
This position is analogous to the factual
scenario in
Allianz
. The fact that Mr Ferreira sued
for specific performance in no way means that he abandoned or failed
to exercise his
right to sue for damages. He was entitled to
sue for specific performance and, alternatively, damages in the event
of non compliance
with an order for specific performance.
Once the first application was instituted, it had the effect of
interrupting prescription.
[54]
There is yet another
reason why Mr Rademeyer’s case is unsustainable. He
relied on
Tembani
[32]
in support of his contentions. This case is distinguishable and
does not support his argument.
Tembani
dealt
with two separate causes of actions, where finalisation of the Law
Society matter was not a necessary “delictual ingredient”
of the claim for damages. In this matter, Mr Ferreira
sought a declaration for specific performance and, in the absence
of
such performance, damages. Mr Ferreira’s cause of
action was founded on the principles of the double barrelled
procedure. The alternative claim for damages which was premised
on the further assumption of non compliance with the
court order
was interrupted by service of the first application.
There
is an inextricable link between the Pickering J order and the
later action instituted in the matter for damages.
The
Pickering J order has not been set aside, nor abandoned.
[55]
I have had the opportunity to consider the second
judgment of my Brother, Majiedt J. Even if I disagree
with him,
I have to recognise the force and quality in its
reasoning. However, after careful reflection, I find that
nothing in that
judgment compels me to revisit or alter my conclusion
on the outcome of this appeal.
[56]
I agree with the High Court and Supreme Court of Appeal
that
Mr Ferreira’s previous action before Pickering J
interrupted prescription and that the debt has not prescribed.
If I had commanded the majority, I would have granted the application
for leave to appeal, and refused leave to appeal with costs,
including the costs of two counsel.
MAJIEDT J
(Zondo CJ, Gamble AJ, Madlanga J, Mhlantla J,
Theron J concurring):
[57]
I have read the judgment
of my Colleague Mathopo J, (first judgment) and, while I agree
that this matter engages our jurisdiction
and that it is in the
interests of justice that we hear the appeal, I reach a different
outcome on the merits. In respect
of jurisdiction, the central
issue is that
of
prescription. There are many cases that have come before this
Court where it was called upon to decide whether a litigant’s
claim had prescribed and this Court held that it had jurisdiction in
such matters.
[33]
In
this case, this Court is called upon to decide whether
Mr Ferreira’s claim for damages had prescribed
by the time
he instituted the proceedings in the High Court that have led to
these proceedings, and therefore this Court has jurisdiction.
[58]
T
his Court grants leave to appeal when it is
in the interests of justice to do so. The factors that the
Court takes into
account in determining whether it is in the
interests of justice to grant leave include whether there are
reasonable prospects
of success for the appeal, the importance of the
issues involved in the appeal, whether the issues go beyond the
interests of the
parties before the Court and will also affect a
large section of society. This list is not exhaustive. In
my view there
are reasonable prospects of success in this matter. The
legal issues raised are important and the impact of the judgment in
this
case will go beyond the parties before the Court and the matter
is of great importance. It is thus in the interests of justice
to grant leave to appeal.
[59]
I regrettably part ways
with my Colleague on the merits of the appeal. I would uphold
the appeal with costs, inclusive of
costs of two counsel.
First, a simplified, sweeping synopsis of, I daresay, the
well-established law. Prescription
of a debt starts running as
soon as the debt becomes due, or when knowledge of the debt becoming
due can reasonably be expected
of the creditor. Prescription is
judicially interrupted when process initiating a lawsuit for
recovery
of that particular debt
is
issued and served on the debtor. In our law, breach of contract
is remediable through
two
mutually exclusive options
––
a
claim for specific performance that seeks, notwithstanding the
breach, to keep the contract alive;
or
cancellation
of the contract and a claim for damages.
[34]
[60]
When an election is made to sue for specific performance,
axiomatically that lawsuit
cannot possibly be a basis for the
judicial interruption of the running of prescription in respect of
cancellation and a damages
claim in respect of the same debt arising
from breach of the contract. Judicial interruption of the
running of prescription
of the latter can self-evidently only occur
when the election is made to cancel and sue for damages. And,
plainly, where
summons has been issued and served to determine
liability in respect of damages for breach of contract within the
three-year prescription
period, it matters not that you sue after the
three-year period to determine the quantum of the damages in respect
of that same
claim. This is because the later claim for the
assessment of damages is a continuation of the first proceedings to
determine
liability. Proceeding then from the general to the
specific – what are the facts in this case and how do these
legal
principles apply to them?
[61]
I gratefully adopt my
Colleague’s comprehensive factual narrative and will repeat
facts only for purposes of clarification,
context or emphasis.
In particular, it is necessary to have regard to the specific dates
of key events. This case concerns
the judicial interruption of
prescription. The crucial aspect for consideration, and the
primary difference between my Colleague
and I, is the precise status
and ultimate legal effect of the order made by Pickering J
(Pickering J order) by agreement
between the parties, and the
events that followed. As I shall endeavour to demonstrate,
these events place this matter on
a different footing to both
Allianz
[35]
and
Cadac
.
[36]
Those cases are
distinguishable and, in relying on them for their reasoning, both the
first judgment and the Supreme Court of Appeal
err.
The distinction is not merely “artificial” as the first
judgment would have it.
[37]
[62]
The following salient
facts bear repetition. The first breach of the sale agreement
occurred on 13 September 2011.
Thus, prescription
began running at that time in respect of the damages which
Mr Ferreira may have suffered as a consequence
of this initial
breach. It is common cause, however, that the damages then
incurred (and the question of prescription in
respect thereof) is not
the subject-matter in issue here. When Mr Rademeyer failed
to fulfil all the essential obligations
of the sale agreement,
[38]
and failed to respond to
a demand to do so, Mr Ferreira launched an application in the
High Court requesting, amongst
others, an order for specific
performance. Mr Ferreira also sought a further order that,
in the event of Mr Rademeyer
failing to comply with his
obligations within five days of the service of the specific
performance order, cancellation of the sale
agreement and damages.
Mr Ferreira therefore elected, in the first instance, to keep
the sale agreement alive and to
insist that Mr Rademeyer upholds
his part of the bargain. The obvious corollary is that an
election was irrevocably
exercised by Mr Ferreira not to
cancel. Damages were therefore in Mr Ferreira’s
contemplation as a future
event, contingent upon non compliance
with the Pickering J order for specific performance and, then,
cancellation of
the sale agreement.
[63]
The Pickering J order was issued on 7 August 2012.
Service of
that order on Mr Rademeyer occurred on
15 August 2012. Mr Rademeyer remained
non-compliant and Mr Ferreira
consequently formally cancelled
the sale agreement and served a notice of cancellation on
Mr Rademeyer. Cancellation
in accordance with the
Pickering J order occurred, and damages were thus suffered, by
Mr Ferreira on 23 August 2012,
that is, five days
after service of the Pickering J order. Therefore, an
action for those damages had to be instituted
within three years from
that date, that is, by no later than 23 August 2015.
[64]
On 17 February 2016, under the same case number of the
Pickering J
order, case number (239/12), Mr Ferreira
launched a further application claiming damages, as a result of
Mr Rademeyer’s
non-compliance with the Pickering J
order. In response, Mr Rademeyer filed a
rule 30
notice as adumbrated in the first judgment. As a result,
Mr Ferreira withdrew this application on 16 March 2016
and, on 18 April 2016, instituted action proceedings in the
High Court under case number (1256/16). In that
matter, he
sought damages pursuant to the cancellation of the agreement as a
result of Mr Rademeyer not complying with the
Pickering J
order for specific performance. The date of service of this
action does not appear in the papers, but the
special plea filed by
Mr Rademeyer is dated 28 June 2016.
[65]
As the first judgment
explains, Mr Rademeyer’s special plea of prescription was
met by a replication with a defence,
amongst others,
[39]
that the service of the
application papers that ultimately led to the Pickering J order
had interrupted the running of prescription
in the damages claim.
In essence, the first judgment holds that this defence is good in
law, while I hold the contrary view
that the special plea ought to
have been upheld, as Mr Ferreira’s damages claim had
prescribed. The central issue
is whether the proceedings before
Pickering J constitute the same cause of action as the damages
claim.
[66]
Of cardinal importance is
the fact that when the matter came before Pickering J,
Mr Ferreira
had
plainly not suffered any damages as yet and he therefore had no
extant damages claim at that time. It follows that Mr Ferreira
could not obtain an order at that time relating to the liability for
damages which had not yet been sustained. Self evidently,
there was thus no claim in respect of which prescription could have
commenced running.
Any
claim for damages then would have been premature, since Mr Ferreira
was seeking specific performance of the agreement,
and,
self evidently, could not approbate and reprobate with a
simultaneous damages claim at that time. Enforcement and
cancellation of a contract are two mutually exclusive options
available to an innocent party who must make an election as to the
relief it seeks – that much is trite in our law.
[40]
The debt for damages (not
specific performance) arose only subsequent to the order made by
Pickering J, when Mr Rademeyer
failed to perform as
ordered. That failure was a fresh breach of the contract which
constituted the basis for cancelling
the contract, and prescription
began running five days after the Pickering J order was served
on Mr Rademeyer (which,
as stated, occurred on 15 August 2012).
[67]
At the time when
Mr Ferreira was seeking specific performance of the sale
agreement before Pickering J, the sale had not
yet been
cancelled. The order by Pickering J was for specific
performance within five days of service of the order,
“failing
which cancellation and damages”. Damages, if any, were
thus suffered by Mr Ferreira only when,
five days after service
of the order, Mr Rademeyer’s non compliance
persisted. On the objective facts, cancellation
only occurred
on 23 August 2012, five days after the service of the
Pickering J order on Mr Rademeyer.
Moreover, and
importantly, Mr Ferreira has accepted that cancellation of the
contract occurred in terms of the order of Pickering J
upon the
failure of Mr Rademeyer to comply with the order of specific
performance within the period provided in the order,
and did not
pursue the pleaded cancellation of July 2015.
[41]
Only at that point did
Mr Ferreira’s right to damages come into existence.
[68]
It is necessary to
restate some well-established legal principles. First, it bears
emphasis that a debt is the correlative
of a right of action, when
one is extinguished, so, too, is the other.
[42]
It
is important to draw a clear distinction between the contractual
remedies of specific performance and cancellation and concomitant
damages. In the case of the former, the claim is based on the
contract itself and breach of the contract is not a prerequisite
for
the claim.
[43]
It
is the primary remedy for breach of contract and simply seeks to
ensure that the other contracting party performs as she undertook
to
do.
[44]
[69]
Prescription in respect
of a damages claim for breach of contract commences to run at the
earliest from the time of breach of contract.
[45]
A claim for specific
performance can prescribe separately from a claim for damages.
This is so, since upon breach with resultant
damages, a new separate
personal right arises so that the innocent party is restored to the
status
quo
ante
,
that is, the position she would have been in had the breach not
occurred. On the other hand, a right to claim specific
performance originates upon conclusion of the contract, and
prescription of the debt would commence running as soon as it is due
–– that is not the case in respect of a damages claim
where prescription would only start running when the breach occurs.
If a debtor is non-compliant with a court order to make specific
performance, it constitutes a further breach of the contract and
a
judgment creditor may seek an order from the court cancelling the
agreement and for an award of damages.
[46]
The so-called
“double barrelled” approach permits a plaintiff to
claim specific performance and, in the alternative,
an order
cancelling the agreement in the event that the debtor fails to comply
with the order for performance within the period
stipulated by the
court order. That is what happened here.
[70]
It bears
repetition that, if we accept as we must, by the time of the
Pickering J order, Mr Ferreira had not yet suffered
any
damages, he
could
not at that time obtain an order relating to the liability for
damages.
[47]
There
may arguably be a good reason why this is so –
the
duty resting upon an innocent party to mitigate its damages only
arises once the damages are suffered. Conceivably, there
may
then even be a full mitigation of damages and an order for liability
and payment of damages would be premature, and may well
lead to the
“guilty” party being deprived of the right to raise
mitigation of damages as a defence. Thus, in
the present
instance, Mr Ferreira may have been able to sell the property
for a higher purchase price, in which event there
would be no
damages, or for a substantial purchase consideration, resulting in a
reduced sum of damages. Of course, a guilty
party may even seek
to prove that no loss has been suffered, but that can only happen at
the time that damages are alleged to have
been suffered. It is
furthermore theoretically possible that a party may be deprived of
the potential protection of the three-year
period of prescription,
because in effect then the claim would never prescribe and summons
could be issued many years and even
decades later.
[71]
On behalf of
Mr Rademeyer, it was vigorously contended before us that the
double-barrelled approach should be discarded.
The thrust of
that contention embraces the arguable aspects raised in the previous
paragraph, that
a judgment on the question of liability
for prospective damages, or for the calculation of prospective
damages, would deprive the
party against whom the order was made of
the opportunity to contest liability on the basis that no loss had
been suffered, alternatively,
to raise the issue of the mitigation of
damages. The argument was further that it would also deprive a
party of the potential
protection of the prescriptive period of three
years as its effect would be that the claim could never prescribe and
summons could
be issued decades later. While the argument is,
on the face of it, rather attractive, I do not adopt any position in
that
regard, as the matter can in my view be disposed of within the
purview of the double barrelled approach.
[72]
The
case law, discussed next, supports the viewpoint that at the time of
the Pickering J order, Mr Ferreira had not yet
suffered
damages and could not then obtain an order in respect of liability
for damages.
Evins
[48]
concerned
a defence of prescription in a damages claim in the context of the
“once and for all” rule. Mrs Evins,
the
appellant, had sustained serious bodily injuries in a collision
between the vehicle in which she was being conveyed as a passenger,
driven at the time by her husband who died in the collision, and
another vehicle. Mrs Evins had initially claimed
compensation
in a single combined summons (first summons), first for
her own injuries and, second, for loss of support arising from the
death
of her husband. It was common cause that, while Mrs Evins
had complied with the antecedent legislative prescripts in
respect of
her own claim, there was no compliance therewith as far as her loss
of support claim was concerned.
[49]
[73]
Some five
years after the collision, Mrs Evins caused a second summons to
be issued in which she claimed only loss of support
due to her
husband’s death in the collision. In the particulars of
claim she alluded to the delivery of the first claim
form, the
service of the first summons and the delivery of the second claim
form. Shortly thereafter, she amended her first
summons by the
deletion of all references to the claim for loss of support.
[74]
The
respondent,
[50]
Shield Insurance,
raised prescription in a special plea to the second summons, in
respect of the claim for loss of support.
The two actions were
later consolidated by order of court. The question was what the
effect of the service of the first summons
had on the loss of support
claim. The argument for Mrs Evins was that a single
negligent act by the insured driver had
caused both her bodily
injuries and the death of her husband. She was therefore
entitled to sue in one single action for
both sets of damages, her
own and those incurred as her husband’s dependant, for loss of
support. In the premises,
she argued, the service of the first
summons had interrupted the prescription of the entire (two-pronged)
claim since there can
be no piecemeal prescription of a debt and
interruption of prescription of only part of a debt. That
argument was rejected
in the trial court on two bases, first, that
the loss of support claim was a right distinct from the right to
claim damages for
bodily injuries where both are caused by the same
negligent act and, second, that in any event, the loss of support
claim was not
interrupted by service of the first summons, since that
claim had not been prosecuted to final judgment as required by the
Act.
[75]
On
appeal, Corbett JA noted that the central concept of a cause of
action and the enquiry whether different claims constitute
parts of a
single cause of action or separate causes of action were of
particular significance in regard to the application of
the so called
“once and for all” rule and the related questions of
res
judicata
(the
matter has been decided) and prescription. The rule applied
mostly in common law actions for damages in delict, but also
in
claims for damages for breach of contract,
[51]
and
its purpose is to deter a multiplicity of actions in a single cause
of action and to ensure that there is an end to litigation.
[52]
[76]
In
answering the central question in the case, Corbett JA conducted
an extensive analysis of what the essential criterion of
a cause of
action is,
[53]
and
concluded that, although there is some overlap, the
facta
probanda
(the
facts required to be proven) a bodily injury claim differs
substantially from those in a loss of support claim. The two
causes of action may also conceivably arise at different times,
although they may flow from the same event (for example, where
the
breadwinner dies later, after the accident) and may otherwise lead to
serious anomalies, were they to be regarded merely as
facets of one
single indivisible cause of action. Thus, Corbett JA
ultimately concluded that a claim for damages for
bodily injuries was
distinct from a loss of support claim, even though they may both
arise from a common occurrence. In respect
of the case itself,
the Court held that the first summons encompassed two causes of
action. The claim for loss of support
was, however, not
properly and effectively prosecuted due to non compliance with
the prescripts in
section 25
of the Act. The first summons
had not interrupted prescription of that claim and it had thus become
prescribed.
[77]
The following
dictum of Corbett JA in
Evins
is instructive:
“
Where
a creditor has two rights, or causes, of action then there are two
corresponding debts. When it comes to the judicial
interruption
of prescription in terms of section 15, then, if the process
seeks to enforce two debts (or causes of action),
it will only
interrupt prescription in respect of both if it is effective as a
means of commencing legal proceedings in respect
of both. If it
is effective only in respect of one, then this will not enure for the
benefit of the creditor in respect of
the other”.
[54]
[78]
That
dictum authoritatively sets out the position regarding judicial
interruption of prescription – for prescription to be
judicially interrupted in respect of a damages claim, there must be
an extant claim for damages, that is,
a
right enforceable against the debtor in respect of which extinctive
prescription is running, when the initial proceedings are
instituted. Before dealing with
Allianz
and
Cadac
,
which are central to the mistaken reasoning of the first judgment and
that of the Supreme Court of Appeal, it is
useful to
have regard to an earlier case,
Neon and Cold Cathode Illuminations
,
[55]
cited by Howie J in
Allianz
.
That case concerned the question whether the appellant company’s
right of action against the respondent, a surety
and co-principal
debtor, had become prescribed under the previous
Prescription Act.
[56
]
The respondent had
originally incorrectly been sued as lessee. The claim was
dismissed for that reason and a new summons,
the subject of the
prescription issue, was then issued. Trollip JA explicated
the assessment whether actions for declaratory
orders would involve
the same cause of action as that on which the further litigation
would be founded as follows—
“
[I]n
order to effectively interrupt prescription . . . . there must . . .
. be (a) a right enforceable against the debtor in respect
of which
extinctive prescription is running, and, (b) a process served on that
debtor instituting legal proceedings for the enforcement
of . . . .
‘the same or substantially the same right as would otherwise be
rendered unenforceable by lapse of time.’”
[57]
[79]
Against that backdrop, I
discuss
Allianz
.
My colleague has dealt comprehensively with the facts of that
case.
[58]
It is necessary to add
that the plaintiffs there first sought declaratory orders in 1985
(the first plaintiff in August 1985
and the second plaintiff in
March 1985) that the defendant (Allianz) was liable in terms of
the insurance policy for all loss
or damage to the works as a result
of a storm, and was legally liable to make payment in terms of the
policy for that loss or damage.
But the debt had become due,
and prescription had already begun running, before then, on
7 October 1984. The Court’s
judgment and dicta
of Howie J, referred to by Mathopo J, must be understood
within this context. In dismissing
Allianz’s special plea
of prescription, the Court did so on the basis that service of the
action for declaratory relief in
1985 had interrupted the running of
prescription of the damages claim.
[80]
With reference to
Allianz
,
[59]
my Colleague finds that the case is
in pari materia
(on the same
subject/matter) with this one and “supports Mr Ferreira’s
contention that subsequent actions for damages
consequent upon an
order for specific performance are not separate proceedings, but
continuations of the initial legal action”.
Therefore,
finds Mathopo J, “[t]he Supreme Court of Appeal
thus correctly held that the cause of the
action for damages is the
same as that of the application for specific performance”.
[60]
I disagree.
[81]
As I see it, the primary distinction between this case and
Allianz
(and also
Cadac
, which I will discuss presently) is that
there, when the plaintiff in
Allianz
sued for loss incurred
due to storm damage, the plaintiff’s right to damages had
already accrued. The damages suit
was a first step to recover
the damages. What remained was only the quantification of the
damages. The portion of the
claim in respect of which the
prescription defence was raised was instituted at the same time as
the proceedings that interrupted
the running of prescription.
But here, as stated, when Mr Ferreira instituted proceedings
against Mr Rademeyer
which culminated in Pickering J’s
order of 7 August 2012, Mr Ferreira did not, as yet,
have an existing
claim for damages. At that stage, Mr Ferreira
was merely seeking an order for specific performance of the sale
agreement.
The sale had not yet been cancelled and there was in
law and in fact no basis for a claim for damages at that juncture.
[82]
I must in passing add that the parties’ agreement to proceed
before Pickering J
on the basis of a stated case appears to have
been poorly considered. The matter is complicated by the
ambiguous and opaque
order of Pickering J, who ordered specific
performance within five days of service of the order, failing which,
cancellation
and damages. That was pursuant to a draft order
placed before the High Court, which Pickering J then
accepted and
made an order of court. At the hearing in this
Court, counsel had great difficulty explaining what exactly the order
meant
and what its effect was on the commencement of the running of
prescription.
[83]
The special plea that Howie J had to adjudicate in
Allianz
,
bore some similarity to the factual scenario here, save in respect of
the important point of distinction to which I have already
alluded.
The Court explained:
“
The
special plea highlights the distinction between a claim for a
declarator and a claim for payment of money. The crux of
it is
that defendant's liability, if any, was to pay money, which debt was,
in terms of
section 11(d)
of the
Prescription Act 68 of
1969
extinguished by the passing of more than three years after
7 October 1984. By that date, says defendant, the
debt
had become due and plaintiffs knew the facts from which the debt
arose.”
[61]
[84]
The Court thus had to decide whether the subsequent proceedings for
the quantification
of damages would be a continuation of the initial
proceedings. As stated, the Court’s dismissal of
Allianz’s
special plea of prescription, was based on the fact
that service of the declaratory action in 1985 had interrupted the
running
of prescription of the damages claim. Howie J
emphasised:
“
Plaintiffs
are quite patently not seeking to obtain payment of part of the
indemnity now and part later. They are seeking
to enforce their
rights to the indemnity. If further proceedings are instituted
by plaintiffs in due course to exact payment
from defendant pursuant
to judgment 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. Although the relief sought in
the present case differs
from the relief which will, on the above supposition, be sought in
the second action, the precise form
of the relief and, if it is
monetary relief, the
quantum
thereof,
are not elements of the cause of action.”
[62]
[85]
The Court in
Allianz
emphasised that the cause
of action in the initial proceedings and the subsequent proceedings
were the same and cited the passage
from
Neon and Cold Cathode Illuminations
.
[63]
The important part of
that dictum of Trollip JA is that there must be
a
right enforceable against the debtor in respect of which extinctive
prescription is running
before
prescription can be effectively interrupted. That is absent in
the present instance, for the reasons I have advanced.
[86]
Cadac
concerned the wrongful seizure of Cadac’s kettle
grills at the instance of Weber Stephens, based on alleged
trademark
infringement and counterfeiting. In the High Court,
Cadac sought, amongst others, an order setting aside the warrant
under which the grills had been seized and an order for an inquiry
into damages. The High Court found that the warrant
of
seizure had been obtained irregularly and set it aside. That
Court postponed the prayer for damages
sine die
. Cadac
only pursued the damages claim three years and two days after the
judgment and order of the High Court relating
to the setting
aside of the warrant. Weber Stephens raised prescription
as a defence.
[87]
On appeal, one of the issues was the nature of Cadac’s claim in
the High Court.
This was because Weber Stephens
contended that at the time when the main application was launched,
the right to damages had
not yet accrued, and that the proceedings
for the recovery of damages (albeit in the form of an inquiry into
damages) were accordingly
premature. This argument was based on
the supposition that the warrant was not void, but voidable, and that
a cause of action
for wrongful attachment of goods could only arise
once the warrant had been set aside – until then it remained
valid.
[88]
The
Supreme Court of Appeal held that “the cause of
action for an interdict and one for damages is the same.
Only
the nature of the relief differs.”
[64]
The Court concluded that
the action for damages had accrued when the kettles were seized and
that, once the warrant was set aside,
it was set aside with
retrospective effect. The application for an inquiry into
damages had thus not been premature:
“
[T]he
claim relating to damages in the application to set aside the warrant
was not premature.
The
notice of motion was a process whereby proceedings were instituted as
a step in the enforcement of a claim for payment of a
debt.
This means that the running of prescription was interrupted
in
terms of
section 15(1)
of the
Prescription Act 68 of
1969
”.
[65]
(Emphasis added).
[89]
This case is different – as I have said, at the stage
when the matter came before Pickering J, there was no extant
claim
for damages in respect of which prescription had already
started running. It bears repetition that any claim for damages
at that time would have been premature, since Mr Ferreira was
seeking specific performance of the agreement and self evidently
could not approbate and reprobate with a simultaneous claim for
damages at that time.
Hypothetically
speaking, had Mr Ferreira complied with the order of specific
performance of Pickering J, there would have
been no
cancellation and consequently no right to claim damages based on such
cancellation. Therefore, Mr Ferreira’s
claim had
prescribed, since more than three years had passed between the date
when the debt was due and payable subsequent to cancellation
(which
had occurred five days after service of the order on Mr Rademeyer)
and the date when Mr Ferreira had issued summons
for the
recovery of the debt.
[90]
The double-barrelled approach does not assist Mr Ferreira.
The point of
departure in this regard is that the double-barrelled
approach is limited to an order for cancellation and not recognised
as appropriate
for an order for damages (whether it is in respect of
liability for prospective damages or a specific sum of prospective
damages).
That limitation accords with trite principles of
contract law enunciated earlier. On that approach, in the
present case,
what was left after the Pickering J order was not
merely the quantification of the damages claim. To establish
the existence
of a claim for damages, Mr Ferreira would still
have had to prove a further breach of contract, that is:
(a)
service of the order on Mr Rademeyer;
(b)
that Mr Rademeyer did not thereafter timeously comply with his
obligations under the
sale agreement; and
(c)
that as a result, the sale agreement was cancelled.
[91]
I reiterate
that Mr Ferreira’s
right of action only
arose subsequent to the issue of the Pickering J order. At
the time that the breach described by
the terms of the order
occurred,
Mr Ferreira
acquired a right of action to claim damages arising from such
cancellation. The fact that our Courts have recognised the
procedural mechanism of a double-barrelled approach does not have the
effect that Mr Ferreira could, through legal process
in the case
before Pickering J which concerned specific performance and not
damages, interrupt prescription insofar as his
claim for damages was
concerned.
[92]
In
sum then,
the
debt in this matter constitutes the contractual damages arising from
the cancellation of the contract. As defined by this
Court in
Makate
,
[66]
the obligation to pay the
debt, and the corresponding right to claim or receive payment, only
arose at the earliest upon cancellation
of the contract, which, as
stated, was on 23 August 2012. T
he
fresh breach and consequent damages could only in fact and law arise
after the Pickering J order. On first principles,
Mr Ferreira’s
conditional
election to cancel, in the event of non-compliance with the order of
Pickering J, only became available and effective
when
Mr Rademeyer failed to comply.
That
means that the institution of proceedings before Pickering J,
under case number (239/2012), could never serve to interrupt
prescription of that debt as the debt did not exist then or even
later, at the time of the Pickering J order. The judicial
interruption that did in fact occur, was of the debt relating to
specific performance and not in respect of damages. That
is the
crucial point of distinction between the first judgment and this
one. In the premises, the prescription point raised
in
Mr Rademeyer’s special plea was good and Mr Ferreira’s
claim for damages has prescribed.
[93]
For these
reasons, I would grant leave and uphold the appeal with costs,
including the costs of two counsel.
[94]
I make the
following order:
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Supreme Court of Appeal is set aside
and substituted with the following:
“
(a)
The appeal is upheld.
(b) The
order of the High Court dismissing the defendant’s special
plea is set aside and replaced with
an order upholding the special
plea.”
4.
The respondent is ordered to pay the costs of the applicant in this
Court, the Supreme Court of Appeal
and the High Court,
including the costs of two counsel, where so employed.
For the Applicant:
JJ
Nepgen SC
Instructed by
Manilal Brewis Attorneys
For the Respondent:
A Beyleveld
SC and TJD Rossi
Instructed
by
Friedman Scheckter
Attorneys
[1]
68
of 1969.
[2]
The erf was registered thus in the Deeds Office, under Gqeberha’s
previous name.
[3]
Rule 30(1)
relates to irregular proceedings and provides that a
party to a cause in
which an irregular step has been taken by any other party may apply
to court to set it aside.
[4]
According to
rule 33(4):
“
if,
in any pending action, it appears to the court
mero
motu
that there is a question of law or fact which may conveniently be
decided either before any evidence is led or separately from
any
other question, the court may make an order directing the disposal
of such question in such manner as it may deem fit and
may order
that all further proceedings be stayed until such question has been
disposed of, and the court shall on the application
of any party
make such order unless it appears that the questions cannot
conveniently be decided separately.”
[5]
Ferreira
v Rademeyer
,
unreported judgment of the High Court of South Africa, Eastern
Cape Division, Gqeberha, Case No 1256/15 (23 February 2021)
(
High Court
Judgment) at para 20.
[6]
Cadac
(Pty) Ltd v Weber Stephen Products Company
[2010] ZASCA 105
;
2011
(3) SA 570
(SCA) (
Cadac
).
[7]
Cape
Town Municipality v Allianz Insurance Co Ltd
1990
(1) SA 311
(C) (
Allianz
).
[8]
Rademeyer
v Ferreira
[2022]
ZASCA 92
; 2022 JDR 1993 (SCA) (Supreme Court of Appeal
judgment).
[9]
Allianz
above n 7 at 333G.
[10]
Supreme Court of Appeal judgment above n 8 at para
23.
[11]
Makate
v Vodacom (Pty) Ltd
[2016]
ZACC 13
;
2016 (4) SA 121
(CC);
2016 (6) BCLR 709
(CC) (
Makate
).
[12]
Desai
N.O. v Desai NNO
[1995]
ZASCA 113
;
1996 (1) SA 141
(A) (
Desai
N.O.
).
[13]
Off-Beat
Holiday Club v Sanbonani Holiday Spa Shareblock Limited
[2017] ZACC 15
;
2017 (5)
SA 9
(CC);
2017 (7) BCLR 916
(CC) (
Off Beat Holiday
Club
).
[14]
Custom
Credit Corporation (Pty) Ltd v Shembe
[1972]
ZASCA 28
;
1972 (3) SA 462
(A) (
Shembe
).
[15]
Id at 470.
[16]
Peter
Taylor & Associates v Bell Estates (Pty) Ltd
[2013] ZASCA 94; 2014
(2) SA 312 (SCA).
[17]
Section 167(3)(b)(i) and (ii) of the Constitution.
[18]
Road
Accident Fund v Mdeyide
[2010]
ZACC 18
;
2011 (1) BCLR 1
(CC);
2011 (2) SA 26
(CC) (
Mdeyide
).
[19]
Le Roux
v Coetzee & Seuns
[2023]
ZACC 46
;
2024 (4) SA 1
(CC);
2024 (4) BCLR 522
(CC) (
Le
Roux
)
at para 25;
Mtokonya
v Minister of Police
[2017]
ZACC 33
;
2017 (11) BCLR 1443
(CC);
2018 (5) SA 22
(CC) (
Mtokonya
)
at para 9;
National
Union of Metalworkers of SA obo Fohlisa v Hendor Mining Supplies (A
Division of Marschalk Beleggings (Pty) Ltd)
[2017]
ZACC 9
;
2017 (7) BCLR 851
(CC) at para 8; and
Mdeyide
above n 18 at para 138.
[20]
S v
Boesak
[2000]
ZACC 25
;
2001 (1) SA 912
(CC);
2001 (1) BCLR 36
(CC) at para 12.
[21]
Fraser
v Naude
[1998]
ZACC 13
;
1998 (11) BCLR 1357
(CC);
1999 (1) SA 1
(CC) at para 7.
[22]
Makate
above n 11.
[23]
Desai
N.O.
above
n 12.
[24]
Off Beat Holiday
Club
above
n 13.
[25]
Allianz
above n 7.
[26]
Cadac
above n 6.
[27]
Shembe
above
n 14.
[28]
Allianz
above n 7 at 331G J.
[29]
Id at 334A E.
[30]
Id at 334H I.
[31]
Allianz
above n 7 at 333G-H.
[32]
President
of the Republic of South Africa v Tembani
[2024]
ZACC 5
; 2024 JDR 1862 (CC); 2024 (9) BCLR 1152 (CC).
[33]
See, among others,
Mtokonya
above
n 19 at para 9 and
Le
Roux
above
n 19 at para 25.
[34]
Christie and Bradfield
Christie’s
Law of Contract in South Africa
8
ed (LexisNexis, South Africa 2019) at 642.
[35]
First judgment [42] – [53] with reference to
Allianz
above n 7.
[36]
Cadac
above
n 6.
[37]
First judgment at [49].
[38]
By
not signing all the transfer documents required to effect transfer;
furnish guarantees for payment of the balance of the purchase
price
or pay transfer costs and duties.
[39]
Mr Ferreira later abandoned the second defence that the order
of Pickering J constitutes a judgment debt in terms of
section 11(a)(ii)
of the
Prescription Act which
provides
that the prescriptive period for a judgment debt is 30 years, and
nothing more need be said about it.
[40]
Christie and Bradfield above n 34 at 675; Van Huyssteen et al
Contract:
General Principles
6
ed (Juta, Cape Town 2020) at 385 and 397.
[41]
Vol. 1, Para. 7.3 of the Particulars of Claim at p 35, lines 9 to
11.
[42]
Makate
above n 11 at para 195,
citing
Evins
v Shield Insurance Co Ltd
[1980]
ZASCA 3
;
1980 (2) SA 814
(A) (
Evins
)
at 842E-F; see also
Oertel
v Direkteur van Plaaslike Bestuur
1983
(1) SA 354 (A).
[43]
Van Huyssteen et al above n 40 at 429.
[44]
Id.
[45]
Id at 479.
I
do not agree with the contrary view that breach of contract does not
give rise to a new obligation. See in this regard
Lubbe
and Murray
Farlam
and Hathaway: Contract – Cases, Materials and Commentary
3 ed (Juta, Cape Town
1988) at 414
.
On that approach, prescription in respect of a claim for damages due
to breach of contract starts running as soon as the
original right
to performance becomes due; see also De Wet and Van Wyk
Die
Suid Afrikaanse
Kontraktereg en Handelsreg
5
ed (Butterworths, Durban 1992) at 294.
[46]
Shembe
above
n 14 at 469EE.
[47]
Compare
Coetzee
v SA Railways and Harbours
1933
CPD 565
at 576: “I know of no case which goes as far as to say
that a person who has as yet sustained no damage, can sue for
damages
which may possibly be sustained in the future”.
[48]
Evins
above
n 42 at 835A.
[49]
This entailed the claimant in terms of
section 25(1)
of the
Prescription Act submitting
a claim form (the so called
MVA 13 form), prior to issuing summons.
[50]
Defendant at the trial.
[51]
Corbett JA in
Evins
above n 42 at 835A D
citing, among others,
Shembe
above
n 14 at 472.
[52]
Id.
[53]
With reference to, among others,
Mckenzie
v Farmers’ Co-operative Meat Industries Ltd
1922
AD 16.
[54]
Evins
above n 42 at 842C-F.
[55]
Allianz
above n 7 at 333B C
citing
Neon
and Cold Cathode Illuminations
(Pty)
Ltd v Ephron
1978
(1) SA 464
(A) (
Neon
and Cold Cathode Illuminations
).
[56]
18 of 1943.
[57]
Neon
and Cold Cathode Illuminations
above
n 55 at 470H to 471A.
[58]
At [43] and following.
[59]
At [44] with reference to
Allianz
above n 7 at 334H I.
[60]
At [48].
[61]
Allianz
above
n 7 at 317C-D.
[62]
Id at 332H-333A.
[63]
Allianz
above n 7 at 333B-D with
reference to
Neon and Cold Cathode Illuminations
above n 55.
[64]
Cadac
above n 6 at para 18.
[65]
Id at para 19.
[66]
Makate
above n 11 at paras 85,
86 and 93.
sino noindex
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