Case Law[2023] ZACC 46South Africa
Le Roux and Another v Johannes G Coetzee and Seuns and Another (CCT 117/22) [2023] ZACC 46; 2024 (4) BCLR 522 (CC); 2024 (4) SA 1 (CC) (18 December 2023)
Constitutional Court of South Africa
18 December 2023
Headnotes
Summary: Prescription Act 68 of 1969 — section 12(3) — clients’ professional negligence claim against legal practitioner — knowledge of facts may include knowledge of a legal conclusion — exception to the general rule
Judgment
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## Le Roux and Another v Johannes G Coetzee and Seuns and Another (CCT 117/22) [2023] ZACC 46; 2024 (4) BCLR 522 (CC); 2024 (4) SA 1 (CC) (18 December 2023)
Le Roux and Another v Johannes G Coetzee and Seuns and Another (CCT 117/22) [2023] ZACC 46; 2024 (4) BCLR 522 (CC); 2024 (4) SA 1 (CC) (18 December 2023)
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sino date 18 December 2023
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT 117/22
In
the matter between:
PIETER
PAUL LE
ROUX
First Applicant
JOHANNA
CATHARINA LE ROUX
Second Applicant
and
JOHANNES
G COETZEE & SEUNS
First Respondent
DANIEL
CORNELIUS COETZEE
Second Respondent
Neutral
citation:
Le Roux and Another v
Johannes G Coetzee & Seuns and Another
[2023] ZACC 46
Coram:
Maya DCJ,
Kollapen J, Madlanga J, Majiedt J,
Makgoka AJ, Potterill AJ, Rogers J, Theron J and
Van Zyl AJ
Judgments:
Kollapen J (majority): [1] to [146]
Van Zyl AJ
(concurring in the result): [147] to [216]
Rogers J
(concurring): [217] to [235]
Heard
on:
16 May 2023
Decided
on:
18 December 2023
Summary:
Prescription Act 68 of 1969
—
section 12(3)
—
clients’ professional negligence claim against legal
practitioner — knowledge of facts may include knowledge
of a
legal conclusion — exception to the general rule
ORDER
On
appeal from the Supreme Court of Appeal (hearing an appeal from
the High Court of South Africa, Northern Cape Division,
Kimberley):
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:
“
The
appeal is dismissed with costs.”
4.
The respondents are to pay the applicants’ costs, including the
costs of
two counsel.
JUDGMENT
KOLLAPEN J (Maya DCJ,
Madlanga J, Majiedt J, Rogers J and Theron J
concurring):
Introduction
[1]
This
is an application for leave to appeal against the judgment and order
of the Supreme Court of Appeal which held that the
applicants’
claim against their erstwhile legal practitioner for damages arising
out of a breach of mandate claim had prescribed
in terms of the
Prescription Act
[1]
(Prescription Act). This matter turns on the “primary facts”
a client is required to have knowledge of for
the purposes of
prescription in a claim against their legal practitioner for
negligent breach of mandate – in particular
whether such
“primary facts” may include a legal conclusion. The
question arises in the context of section 12(3)
[2]
of the
Prescription Act which
provides that prescription will not
begin to run until the creditor has knowledge of the facts from which
the debt arises.
Parties
[2]
The applicants are Mr Pieter Paul le Roux and Ms Johanna
Catharina le Roux (applicants). The first respondent is the law
firm
Johannes G Coetzee & Seuns, and the second respondent is Mr
Daniel Cornelius Coetzee (Mr Coetzee), the applicants’
erstwhile legal practitioner, practising at the first respondent’s
offices (collectively referred to as the respondents).
Factual
background
[3]
This dispute’s genesis is in legal services provided by
Mr Coetzee to the applicants, in particular, the purported exercise
of an option to purchase a farm. The matter was decided on the
basis of agreed facts in the Supreme Court of Appeal
and only a
summation is necessary. I deal with: (a) the option; (b) the
first action between the applicants and the deceased
estate of the
owner of the farm; and (c) the breach of mandate action in this
section.
The
option
[4]
On 13 July 2000, the applicants were granted an option by
Mr Jan Harmse Steenkamp, the owner of a farm in the
Northern
Cape (property), to purchase the property (option). The
option could be exercised within two months of Mr Steenkamp’s
death, which subsequently occurred on 13 September 2003.
Thereafter, the applicants met with Mr Coetzee, and
mandated
him to represent them as their legal practitioner, and in
that capacity, advise them and exercise the option on their behalf.
In doing so, the applicants provided Mr Coetzee with the option.
He informed the applicants that the option was valid
and that
he would write a letter to the executor of Mr Steenkamp’s
estate exercising the option. Material to this
matter is that,
prior to leaving his offices, Mrs le Roux asked Mr Coetzee
whether it was necessary for them to
sign anything, to which
Mr Coetzee responded that it was not. On
26 September 2003, Mr Coetzee addressed
correspondence
to the executor of Mr Steenkamp’s estate purporting to
exercise the option on behalf of the applicants.
The
first action
[5]
However,
in breach of the option and without the applicants’ knowledge,
the property had already been sold by Mr Steenkamp
to a Mr Paul
Steenkamp Nel (Mr Nel) on 8 July 2003 and transferred
on 16 September 2003. Consequently,
the applicants brought
an action against Mr Steenkamp’s estate and Mr Nel to
enforce the option and claim
the transfer of the property (first
action). The first action was dismissed by the High Court
on the basis that the
exercise of the option was ineffectual, as it
did not comply with the requirements of section 2(1) of the
Alienation of Land
Act
[3]
in
that Mr Coetzee had failed to obtain the applicants’
written authority.
[4]
The
breach of mandate action
[6]
It was only as a result of the first action that the
applicants learnt of the non compliance with the Alienation of
Land Act
and the ineffectual exercise of the option by Mr Coetzee.
Consequently, the applicants brought an action for breach of mandate
seeking damages against the respondents (breach of mandate action).
The following events are material to the breach of mandate
action:
(a)
The option could have been exercised from
13 September 2003 until
12 November 2003.
(b)
The applicants mandated Mr Coetzee and the correspondence
purportedly
exercising the option, was despatched on 26 September 2003.
(c)
Initially, Mr Nel’s attorneys obtained
an opinion from counsel
advising that the applicants were entitled to the transfer.
After long and fruitless negotiations,
Mr Nel’s new attorneys
challenged the option on the basis of undue influence and that Mr le
Roux had allegedly misled the
late Mr Steenkamp. This led
to the applicants instituting the first action.
(d)
In January 2005, Mr Nel’s plea in the first action
was served. In response to an allegation in the particulars of
claim that the applicants had exercised and confirmed the
option in
writing, on 26 September 2003,
(“skriftelik
uiteoefen and bekragtig”), Mr Nel pleaded
:
“
Eerste
Verweerder erken dat Eisers gepoog het om die opsie skriftelik uit te
oefen en te bekragtig. Behoudens die voorgaande
word die inhoud
van hierdie paragraaf ontken.”
[First
Defendant admits that the Plaintiffs attempted to exercise and
confirm the option in writing. Save for the aforesaid,
the
content of this paragraph is denied.]
(e)
On or about 17 May 2005, the applicants terminated
Mr Coetzee’s
mandate and on 22 June 2005 they appointed Nilssens Attorneys as
their new attorneys.
(f)
Nilssens Attorneys briefed counsel to deal
with the first action.
Neither advised the applicants that Mr Coetzee was required to
have their written authority
in order to validly exercise the option.
(g)
In early November 2007, during the trial of the first
action,
Mr Coetzee’s non-compliance with the Alienation of Land
Act was put to Mr le Roux during his cross-examination.
For the first time, the applicants were alerted to the fact that
Mr Coetzee’s purported exercise of the option had been
ineffectual for want of compliance with section 2(1) of the
Alienation of Land Act. The proposition was as follows:
“
Wel
laast daar geen misverstand is nie, ek stel dita an u in termed at op
wat Coeetzee gedpen het op getuienis en dekumentasia tot
nou toe voor
heirdie Hof, is dit die Eestre Veweerder se saak dat daar nie voldoen
was aan die vereistes van Artikel 2(1) van die
Wet op Vervreemding
van Grond nie end at alleen om daardie rede u eis nooit kan slaag
nie.”
[I
put it to you that in terms of what Coetzee did in evidence and in
documentation until now before this Court, it is the First
Defendant’s case that there has not been compliance with the
requirements of section 2(1) of the Alienation of
Land Act
and for that reason alone your claim cannot succeed.]
(h)
On 11 September 2009, judgment was handed down in the
first action
dismissing the applicants’ claim and confirming the
non-compliance with the Alienation of Land Act.
(i)
On 29 September 2009, the applicants
served the summons in the
breach of mandate action on the respondents.
(j)
On 10 March 2010, in response to the
breach of mandate action,
the respondents filed a special plea of prescription in terms of the
Prescription Act.
[7
]
It is the breach of mandate claim which is the subject of the
application before this Court.
Litigation
history
High Court
[8]
The respondents’ special plea of prescription in the
High Court was that non compliance with the Alienation of Land
Act
was a legal conclusion, and not a fact, for purposes of
section 12(3)
of the
Prescription Act. It
was therefore
not open to the applicants to rely on November 2007 as the date from
which prescription began to run as non-compliance
with the Alienation
of Land Act was a legal conclusion knowledge of which was not
necessary for prescription to commence running.
They contended
that prescription started to run on 13 November 2003, when the option
lapsed without having been validly exercised.
In the
alternative, the respondents submitted that the applicants
should have become aware of non-compliance with the Alienation
of
Land Act in 2005 upon receipt of Mr Nel’s plea in the
first action, or thereafter pursuant to the appointment of
new
attorneys.
[9]
The High Court found in the applicants’ favour and
dismissed the special plea with costs. It held that
non-compliance
with the Alienation of Land Act was not a legal
conclusion, but a fact that the applicants were required to have
knowledge of in
terms of
section 12(3)
of the
Prescription Act.
The
Court accepted that the applicants only acquired knowledge of
this during the cross examination of Mr le Roux.
[10]
In
its reasoning in dismissing the special plea of prescription, the
High Court said that a “basic and material”
ingredient of the applicants’ cause of action was a material
breach of the mandate. It then said that setting out the
cause
of action without pleading the implied term and the breach would
render the claim excipiable. This, it said, led to
the
inescapable conclusion that non-compliance with the provisions of
section 2(1) of the Alienation of Land Act was a fact
of which
the applicants had to have knowledge and not a legal conclusion.
[5]
The High Court granted the respondents leave to appeal its
judgment and order to the Supreme Court of Appeal.
Supreme Court
of Appeal
[11]
The
Supreme Court of Appeal confirmed that in terms of
section 12(3)
of the
Prescription Act, “the
facts from which the debt
arises” are those minimum essential facts required to prove a
claim and that prescription begins
to run when the creditor has
knowledge of these facts, but that the same position does not apply
to legal conclusions arising from
the facts.
[6]
As such, the Supreme Court of Appeal held that a two step
enquiry is required where prescription is raised.
The court
must, first, determine the primary facts; and second, the knowledge
or deemed knowledge thereof.
[12]
The
Supreme Court of Appeal relied on a series of cases, including
Truter
[7]
and
Mtokonya
,
[8]
and upheld the appeal on the basis that knowledge of legal
conclusions drawn from the facts was not required for prescription to
run. It also referred to
Yellow Star
Properties
[9]
where the Supreme Court of Appeal affirmed that the failure to
appreciate the legal consequences which flowed from the facts
does
not delay the date from which prescription starts to run.
[10]
[13]
The Supreme Court of Appeal found that the applicants had
the minimum facts to institute a claim on 26 September 2003. This
included the consultation with Mr Coetzee, the advice that the
applicants need not sign anything, the mandate provided to
Mr Coetzee
to exercise the option, and the subsequent letter of
26 September 2003 sent by Mr Coetzee to the executor
of Mr
Steenkamp’s estate. In addition, it also found that the
applicants were aware of these primary facts when they
suffered
damages with the lapsing of the option on 13 November 2003.
Alternatively, they should reasonably have had
knowledge thereof when
they appointed their new attorneys and consulted with them in
June 2005. The Supreme Court of
Appeal accepted that the
applicants only became aware of the non-compliance with the
Alienation of Land Act during the cross-examination
of
Mr le Roux in November 2007. However, it held that
this was a legal conclusion, not a fact from which the claim
arose
and, as such, was unrelated to the commencement of the running of
prescription. The Supreme Court of Appeal
upheld the
appeal in favour of the respondents.
In
this Court
[14]
Aggrieved by the decision of the Supreme Court of Appeal,
the applicants approached this Court seeking leave to appeal against
the judgment and order of the Supreme Court of Appeal. The
Chief Justice issued set-down directions and called on the
parties
to
file written argument on the merits of the appeal.
In
addition, the parties were directed to file written submissions on
the following issues:
(a)
In the light of the facts of this matter,
where clients claim from
their legal practitioner for giving them incorrect advice about the
law, is knowledge that the advice
was wrong to be treated, for
purposes of prescription, as knowledge of a fact?
(b)
If, for purposes of prescription, the applicants
did not have the
requisite knowledge in September-November 2003 (when the option was
ineffectually exercised and then lapsed),
did the applicants acquire
the requisite knowledge, or could they by exercising reasonable care
have acquired the requisite knowledge,
when they terminated the
mandate of their previous attorneys and instructed new attorneys in
June/July 2005?
Applicants’
submissions
Jurisdiction and leave
to appeal
[15]
The
applicants argue that the jurisdiction of this Court is engaged in a
number of respects. They say that, to the extent
that the
matter involves the interpretation of the
Prescription Act, this
raises a constitutional issue as this Court found in
Links
.
[11]
They further submit that the judgment of the Supreme Court of
Appeal will result in legal uncertainty as that Court
deviated from
its own jurisprudence in
McMillan
,
[12]
Bath
[13]
and
WK
Construction
,
[14]
with regard to when the running of prescription commences in
professional negligence claims. Relying on
Beadica
,
[15]
the applicants say that certainty is accordingly required, and it is
for this Court to provide it. Finally, the applicants
argue
that the judgment of the Supreme Court of Appeal has created an
insurmountable hurdle for litigants seeking to claim
from their
erstwhile legal practitioners. In order to avoid the adverse
consequences of prescription, a client who receives
advice from a
legal practitioner is required to scrutinise and test the correctness
of that advice when it is received. This,
they say, is
impractical and unfair and in violation of the right of access to
court which section 34 of the Constitution guarantees.
Merits
[16]
The
applicants contend that the breach of mandate is a primary fact, and
that prescription could not start running until such time
as they had
knowledge of the breach. The applicants rely on
Links
,
where this Court held that knowledge of the factual element of
negligence is a “fact” in the context of
section 12(3)
of the
Prescription Act.
[16
]
They say, in addition, that
Links
held that in cases of professional negligence, a party seeking to
rely on prescription must show that the plaintiff was in possession
of sufficient facts to cause them on reasonable grounds to think that
the injuries were due to the fault of the medical staff,
recognising
that a claim of this nature is usually premised on a layperson
seeking professional services of which they know little.
[17]
[17]
Further, the applicants submit that the judgment in
McMillan
,
which was confirmed by
Bath
, applies the same ratio as those
in
Links
and
WK Construction
. These judgments,
they say, all hold that prescription only commences when there are
reasonable grounds for suspecting that
the advice, they had been
given was incorrect and the creditor has an opportunity to
investigate further.
[18]
Accordingly, the applicants say that they only acquired actual
knowledge of the breach during Mr le Roux’s cross-examination
in the first action. As to constructive knowledge, they also
say that they could not, with the exercise of reasonable care,
have
acquired knowledge of the breach of mandate at any earlier time than
in November 2007, when this emerged during the cross-examination
of Mr le Roux.
Respondents’
submissions
Jurisdiction
and leave to appeal
[19]
The respondents dispute that the application engages the
jurisdiction of this Court on any basis. They say, without
conceding
that much, that if the Supreme Court of Appeal
erred in the application of the law by failing to follow precedent,
it
was a case of the misapplication of a settled principle of law.
This, they say, does not engage the jurisdiction of this Court.
In addition, they contend that leave to appeal should not be granted
as the dispute before this Court is factual and not located
in any
principle of law which requires the attention of this Court.
Merits
[20]
The respondents submit that the facts for the purposes of
section 12(3)
are that the respondents had—
(a)
been given a mandate by the applicants to
exercise an option on their
behalf;
(b)
purported to exercise the option on their behalf;
and
(c)
attempted to do so without the written authorisation
of the
applicants.
[21]
Conversely, the respondents contend that knowledge that the
purported exercise of the option was ineffectual for non-compliance
with the Alienation of Land Act, is a legal conclusion.
[22]
The
respondents submit that the applicants require this Court to deviate
from the findings of the Supreme Court of Appeal and
this Court
in the matters of
Fluxmans
[18]
and
Mtokonya
,
respectively. They argue that these judgments draw a clear
distinction between the facts from which a debt arises and the
legal
conclusions to be drawn from such facts. Further, the
respondents submit that
Fluxmans
and
Mtokonya
support the proposition that knowledge of the legal consequences of
the facts was not required for prescription to run.
[19]
As knowledge of non-compliance with the Alienation of Land
Act was a legal conclusion, knowledge thereof was
not required.
Instead, they conclude that prescription began to run when the
applicants had knowledge of the primary facts
either on 26 September
2003, when the respondents purported to exercise the option without
any written authority, alternatively
on 13 November 2003, when
the two-month period for the exercise of the option, expired.
[23]
The respondents also contend that, if the applicants did not
have actual knowledge of the breach of the mandate before November
2007, they could, by the exercise of reasonable care, have acquired
such knowledge. They say that this should have occurred
in
January 2005 when the plea in the first action was filed, and
additionally thereafter when the applicants changed legal
practitioners
and engaged the services of Nilssens Attorneys in
mid-2005.
Issues for
determination
[24]
The following issues are to be determined:
(a)
Does the matter engage the jurisdiction of
this Court?
(b)
Can the facts as contemplated in
section 12(3)
of the
Prescription
Act in
a negligence action against a legal professional (including a
claim based on the furnishing of incorrect legal advice or the
failure
to discharge a mandate) include a legal conclusion?
(c)
On the agreed facts, when did the applicants
acquire knowledge of
such facts?
(d)
On the agreed facts, when could the applicants,
by the exercise of
reasonable care, have acquired such knowledge?
Jurisdiction
and leave to appeal
[25]
A
consequence of extinctive prescription is that it extinguishes a
right of action that a party would ordinarily have under section
34
of the Constitution. To that extent, the interpretation of
section 12(3)
of the
Prescription Act raises
a constitutional matter
engaging this Court’s jurisdiction under section 167(3)(b)(i)
of the Constitution.
[20]
[26]
In
addition, the discrete legal point as to what constitutes the
relevant “facts” contemplated in
section 12(3)
of
the
Prescription Act in
actions of professional negligence against
legal practitioners also engages this Court’s jurisdiction
under section 167(3)(b)(ii)
of the Constitution, as it raises an
arguable point of law of general public importance. The
interpretative question located
in
section 12(3)
of the
Prescription
Act is
whether a client who sues a legal practitioner for damages in
a claim based on professional negligence must have knowledge, that
there was, as a matter of law, a breach of mandate as part of the
facts on which the claim is based. It is arguable in all
of the
respects alluded to by this Court in
Paulsen
,
[21]
in that:
(a)
there is no authoritative pronouncement on
the issue, with available,
cogent academic or expert views on it being divergent;
(b)
it raises new and difficult questions of law; and
(c)
the answer
to the question in issue is not readily discernible.
[22]
[27]
Further, the point of law extends beyond the interests of the
parties to this litigation, having relevance for the legal profession
as a whole and the public who seek and engage their professional
services. Finally, it is a point of law that ought to be
determined and it is therefore important for this Court to pronounce
on the issue in the interests of legal certainty.
[28]
In addition, it is in the interests of justice that leave to
appeal be granted. It is not an issue that has previously
enjoyed
the attention of this Court. There are good prospects
that this Court will reverse or materially alter the decision of
the Supreme Court of Appeal. I find in favour of the
applicant on jurisdiction and leave to appeal. Leave to appeal
is granted.
Analysis
Legal
framework
Right
of access to courts and legal certainty
[29]
The proposition that a claim, otherwise valid in law and even
one that is unassailable, may be extinguished if not asserted within
the time provided by the law is unsettling. It is unsettling,
as its effect is to negate the substance of the right conferred
by
section 34 of the Constitution “to have any dispute that can be
resolved by the application of law decided in a fair public
hearing
before a court or, where appropriate, another independent and
impartial tribunal or forum”.
[30]
The
right of access to courts is central to the functioning of any
democratic society and was described by this Court in
Barkhuizen
,
[23]
as follows:
“
Our
democratic order requires an orderly and fair resolution of disputes
by courts or other independent and impartial tribunals.
This is
fundamental to the stability of an orderly society. It is
indeed vital to a society that, like ours, is founded
on the rule of
law. Section 34 gives expression to this foundational value by
guaranteeing to everyone the right to seek
the assistance of a
court.”
[24]
[31]
In
addition, in
Chief
Lesapo
[25]
this Court said:
“
The
right of access to court is indeed foundational to the stability of
an orderly society. It ensures the peaceful, regulated
and
institutionalised mechanisms to resolve disputes, without resorting
to self-help. The right of access to court is a bulwark
against
vigilantism, and the chaos and anarchy which it causes. Construed
in this context of the rule of law and the principle
against
self-help in particular, access to court is indeed of cardinal
importance. As a result, very powerful considerations
would be
required for its limitation to be reasonable and justifiable.”
[26]
[32]
At the same time, it is unfair for those against whom such
claims are brought to have to unduly wait for those claims to emerge
and be adjudicated upon. The ability to adequately respond to
such claims, to locate documents that may be relevant, to trace
relevant witnesses and to generally prepare properly to meet a claim,
is all prejudiced by long periods of delay. In much
the same
way, the right to a fair public hearing that section 34
contemplates may also be undermined by undue delay in asserting
a
claim.
[33]
In
Mdeyide
[27]
this Court referred to extinctive prescription as advancing the
interests of social certainty when it said:
“
In
the interests of social certainty and the quality of adjudication, it
is important, though, that legal disputes be finalised
timeously.
The realities of time and human fallibility require that disputes be
brought before a court as soon as reasonably
possible. Claims
thus lapse, or prescribe, after a certain period of time. If a
claim is not instituted within a fixed
time, a litigant may be barred
from having a dispute decided by a court. This has been
recognised in our legal system –
and others – for
centuries.”
[28]
[34]
It is between these imperatives – the right of access to
court and the need for legal certainty – that the law of
extinctive
prescription must carefully navigate in order to do
justice to both. The effect of extinctive prescription is to
permanently
extinguish the right of access to court which would
otherwise be intact. The consequences of delay for the debtor
might not
be as far-reaching, as the debtor would still retain the
opportunity to contest the claim. In one instance, the effect
is
permanent and dispositive of the right, while, in the other
instance, it is relative and not as far-reaching. It is within
this context that
section 12
of the
Prescription Act is
located.
Section
12
of the
Prescription Act
[35
]
Section 12
of the
Prescription Act provides
, in relevant
parts, as follows:
“
(1)
Subject to the provisions of subsections (2), (3), and (4),
prescription shall commence to run as soon as the debt is due
.
(2)
If the debtor wilfully prevents the creditor from coming to know of
the existence
of the debt,
prescription shall not commence to run
until the creditor becomes aware of the existence of the debt
.
(3)
A debt shall not be deemed to be due until
the creditor has
knowledge of the identity of the debtor and of the facts from which
the debt arises
: Provided that a creditor shall be deemed to have
such knowledge if he could have acquired it by exercising reasonable
care.”
(Emphasis added.)
[36]
In
Coboza
,
[29]
the Supreme Court of Appeal set out the manner in which the
issue of prescription, and specifically
section 12(3)
of the
Prescription Act, should
be applied. They are:
(a)
what are the facts from which the debt arises
(“the primary
facts”); and
(b)
when were
the primary facts known, or when should they reasonably have been
known, to the creditor?
[30]
[37]
While
section 12
provides the framework within which claims of extinctive
prescription are to be adjudicated, its interpretation takes place
against
the backdrop of the Constitution, as section 39(2)
reminds us that “[w]hen interpreting any legislation, and when
developing
the common law or customary law, every court, tribunal or
forum must promote the spirit, purport and objects of the Bill of
Rights”.
[31]
[38]
There are a number of features of the section that require
consideration and they relate in the main to knowledge – what
it
means, when it is acquired or deemed to be acquired and what would
constitute the facts for purposes of section 12(3).
The
content and scope of the knowledge requirement
[39]
A
dominant theme of
section 12(3)
of the
Prescription Act is
that
prescription generally runs against a creditor when there is either
knowledge or awareness of the debt. While knowledge
and
awareness may have different meanings depending on the context,
[32]
they can also be used interchangeably. In the context of the
section, they generally refer to the same thing – the
facts
from which the debt arises as well as the identity of the debtor that
the creditor has knowledge of or is deemed to have
knowledge of, if
the creditor could have acquired it by exercising reasonable care.
[40]
The knowledge that
section 12(3)
contemplates could be either actual or deemed. Actual knowledge
relates to the subjective knowledge that a creditor acquires
of a
fact while deemed knowledge is that which a creditor could have
acquired by exercising reasonable care.
[41]
In
Brand
[33]
the Court said whether conduct would constitute failure to take
reasonable care would depend on a number of factors. It said:
“
Whether
the failure on the part of the creditor to take such steps amounts to
a failure to exercise reasonable care within the meaning
of the
proviso or not depends, in my view, upon a consideration of all the
circumstances relevant to the creditor’s conduct,
including, in
the context of the present case, such factors as the plaintiff’s
physical and mental condition, the pain he
was suffering, his memory
function and the environment in which he then found himself.”
[34]
[42]
In addition, in
Truter
the Court said in the context of when prescription began to run:
“
By
contrast, in the present case, it is abundantly clear that Deysel
believed
and appreciated
from as early as 1994 that a wrong had been done to him by Drs Truter
and Venter.”
[35]
(Emphasis added.)
The general rule that
legal conclusions are not primary facts
[43]
Our courts have drawn a distinction
between primary facts and legal conclusions for the purpose of what
constitutes knowledge of
the facts under
section 12(3).
A
general rule has emerged that legal conclusions do not constitute
facts. Therefore, knowledge of such legal conclusions
is not
required by a creditor for purposes of
section 12(3).
[44]
In
Truter
,
the Supreme Court of Appeal drew a clear distinction between
facts and legal conclusions when it said:
“
In
a delictual claim,
the requirements of
fault and unlawfulness do not constitute factual ingredients of the
cause of action, but are legal conclusions
to be drawn from the
facts
:
‘
A
cause of action means the combination of facts that are material for
the plaintiff to prove in order to succeed with his action
.
Such facts must enable a court to arrive at certain legal
conclusions regarding unlawfulness and fault the constituent elements
of a delictual cause of action being a combination of factual and
legal conclusions, namely a causative act, harm, unlawfulness
and
culpability or fault.’”
[36]
(Emphasis added.)
[45]
This
approach was accepted and approved by this Court in
Links
[37]
and
Mtokonya
.
[38]
[46]
In
Links
,
this Court clearly distinguished the factual and the legal elements
of negligence and causation and emphasised that, until there
was
knowledge of facts that would have led the creditor “to think
that possibly there had been negligence and that this had
caused his
disability, he lacked knowledge of the necessary facts contemplated
in
section 12(3)
”.
[39]
This highlights both the relationship as well as the distinction
between the factual and the legal components of a case.
[47]
In
Mtokonya
, this Court, in dealing with the
distinction between facts and legal conclusions, said:
“
Furthermore,
to say that the meaning of the phrase ‘the knowledge of . . .
the facts from which the debt arises’ includes
knowledge that
the conduct of the debtor giving rise to the debt is wrongful and
actionable in law would render our law of prescription
so ineffective
that it may as well be abolished. I say this because
prescription would, for all intents and purposes, not
run against
people who have no legal training at all. That includes not
only people who are not formally educated but also
those who are
professionals in non-legal professions. However, it would also
not run against trained lawyers if the field
concerned happens to be
a branch of law with which they are not familiar. The
percentage of people in the South African population
against whom
prescription would not run when they have claims to pursue in the
courts would be unacceptably high. In this
regard it needs to
be emphasised that the meaning that we are urged to say is included
in
section 12(3)
is not that a creditor must have a suspicion
(even a reasonable suspicion, at that) that the conduct of the debtor
giving rise
to the debt is wrongful and actionable but we are urged
to say that a creditor must have knowledge that such conduct is
wrongful
and actionable in law. If we were asked to say a
creditor needs to have a reasonable suspicion that the conduct is or
may
be wrongful and actionable in law, that would have required
something less than knowledge that it is so and would not exclude too
significant a percentage of society.”
[40]
[48]
This Court was clear in its view that a creditor is not
required to have knowledge that the conduct of the debtor was
wrongful and
actionable in law for the purposes of
section 12(3).
On the other hand, this Court also reasoned that a requirement for a
creditor to have a reasonable suspicion that conduct
was wrongful and
actionable might be different. This Court left open the meaning
to be attributed to
section 12(3)
and said that it would not
exclude a suspicion of wrongful and actionable conduct, as opposed to
knowledge that such conduct was
wrongful and actionable
.
As I understand it, the suspicion that conduct would be actionable or
wrongful would be a fact; it could never constitute
a legal
conclusion. A suspicion is, by its very nature, incompatible
with a conclusion of law. On the other hand, knowledge
of
wrongfulness, fault or negligence would constitute conclusions of
law.
[49]
Relatedly,
in
Haward
,
[41]
the House of Lords also referred to the issue when it said:
“
A
linguistic point, which can give rise to confusion, should be noted
here. Sometimes the essence of a claimant’s case
may lie
in an alleged act or omission by the defendant which cannot easily be
described, at least in general terms, without recourse
to language
suggestive of fault: for instance, that ‘something had gone
wrong’ in the conduct of the claimant’s
medical
operation, or that the accountant’s advice was ‘flawed’.
Use of such language does not mean the
facts thus compendiously
described have necessarily stepped outside the scope of
section 14A(8)(a).
In this context there can be no
objection to the use of language of this character so long as this
does not lead to any blurring
of the boundary between the essential
and the irrelevant.”
[42]
The knowledge requirement
in professional negligence claims
[50]
In instances involving claims
against professionals based on negligence, a creditor may have
knowledge of facts but may, due to
a lack of expert knowledge, be
unable to discern from those facts that something wrong has
occurred. Those facts may well
objectively constitute the
necessary facts to institute an action seen from the perspective of
someone knowledgeable in the field
(for example, medicine,
engineering or auditing). However, to a creditor who lacks such
expertise, they may not say the same
thing. It would be harsh
in those situations to say that the creditor has knowledge of the
facts from which the debt arises.
[51]
This is precisely the situation that
this Court described in
Links
when dealing with a medical negligence claim, it said:
“
It
seems to me that it would be unrealistic for the law to expect a
litigant who has no knowledge of medicine to have knowledge
of what
caused his condition without having first had an opportunity of
consulting a relevant medical professional or specialist
for advice.
That in turn requires that the litigant is in possession of
sufficient facts to cause a reasonable person to
suspect that
something has gone wrong and to seek advice.”
[43]
[52]
This
was also the approach followed by the Supreme Court of Appeal in
WK Construction
,
[44]
a case involving professional negligence by an auditor, where the
Court said:
“
The
question is, accordingly, whether, by 22 August 2013, it can be said
that the known facts would have caused WK Construction,
on reasonable
grounds, to have suspected that there was fault on the part of Mazars
so as to cause it to seek further advice.
Stated differently,
whether
WK
Construction
had ‘knowledge of facts that would have led [it] to think that
possibly there had been negligence [on the part of Mazars]
and that
this had caused’ its loss from the fraud perpetrated by Mr
Maartens.”
[45]
[53]
Two propositions emerge from
Links
and
WK Construction
.
First, we are able to say that in professional negligence cases, at
least in cases involving professionals other than lawyers,
knowledge
of the facts for the purpose of
section 12(3)
will arise when
the creditor knows, or should on reasonable grounds know, that
something wrong has occurred. This may be
preceded by a
suspicion to that effect which will require the creditor to make
further enquiry or seek expert advice as part of
the exercise of
reasonable care. The reference to “something wrong”
occurring, or a “suspicion of fault”,
or of “negligence”
is not a reference to knowledge of a wrong in the legal sense, but
rather a reference to the existence
of facts that should instil in
the creditor a belief that something had gone wrong.
[54]
Second, it also follows from the
above that in professional negligence cases, a mere suspicion that
some wrong has occurred would
not trigger the running of
prescription. If the facts are such that they give rise to a
suspicion of some wrongdoing on the
part of another, it would warrant
further enquiry. Prescription would start to run upon the
conclusion of that enquiry if
the suspicion is confirmed or upon the
expiry of a reasonable period for investigating the matter and coming
to a conclusion.
[55]
However, if the nature of the facts
is such that they do not appear to a reasonable person to suggest
wrongdoing on the part of
another, the creditor would not be at risk
and prescription will not start to run.
Links
tells us that in such situations, prescription would only start to
run when the creditor knows or on reasonable grounds should
know that
a wrong has been committed by an identified party and the facts
giving rise to it. It is then that the creditor
has knowledge
of the identity of the debtor and the facts from which the debt
arises. That prescription should start to run
from that point
accords with the language of
section 12(3)
, gives effect to the
rights in
section 34
of access to court and does not unduly
impede the right to a fair hearing that a debtor is also entitled to
under
section 34.
[56]
These principles have not been
contentious. In cases such as
Links
and
WK Construction
,
the expert, or further, advice that the court made reference to would
have constituted facts and not legal advice or a legal conclusion.
The advice would fit relatively seamlessly into the scheme of
section
12(3)
as primary facts. However, the problem is that not all
expert advice fits neatly into the characterisation of a fact, as I
explain below.
The
difficulty with the general rule in legal professional negligence
claims
[57]
The application before this Court is
one based on professional negligence on the part of a legal
practitioner and the applicants
have argued that there should be no
difference in the approach in this case to that taken in professional
negligence cases such
as
Links
(medicine) and
WK Construction
(auditing). They say that if a medical or auditing conclusion
would constitute a fact for the purpose of
section 12(3)
, there
is no reason why a legal conclusion should not be treated in the same
way in a claim for professional negligence against
a legal
practitioner for allegedly deviating from the standard of reasonable
attorneys. At first sight, this may seem to
be a persuasive
proposition but there are difficulties that it runs into.
What
is the difficulty?
[58]
In cases involving a claim for damages based on the
professional negligence of a legal practitioner, the
facts-versus-legal-conclusion
distinction arises much more sharply
and raises a conceptual difficulty in maintaining the separation
between facts and legal conclusions
that cases such as
Mtokonya
and
Truter
speak to.
[59]
The
attorney-client relationship is understood to be “of a very
special character with certain aspects peculiar to itself”.
[46]
An attorney—
“‘
must
be meticulous, accountable, . . . He or she must serve his
client faithfully and diligently and must not be guilty of
any
unnecessary delay. He or she must once he or she has undertaken
the client’s case, not abandon it without lawful
reason or
excuse. An attorney who fails to explain his or her precise
instructions and lays possum invites an adverse inference
against him
or herself . . .’
‘
An
attorney is liable for the consequence of gross negligence if he or
she displays a lack of reasonable skill and diligence in
the
performance of his or her duties in matters within his or her field
of practice, expertise or knowledge.’
‘
An
attorney’s liability arises out of contract and his or her
exact duty towards his or her client depends on what he or she
is
employed to do. In the performance of his or her duty or
mandate, an attorney holds himself or herself out to his or her
clients as possessing the adequate skill, knowledge and learning for
the purpose of conducting all business that he or she undertakes.
If, therefore, he or she causes loss or damage to his or her
client owing to a want of such knowledge as he or she ought
to
possess, or the want of such care he or she ought to exercise, he or
she is guilty of negligence giving rise to an action for
damages by
his or her client against him or her.’”
[47]
[60]
People
seek the services of a legal practitioner for a variety of reasons –
but in the main, they seek legal advice or require
the provision of
legal professional services. It would be fair to say that those
who seek professional legal services are
not knowledgeable in the law
and its intricacies. In a country such as ours, where
the Constitution and the law occupy
a central place in the lives
of people, many rely on the advice and services of legal
practitioners to navigate their way around
the choices they must
make, the conduct they must conform to and generally how they must
live their life as constitutional subjects.
When this happens,
it would also be fair to say that reliance may reasonably be placed
on the legal advice received or an undertaking
that the legal
practitioner will carry out the given mandate professionally and
diligently. An assurance that it has been
discharged may be
similarly treated. In
Waglines
,
[48]
Didcott J alluded to the duty to acquaint one with the area of
law they were involved in and to seek advice to that effect
if
necessary:
“
Sometimes,
to be sure, the duty to investigate will be performed satisfactorily
when advice on the lawfulness or otherwise of the
course envisaged is
obtained from a source ostensibly qualified to furnish such, and to
think it lawful will be reasonable once
the assurance has thus been
given that it is.”
[49]
[61]
The
large majority of people who consult legal practitioners do not have
any independent basis to test the correctness of the advice
received
or to interrogate an assurance that a mandate has been professionally
discharged. They would not, in any event,
have any need to do
so. That is the nature of the knowledge gap between
professionals and laypersons, reinforcing the reliance
that people
place on professionals in many areas of their lives – the
medical, accounting, engineering and legal spheres.
[50]
It is for these reasons that legal practitioners are subject to
professional and regulatory bodies.
[62]
While
the legal position in other areas of professional negligence is
relatively uncomplicated,
[51]
when a legal practitioner gives incorrect legal advice or fails to
discharge a mandate by overlooking a legal requirement, the
legal
position is different. The reason for this lies primarily in
the facts-versus-legal-conclusions distinction. This
distinction does not carry the same significance in claims against
professionals who are not legal practitioners. In the
case of
other professions, the furnishing of an expert opinion would require
the expert to apply the rules of that discipline to
the facts at hand
and reach a professional conclusion. That conclusion would not
be a legal conclusion but, for example,
a radiological, an auditing
or an engineering conclusion. That conclusion may well
constitute a primary fact from which a
debt arises. Our law
offers no impediment in recognising that knowledge of such a
conclusion may in appropriate cases be
required before prescription
starts to run.
[52]
[63]
Different considerations, however, apply when that
professional is a legal practitioner, as the application of legal
rules to the
facts would result in a legal conclusion. Just as
someone who does not understand engineering would seek the view of an
engineer
to advise on possible defective engineering advice given, in
other instances, someone may need to consult a legal practitioner to
advise on a legal issue that may relate to advice previously given by
another legal practitioner. In the latter instance,
the legal
advice received may run into the barrier of the exclusion of legal
conclusions as primary facts. In the former
case, it would
not. This distinction may appear to be arbitrary and with
prejudicial consequences to some.
[64]
At the time the incorrect advice is given, or a mandate is
purportedly discharged, the client would generally not know that the
advice was incorrect or that the mandate was not properly
discharged. Either may have occurred as a matter of fact. Yet
the knowledge and appreciation that the advice was incorrect or that
the mandate was not properly discharged may only emerge much
later.
This may emerge as a result of a legal conclusion – an opinion,
advice or a ruling by a court and on a timeline
which may be
unpredictable.
[65]
In
Mtokonya
the Court referred to what constitutes a
legal conclusion by referring, in part, to an article by Clarence
Morris which says:
“
A
conclusion of law results when legal effects are assigned to events.
A conclusion of law stands for more than the happening
of
events, it is a step in the legal disposal of events. If a rule
of law must be applied before a conclusion is reached,
that
conclusion is one of law.
. . .
‘
(T)he
distinction between [questions of fact and questions of law] is
vitally practical. A question of fact usually calls
for proof.
A question of law usually calls for argument.’”
[53]
Relevant
case law
[66]
Arising
from this, if a legal conclusion is the only way a creditor can
obtain knowledge that incorrect legal advice was given or
a mandate
not professionally discharged, does this constitute knowledge of a
fact that section 12(3) contemplates or knowledge
of a legal
conclusion? At first blush, it might appear to be a legal
conclusion, as it would generally arise by applying
the law to the
facts. But that is precisely the conundrum that arises in
matters of this nature. That legal conclusion
may be essential
to completing the spectrum of the minimum facts from which the debt
arises and of which the creditor is required
to have knowledge. Put
differently, it may be that, but for the legal conclusion, a creditor
would not have knowledge of
the “facts” from which the
debt arises. To illustrate these differences, it is useful to
undertake a brief overview
of the approach of our courts in relevant
cases involving legal practitioners. I deal with: (a)
Fluxmans
;
(b)
McMillan
;
and (c)
Ditedu
.
[54]
[67]
In
Fluxmans
,
[55]
a client and their legal practitioner concluded an oral contingency
fee agreement in 2006 that would apply to the prosecution of
a claim
by the client against the Road Accident Fund (RAF). The
RAF claim was settled in 2008. After deducting
the contingency
fee provided for in the agreement, the legal practitioner paid the
client. In 2014, the client wrote to the
legal practitioner
advising that it had come to his knowledge that the contingency fee
agreement did not comply with the provisions
of the Contingency Fees
Act.
[56]
This followed a
judgment by this Court to that effect.
[57]
The client brought an action against the legal practitioner for
unjust enrichment. The legal practitioner raised a
special plea
that the claim had prescribed. The High Court dismissed
the special plea.
[68]
The Supreme Court of Appeal, in a split decision,
overturned the finding of the High Court. The majority deemed
non-compliance
with the Contingency Fees Act a legal conclusion.
For the minority it was a primary fact. The majority found that
the
client knew, in 2008, all the facts on which his claim for unjust
enrichment was based, even though he did not know the legal
conclusion
arising from those facts, namely that the contingency fee
agreement was invalid. It said that—
“
[k]nowledge
that the relevant agreement did not comply with the provisions of the
Act is not a fact which the respondent needed
to acquire to complete
a cause of action and was therefore not relevant to the running of
prescription. . . . It may be that
before February 2014
the respondent did not appreciate the legal consequences which flowed
from the facts, but his failure
to do so did not delay the date on
which the prescription began to run. Knowledge of invalidity of
the contingency fee agreement
or knowledge of its non-compliance with
the provision of the Act is one and the same thing otherwise stated
or expressed differently.
That the contingency fee agreement
such as the present one, which do not comply with the Act, are
invalid is a legal position
that obtained since the decision of this
court in
Price
Waterhouse Coopers Inc
and is therefore not a fact which the respondent had to establish in
order to complete his cause of action.
Section 12(3)
of the
Prescription Act requires
knowledge only of the material facts from
which the prescriptive period begins to run – it does not
require knowledge of
the legal conclusion (that the known facts
constitute invalidity).”
[58]
[69]
The minority would have upheld the appeal on the basis that,
until the judgment of this Court, the appellant was not aware of, and
could not by the exercise of reasonable care, have become aware of,
the facts that indicated non-compliance with the Contingency
Fees
Act. In coming to the conclusion that the claim had not
prescribed, the minority said:
“
In
his founding affidavit the respondent averred that he is a lay person
and that he relied on the appellant to represent his interests
and to
advise him properly and fairly. It is clear that he placed his
trust in the appellant, who he would have thought were
the experts on
matters legal and would handle his claim professionally. He
referred to Mr Perlman, who handled his claim,
as ‘a very
experienced attorney’, and felt confident that he ‘would
be properly advised and represented in all
respects’.
There is nothing in the papers to suggest that he should at any stage
have realised that there had been
non-compliance with the provisions
of the [Contingency Fees] Act and which should have led him to
believe that he should seek legal
advice elsewhere. It is true
that he was not happy with the amount of the fees that he paid in
terms of the agreement, but
that was no reason for him to even
suspect that there had not been compliance with the provisions of the
[Contingency Fees] Act.
He merely felt that, because of the
nature and extent of his injuries, the percentage fees he was
required to pay should be less
than 22.5%. There can be no
basis, therefore, for a submission that the respondent could, by the
exercise of reasonable care,
have acquired knowledge, at an earlier
stage, of facts that would indicate non-compliance with the
[Contingency Fees] Act.
It follows that prescription did not
begin to run until the respondent acquired knowledge, during
February 2014, that the
appellant had not complied with the
provisions of the [Contingency Fees] Act.”
[59]
[70]
The minority premised their view on the absence of knowledge
of facts, as opposed to legal conclusions, namely that the client had
not initially been aware that the document he signed at the
attorneys’ office had not been a written contingency fee
agreement.
And while the minority need not have dealt with the
proposition that legal conclusions may be facts for the purpose of
section
12(3), its reasoning on the progression from the facts of
non-compliance to a conclusion that such facts constitute
non-compliance
with the
Prescription Act leaves
open that
possibility. This matter involved a claim for unjust enrichment
and not professional negligence and is distinguishable
from the case
on hand. Regardless, the views of the majority and the minority
are insightful.
[71]
McMillan
[60]
is an illustration of a breach of mandate claim. In that case,
a firm of legal practitioners were sued in 2017 for breach
of mandate
arising out of the drafting of an ante-nuptial contract which was
subsequently found to be invalid by the High Court
in a ruling
in 2016. The firm pleaded that prescription began to run in
1998, when the firm drafted an invalid ante-nuptial
contract.
In the alternative, the firm pleaded that prescription began to run
in May 2014. At this date, a director
of the firm advised the
client to consult another legal practitioner on the basis that he had
a potential claim against the firm
for the contract. This was
followed up by a letter from the firm to the client to that effect.
[72]
The
Supreme Court of Appeal dismissed an appeal to it and confirmed
the order of the High Court that the claim had prescribed.
It
found, in particular, that the client was aware in May 2014 when he
consulted with the firm that he “may”
have a claim
against them. It went to find further that his cause of action
was complete as soon as he was informed in May
2014.
[61]
[73]
Ditedu
involved a claim for damages by a client against
her erstwhile legal practitioner based on negligence in discharging a
mandate.
In particular, the client alleged that the legal
practitioner was negligent in advising her to accept a settlement of
the
claim in the amount of R5 013 which was offered by the RAF.
The legal practitioner raised a special plea of prescription.
They
argued that the claim was brought three years after the client had
knowledge of all the facts on which the claim was
based, being when
the claim was settled and the client was paid. The High Court
dismissed the special plea. In
doing so, it made two important
observations:
“
In
my view, once a layman consults an attorney, or other legal expert,
and the latter furnishes him or her with an opinion as to
the law,
which opinion proves to be erroneous, the furnishing of that
erroneous opinion is a fact for the purposes of
section 12(3).
.
. .
If
Mr Kruger’s contention were to be accepted, laymen contracting
with attorneys for the furnishing of their expertise in
the knowledge
of the law would be without a remedy in respect of any errors made by
such attorneys, and discovered more than three
years after the
rendering of the service concerned. This would be an absurd
result – especially in the case of commercial
contracts of long
duration – which the legislature could not have intended.
Moreover, section 39(2) of the Constitution
enjoins me ‘(w)hen
interpreting any legislation, . . . (to) promote the spirit,
purport and objects of the Bill of
Rights’. In
Van
Zijl v Hoogenhout
2005 (2) SA 93
(SCA) Heher JA said the following at 98I: ‘In
addition, the plaintiff is entitled to the benefits of a
constitutional dispensation
that promotes, rather than inhibits,
access to courts of law’. The present plaintiff is, of
course, entitled to the
same benefits.”
[62]
[74]
All of these cases proceed from the premise that the creditor
should have knowledge of the facts from which the debt arises.
However, the cases are not unanimous as to whether the creditor must
have an appreciation of the facts from a legal point.
The
majority in
Fluxmans
answered this in the negative, as did
McMillan
. The court in
Ditedu
took a different
view. It may be argued that the minority in
Fluxmans
left the door open to such a view.
[75]
And
so, it does appear that the position on the issue is far from clear.
What is clear though, is that in cases of professional
negligence legal conclusions on matters such as negligence,
wrongfulness and unlawfulness appear to be firmly out of the realm
of
what may constitute the primary facts. Yet, there is a thread
in some of these judgments that prescription will not run
until there
is knowledge and appreciation of the facts. Arising from this,
is the equally strong stance that, unless someone
knew from the
available facts that something wrong had occurred, prescription will
not run.
[63]
From this,
it must be arguable, in professional negligence cases involving legal
practitioners, that: if the absence of a
legal conclusion prevents a
creditor from having knowledge, or deemed knowledge, of the facts
from which a debt arises; then that
legal conclusion may be essential
to completing knowledge of the minimum facts from which the debt
arises.
[76]
It would be inconsistent with the knowledge requirement in
section 12(3) to suggest that prescription must begin to run,
even
in the absence of knowledge that something wrong may have
occurred. In claims involving professional negligence on the
part
of legal practitioners, knowledge that the advice received was
incorrect or knowledge that a mandate was not properly discharged,
where it may depend on legal conclusions, must be regarded as facts
for the purposes of section 12(3). To hold otherwise
would lead
to an injustice for many creditors in that position – their
claims against their erstwhile legal practitioners
would run the risk
of becoming prescribed even in the absence of knowledge that there
was a breach of the mandate. This runs
counter to the language
and the objective of
section 12(3)
of the
Prescription Act.
I
expand on this below.
The
exception – a legal conclusion may be essential in completing
the facts that
section 12(3)
contemplates
[77]
There may be instances where a conclusion that advice is
incorrect, or a mandate not discharged, may be reached without a
legal
conclusion being arrived at. In those instances, the
failure to discharge the mandate would be a fact from which the debt
arises, and one not reached by a legal conclusion. However, in
other cases, it may be impossible to have knowledge that the
advice
given was incorrect or that the mandate was not professionally
discharged without obtaining professional advice to that
effect.
[78]
In those situations, it is argued by the applicants that the
advice obtained would constitute knowledge that the original advice
received was incorrect or that the mandate was not professionally
discharged. They go on to say that this would then be a
fact
from which the debt arises as, absent the further advice or opinion
received, they would not know or reasonably be assumed
to know that
the original advice was incorrect.
[79]
In such instances, a limited exception to the rule is
necessary and appropriate. The exception being: for the
purposes of
section 12(3)
of the
Prescription Act, in
professional negligence claims against legal practitioners, the facts
from which the debt arises may include a legal conclusion,
where that
legal conclusion forms part of the cause of action or minimum facts
in order to pursue the claim. This view is
advanced on three
grounds: (a) the application of the general rule may result in an
injustice; (b) an exception for negligence
claims against legal
practitioners would accord with our jurisprudence relating to other
professions; and (c) the exception is
limited in scope.
[80]
First, to suggest that the general rule must apply in such
instances would result in an injustice in a number of respects in
negligence
claims against legal practitioners where the basis of the
claim is the negligent provision of incorrect advice. Such
injustices
may include the following:
(a)
Prescription would start to run when the
incorrect advice is given,
notwithstanding the lack of knowledge on the part of the client that
the advice was incorrect and the
entitlement to regard that advice as
correct.
(b)
Prescription would in such instances have the result
of penalising
innocent inaction as opposed to negligent inaction.
(c)
A legal practitioner who acts negligently,
under circumstances where
the client is unaware of such negligence, will be entitled to rely on
that negligence from the date that
it objectively occurred to defeat
a claim arising out of such negligence.
[81]
This is an unjust and oppressive outcome by any measure.
It would be asking the impossible of those who seek the services of
a
legal practitioner. Instead of being able to rely on the
correctness of the advice received, they would be required to
independently test the correctness of that advice in order to prevent
the prescription of any possible claim that may arise from
the giving
of that advice. They could only test it by consulting another
legal practitioner, and so the cycle of always having
to be sceptical
of legal advice would be repeated. This cannot be correct.
[82]
Accordingly, it is necessary to bring the interpretation of
section 12(3)
in line with the spirit of the Bill of Rights in
not unduly impeding the right of access to courts and as
section 39(2)
enjoins this Court to do. It would avoid
using extinctive prescription as a blunt instrument to achieve legal
certainty.
[83]
Second, it is also necessary to ensure that our law of
prescription does not perpetuate an arbitrary distinction between
those who
have professional negligence claims against legal
practitioners as opposed to those who have similar claims against
other professionals.
[84]
It must follow that, in appropriate cases of professional
negligence involving legal practitioners, a legal conclusion may be
essential
to complete knowledge of the facts from which the debt
arises. It should not, though, apply in all cases of
professional
negligence involving legal practitioners. Where
the facts suggest some wrongdoing, it would activate the need to make
further
enquiry. In that event, prescription will only commence
running after the completion of that enquiry within a reasonable
time.
[85]
The
current state of our law recognises this in cases involving
professionals other than legal practitioners. In
Links
,
this Court said that it would be unrealistic to expect a layperson
with no knowledge of medicine to have knowledge of what caused
his
condition without first having the opportunity to consult with a
medical expert for advice.
[64]
[86]
It must be similarly arguable that it would be unrealistic for
a layperson who has no knowledge of the law to know or reasonably
suspect that the advice given by a legal practitioner or the manner
in which a mandate was discharged was legally correct. That
person should have the same opportunity, after realising that
something might have gone wrong, to consult with an expert (another
legal practitioner) to establish whether the advice received, or the
services rendered were in accordance with the standards of
the
profession. They are identical situations in all respects
except that in one the conclusion will be a medical or accounting
conclusion while in the other it would be a legal conclusion. They
would say the same thing and achieve the same object in
the context
of interpreting
section 12(3).
In both situations, they
would provide the creditor with an appreciation of the facts that the
creditor needs to have knowledge
of. That, in the instance of
legal practitioners, this appreciation would be arrived at through a
legal conclusion should
not stand as an obstacle to the conclusion
that the knowledge in question constitutes knowledge of the facts
from which the debt
arises.
[87]
Thus, an exception would be consistent with the guarantee
found in section 9 of the Constitution that all are equal
before
the law. It would at first sight seem incongruous with
the guarantee of equality to have different legal regimes applying
to
what are essentially similar professional negligence actions based on
the same principle.
[88]
Third, the exception I propose would constitute a limited
exception. The scope of the exception would be defined in the
following
terms: it would only apply—
(a)
in professional negligence cases against
legal practitioners; and
(b)
where a legal conclusion is necessary as part of
the minimum facts
required by a creditor to have knowledge of the debt in terms of
section 12(3)
of the
Prescription Act.
[89
]
That it is a limited exception is important for a number of
reasons. It would not apply in all cases of professional
negligence
involving legal practitioners but only in those where a
legal conclusion is necessary to establish that incorrect advice was
given,
or a mandate was not properly discharged.
[90]
Importantly,
it would also not apply as an exception to the general principle of
the ignorance of the law and the attendant concern
alluded to by this
Court in
Mtokonya
–
that if prescription did not run against those who did not have
knowledge of the law it would render the law of prescription
ineffective.
[65]
The
proposed exception is not directed at that category or persons but,
instead, to those who seek and obtain legal advice
or give a mandate
only to later discover that the advice was incorrect or the mandate
not discharged in the manner required by
the law. This limited
and narrowly tailored exception will not have any adverse effect on
the efficacy of the law of prescription.
[91]
Finally,
such a limited exception would not unsettle the substantive holding
that a legal conclusion with regard to unlawfulness
or negligence is
not a fact for the purpose of
section 12(3)
[66]
– or that, generally, knowledge of legal conclusions is not
required before prescription commences to run. While the
general rule remains relevant in ensuring the balance between the
right of access to courts and the requirements of legal certainty
in
bringing a claim timeously, it may, if applied without exception,
have unintended and prejudicial consequences in claims against
legal
practitioners. It may, in particular, be inappropriate where
the legal conclusion is the very subject on which the
claimant sought
advice from the legal practitioner and on which the claimant was kept
in ignorance by that legal practitioner’s
negligence. In
such a case, the legal rule is not merely part of the law applied to
the facts of a case; it is at the heart
of the cause of action.
Other
jurisdictions
[92]
Before I apply the exception to the facts in this matter, I
pause to consider how other jurisdictions approach the
fact-versus-law
distinction, namely: England and Canada’s
discoverability principle; India’s sufficient cause approach;
and Kenya’s
approach to material facts. Though the law on
prescription, or limitation as it is termed in these jurisdictions,
differs
in detail from South Africa, there are beneficial insights to
be drawn.
The
English and Canadian distinction between facts and legal conclusions
[93]
The limitation legal framework in both England and Canada is
based on what is termed the rule of discoverability.
“
Discoverability” serves to protect a
creditor who could not reasonably discover that they had a claim.
This serves as
a qualification on the usual rule that the limitation
period starts to run as soon as the claim accrues.
Samuel Beswick (in relation to Canadian law) captures the
principle as the limitation running from when a plaintiff discovered,
or could with reasonable diligence have discovered, a right to the
action as follows:
“
Rather
than construing time to run from the date at which damage or loss
occurs, limitation usually runs from when a plaintiff discovered,
or
could with reasonable diligence have discovered, their right of
action.”
[67]
[94]
The strong view that emerges, at least from England and
Canada, is that prescription should not begin to run unless a client
has
knowledge, or may reasonably suspect, that the advice given by
their legal practitioner was incorrect. A brief discussion
on
each jurisdiction is warranted.
England
[95]
The
position in England is governed by the English Limitation Act of 1980
(English Limitation Act). The ordinary limitation
period is six
years from when the cause of action accrues. However,
section 14A
deals
with special time limits for negligence actions where facts relevant
to the cause of action are not known at the date of accrual.
Section 14A(9) provides that “knowledge that any acts or
omissions did or did not, as a matter of law, involve negligence
is
irrelevant for the purposes of subsection (5) above.
[68]
This position, in respect of the running of prescription, is similar
to South African law where cases hold that knowledge
that the
particular act or omission constituted negligence or was wrongful and
actionable would not be required or be relevant
for prescription to
commence.
[69]
[96]
The
leading case for the English position, in respect of negligent
investment advice is
Haward
.
[70]
Although it does not deal with solicitor negligence and the
applicant was not successful, it is insightful. Lord Nicholls
touched on the question of claims against solicitors, observing that—
“
[
in
]
many
cases the distinction between facts (relevant) and the legal
consequence of facts (irrelevant) can readily be drawn.
In
principle the two categories are conceptually different and
distinct
.
But lurking here is a problem. There may be difficulties in
cases where a claimant knows of an omission by say, a
solicitor, but
does not know the damage he has suffered can be attributed to that
omission because he does not realise the solicitor
owed him a duty.
The
claimant may know the solicitor did not advise him on a particular
point, but he may be totally unaware this was a matter on
which the
solicitor should have advised him. This problem prompted Janet
O’Sullivan . . . to ask the penetrating question:
unless a
claimant knows his solicitor owes him a duty to do a particular
thing, how can he know his damage was attributable to
an
omission?
”
[71]
(Emphasis added.)
[97]
Lord Mance, in the same case, said:
“
For
present purposes what matters is that it is, in my opinion, wrong to
suggest that all a claimant needs to know is that he has
received
professional advice but for which he would not have acted in a
particular way which has given rise to loss, or that he
has not
received advice when, if he had received it, he would have acted in a
way which would avoided such loss.
. . .
A
claimant who has received apparently sound and reliable advice may
see no reason to challenge it unless and until he discovers
that it
has not been preceded by or based on the investigation which he
instructed or expected. A claimant who has suffered
financial
loss in a transaction entered into in reliance on such advice may not
attribute such loss to the advice unless and until
he either makes
the like discovery about the inadequacy of the work done, or at least
discovers some respect in which the transaction
was from the outset
unsound giving him . . . prima facie cause to complain
.
Such a scenario may well occur where there are other causes of loss
which appear to him capable of explaining the whole
loss.”
[72]
(Emphasis added.)
[98]
Furthermore, again in
Haward
,
Lord Walker makes the point that the dividing line between facts and
legal concepts is often a fine one—
“
[A]lthough
the claimant need not, at the starting date, know anything about the
tort of negligence (not even its name) his or her
state of knowledge
cannot be assessed, with hindsight, without some reference to legal
concepts, including what is causally relevant
in the context of a
negligence action.”
[73]
[99]
Haward
continues
to be supported in subsequent cases.
In
dealing with a mistake of law in terms of section 32 of the
English Limitation Act, the Supreme Court of the United Kingdom
in
Test
Claimants in the Franked Investment Income Group Litigation
[74]
understood
Haward
(and a dissent in
Deutsche
Morgan Grenfell
)
to
mean that time does not begin to run until the claimant knows,
actually or constructively, that he made a mistake (that being
an
essential ingredient of the cause of action), to the standard that “a
worthwhile claim arises”.
[75]
In dealing with a professional negligence case against solicitors,
t
he
Manchester High Court in
Taylor
[76]
relied on
Haward
and found that “[i]n the context of professional negligence
cases subject to section 14A, it may be that, on the particular
facts, a claimant may not know the loss or damage is attributable to
the acts or omissions alleged to constitute negligence until
the
point at which he is advised of a potential claim in
negligence”.
[77]
Similarly, in
Witcomb
,
[78]
the trial court (upheld in the Court of Appeal) relying on
Haward
made the following conclusions:
“
[
W]here
the essence of the allegation of negligence is the giving of wrong
advice, time will not start to run under section 14A [of
the English
Limitation Act] until a claimant has some reason to consider that the
advice may have been wrong. . . . [W]here
the essence of the
allegation is an omission to give necessary advice, time will not
start to run under section 14A [of the English
Limitation Act] until
the claimant has some reason to consider that the omitted advice
should have been given.”
[79]
[100]
England
maintains a distinction between facts and legal conclusions.
However, the cases referred to indicate that there is
a subtle
difference between the two and the possibility that a creditor may
need to reach a legal conclusion – not a legal
conclusion of
negligence, but indeed a legal conclusion in order to have knowledge
of the facts for their claim. All of this
leads to the
conclusion made by Janet O’Sullivan, and noted in
Haward
,
wherein she asks the following challenging question of this
conceptual separation: “unless a claimant knows his solicitor
owes him a duty to do a particular thing, how can he know his damage
was attributable to an omission?”
[80]
[101]
In
the analysis that I have undertaken, I conclude that there may be
cases where the defective nature of the advice is transparent,
on its
face, but there will also be other cases where something more is
needed to require the creditor’s own inquiry, something
which
would reasonably cause a person to ask questions about the
correctness of the advice that they were given.
[81]
This reasoning appears consistent with the English position.
Canada
[102]
Canadian
courts have also had some difficulty with the distinction between
facts and law, which Beswick describes as shallow.
[82]
[103]
In
Rafuse
,
[83]
the Supreme Court of Canada was called upon to consider the
distinction
.
In
1969, the plaintiff’s solicitors had failed to advise the
plaintiff that the mortgage he sought was invalid because it
involved
the mortgagor-company giving prohibited financial assistance,
contrary to legislation.
The
Court
considered
whether the discoverability rule was applicable to the provincial
limitation statute, and in concluding such said:
“
I
am thus of the view that the judgment of the majority in
Kamloops
laid down a general rule that
a
cause of action arises for purposes of a limitation period when the
material facts on which it is based have been discovered or
ought to
have been discovered by the plaintiff by the exercise of reasonable
diligence
,
and that that rule should be followed and applied to the appellant’s
cause of action in tort against the respondents.”
[84]
(Emphasis added.)
[104]
It held that prescription against
the negligent solicitors only began to run in 1997, when
non-compliance with the legislation was
raised by the mortgagor in
foreclosure proceedings brought by the plaintiff. The
Supreme Court of Canada regarded the
absence of this knowledge,
as the absence of knowledge of a material fact.
[105]
Later,
in
Cooper
,
[85]
dealing with an action against a solicitor, a Saskatchewan court took
a similar view to that in
Rafuse
and the English position. Again, the discoverability rule was
applied in favour of the claimant who had not been aware, until
some
years later, of legislative provisions of which the solicitors should
have advised him. The Court said:
“
Each
cause of action [of Ms Hatch] is founded on the principle that the
defendants had a duty to advise her of her legal rights
vis-a-vis the
Estate and themselves and that they failed to do so, and/or
negligently misstated the applicable law. Thus,
the discovery
by Ms Hatch of her rights under the MPA [Matrimonial Property Act]
and the DRA [Dependants’ Relief Act] and
the alleged
misinterpretation of the Will by the defendants constitute a
discovery of facts on which to found an action in negligence
against
the defendants and not the law on which to found an action under the
MPA or the DRA. Her initial discovery is akin
to [the
plaintiff’s] discovery [in
Rafuse
]
that its mortgage security was void because its lawyer failed to
comply with a specific law governing mortgages that were unknown
to
it.”
[86]
[106]
In conclusion, and while the principle of discoverability
distinguishes our legal framework from that of England and Canada,
the
idea that a legal conclusion will always be irrelevant is not one
of general applicability. At the very least, the question
has
been raised, and answered to some extent, that knowledge of the facts
may well, in some instances, include knowledge of a legal
conclusion.
India
[107]
The
running of prescription in India is governed by the Limitation
Act
[87]
and the period within
which the action is to be brought will depend on the subject matter
of the case. The starting point
of the limitation is the date
of the accrual of the cause of action. Section 5 of the Indian
Limitation Act
[88]
allows a
court to extend the period of limitation on sufficient cause. A
body of jurisprudence has developed considering
what would constitute
sufficient cause, with the Supreme Court taking a generous view.
It said:
“
The
legislature has conferred the power to condone delay by enacting
section 5 of the Indian Limitation Act 36 of 1963, in order
to
enable
the Courts to do substantial justice to parties by disposing of the
matter on ‘merits’
.
The
expression ‘sufficient cause’ employed by the legislature
is adequately elastic to enable the Courts to apply the
law in a
meaningful manner which subserves the ends of justice that being the
life purpose for the existence of the institution
of Courts
.
It is
common knowledge that this Court has been making a justifiably
liberal approach in matters instituted in this Court
.”
[89]
(Emphasis added.)
[108]
Mistakes
on the part of counsel or incorrect legal advice have been accepted,
in some instances, as constituting sufficient cause
for the purpose
of section 5.
[90]
It
would appear that sufficient cause is, therefore, wide enough to
encompass a diverse range of reasons, and the
facts-versus-legal-conclusion
distinction does not appear to feature
as a significant matter of interpretation.
Kenya
[109]
The
Kenyan Limitation of Actions Act
[91]
includes a provision that the prescription period of three years for
an action founded on torts may be extended by one year where
“it
is proved that material facts relating to that cause of action were
or included facts of a decisive character which were
at all times
outside the knowledge (actual or constructive)”.
[92]
[110]
Material
facts appear to be defined widely to include knowledge of negligence,
as was said in
Mbithi
[93]
in the following terms:
“
Material
facts are restricted to three categories of fact, namely, (a) the
fact that personal injuries resulted from the negligence,
nuisance or
breach of duty constituting the cause of action; (b) the nature or
extent of the personal injury so resulting and;
(c) the fact that the
personal injuries were attributable to the negligence, nuisance or
breach of duty or the extent to which
they were so attributable”.
[111]
In this matter, a father pursued a claim for his son’s
death after the outcome of an inquest. Kwach JA found that
the appellant had pleaded ignorance of the law and that the issue to
be determined was “whether ignorance of the law can
constitute
a material fact of a decisive nature within the meaning of section 27
of the [Kenyan Limitation of Actions Act]”.
After laying
down the three categories of “material facts”, Kwach JA
said that it is not enough that the facts are
known to the plaintiff
and that they are material. They must also be of a decisive
character, “that is to say, they
must be such that a reasonable
person, knowing them and having obtained appropriate advice with
respect to them, would have regarded
them as determining that an
action would have a reasonable prospect of succeeding”.
Further, Kwach JA said that “there
can be no doubt that
the appellant knew right from the start that the death of his son had
been caused by the negligence and/or
breach of duty attributable to
the respondents”. The fact that he mistakenly thought he
had to wait until the completion
of an inquest was not a “material
fact”.
[112]
Mull JA said that he did not regard the appellant’s
mistaken belief about the inquest as fulfilling the requirements of
section 27(2),
stating as follows:
“
I
also hold that ignorance of the law was not a material fact of a
decisive character relating to the cause of the intended action.
The appellant knew the tortfeasors well within the prescribed time.
As a reasonable man, he could have sought legal advice
well within
time to protect his right. . . . The appellant’s conduct
as regards the material facts of the decisive
character as well as
his failure to seek legal advice cannot be regarded as that of a
reasonable and prudent person. The
death of his son called for
vigilant and reasonable steps to be taken to ensure that the
tortfeasors were sued for their negligence.”
[94]
[113]
Both judgments in
Mbithi
appear to leave open the
possibility that, in different circumstances, ignorance of the law
might be a material fact of a decisive
character.
Conclusion
on other jurisdictions
[114]
Evidently, different jurisdictions have adopted different
legal frameworks for regulating prescription or limitation, and the
approach
varies considerably. Though, what emerges from the
overview is that, in cases that involve legal practitioners and the
giving
of incorrect advice, the strong view is that a client should
not be prejudiced by the giving of incorrect advice until the client
becomes aware of the incorrectness of that advice. That outcome
is reached in different ways. In England and Canada,
there
appears to be a tentative leaning in that direction located in the
interpretation of the discoverability principle. In
India, it
is the development of the sufficient cause concept in the context of
extending prescription. In Kenya, it may be
in the width of
what constitutes material facts for the running of prescription.
These approaches are instructive for the
exception carved out in this
judgment.
The
respondents’ plea of prescription in the applicants’
breach of mandate claim
[115]
In
McMillan
, the Supreme Court of Appeal set out
the following requirements that must be met in order to claim breach
of mandate against
a legal practitioner:
(a)
a mandate was given to and accepted by the
legal practitioner;
(b)
there was a breach of that mandate;
(c)
there was negligence, in the sense that the
legal practitioner did
not exercise the degree of skill, knowledge and diligence expected of
an average legal practitioner;
(d)
the client suffered damages; and
(e)
the damages
were within the contemplation of the parties when the mandate was
extended.
[95]
[116]
In these proceedings, and for the purpose of adjudicating the
special plea, the respondents do not dispute that they breached the
mandate given to them by the applicants and that their conduct was,
in the circumstances, negligent. Instead, the dispute
centres
on when it could be said that the applicants had knowledge of the
breach of the mandate.
[117]
The Supreme Court of Appeal held that prescription
commenced to run either on 26 September 2003, when the applicants
consulted
with Mr Coetzee, or on 13 November 2003 when the
option expired.
[118]
On 26 September 2003, the applicants sought legal advice from
their legal practitioner and Mr Coetzee breached his mandate in
providing erroneous legal advice.
[119]
It is not disputed that the applicants did not know until
November 2007, when Mr Le Roux was cross examined,
that
the advice they had sought and which was given to them by Mr
Coetzee was wrong. There was also no basis for them to suspect
that this was the case, even with the exercise of reasonable care.
The conclusion by the Supreme Court of Appeal, that
they had the
minimum facts they needed to institute their claim, is not however
correct as by 26 September 2003, the
Le Rouxs had not yet
suffered any loss and their cause of action was thus not complete.
[120]
13 November 2003 is the alternate date upon which the
Supreme Court of Appeal concluded that the applicants ought to
reasonably
have acquired the requisite knowledge. This is the
date on which the option expired. The Le Rouxs could not, with
the
exercise of reasonable care have known that the option had
expired without it being validly exercised. On the contrary,
any
reasonable person in their position would have believed that the
option had been validly exercised by that date. There is
no
basis to then conclude that they would have acquired knowledge at
that date of either a breach of the mandate or that they had
suffered
loss. However, if the general rule is applied prescription
would have run from this date as was found by the Supreme
Court of
Appeal. On that view of the matter, the
Prescription Act would
treat as irrelevant the fact that the applicants were kept in
ignorance of the legal position by the negligent advice of their
own
attorneys in the very respect on which they subsequently sought to
sue those attorneys.
[121]
Further, in respect of constructive knowledge, in January
2005, Mr Nel served and filed his plea in the first action.
That was preceded by attempts to settle the matter based on counsel’s
opinion that the Le Rouxs had a valid claim to the
transfer of the
property. The plea disputed the validity of Mr Coetzee’s
exercise of the option. The relevant
portion of the plea
admitted that the applicants attempted to exercise the option in
writing but then advanced a bare denial in
respect of the actual
exercise of the option. The applicants would have reasonably
concluded from this, as well as the attempts
to settle the matter,
that their legal practitioner did in fact in writing attempt to
exercise the option but nothing more.
They would not have had
any reason to question the efficacy of what Mr Coetzee had done.
[122]
In any event, Mr Coetzee did not explain the plea to
them. Even if he did, it is not clear what he would have told
them,
as it appears that he too believed that he had exercised the
option validly. In fact, Mr Nel’s legal representatives
themselves may not have been aware of the lack of written authority
at that stage. Various specific defences were raised
in
pre-trial correspondence and in the plea, but non-compliance with the
Alienation of Land Act was not one of them. It would
be asking
the impossible to expect the applicants to reasonably have suspected
that something was amiss when both sets of legal
practitioners
probably did not.
[123]
In
June 2005, the applicants changed attorneys. From the agreed
facts it does not appear that the decision was taken following
suspicion or belief that Mr Coetzee had breached his mandate.
Even if the new attorneys should, if they had diligently
perused the
file, have discovered the absence of a written authority, their
knowledge could not be attributed to the applicant
for the purposes
of section 12(3), having regard to
Jacobs
v Adonis
.
[96]
[124]
Therefore, it must follow that the applicants could not by the
exercise of reasonable care have acquired deemed knowledge of the
breach of mandate by Mr Coetzee either in January 2005 or in
June 2005.
[125]
Accordingly, if the general rule is applied without exception,
the result is not only unsettling but creates different and
formidable
obstacles for those who litigate against their erstwhile
legal practitioners compared with those who do so against their
erstwhile
doctors, accountants or engineers. It is unsettling
because its premise is that when you obtain incorrect legal advice
from
a legal practitioner and have no reason to doubt or question the
correctness of the advice, prescription will commence to run as
soon
as the incorrect advice is given. This is a result that goes
against the spirit of the knowledge requirement in extinctive
prescription and would have as its consequence the prescription of a
claim even when the holder of the claim has no knowledge of
any
conduct that may have given rise to the debt.
[126]
Finally, its effect is to permanently divest a party of a
justiciable claim in terms of section 34 of the Bill of Rights,
even
when that party is unaware that they ever had such a claim. It
is for all these reasons that the operation of the general
rule
without exception is constitutionally unsettling and may fall foul of
the injunction in section 39(2) that, when interpreting
any
legislation, courts must promote the spirit, purport and objects of
the Bill of Rights.
[127]
If we were to apply this general rule to the present case, the
applicants, who left the offices of the respondents assured that
their mandate was in good hands, would have had prescription commence
to run against them from that very day, alternatively from
13 November 2003, when the option which they reasonably thought
had been effectually exercised, in truth had lapsed. This,
even
though they would not have had any basis to reasonably suspect that
the advice they received was incorrect. After all,
it was the
very reason they consulted a legal practitioner – to obtain
advice and give a mandate. They were surely
entitled to expect
that, on both scores, the advice they received was correct and that
the mandate given would be professionally
discharged.
[128]
And
so, it does appear that the rule in
Truter
,
[97]
that knowledge of legal conclusion is not required for prescription
to commence, may result in considerable injustice in cases
where,
without such knowledge, a party may not reasonably know that it has a
claim.
[129]
On
this score, and while I am in agreement with the ultimate conclusion
reached by the High Court, its reasoning in getting there
was flawed.
It found that non compliance with the Alienation of Land
Act was not a legal conclusion but a fact of which
the applicants
were required to have knowledge of. Based on the test
articulated by Morris and accepted by this Court in
Mtokonya
,
[98]
that a conclusion of law results when legal effects are assigned to
events, the conclusion of non-compliance with the Alienation
of Land
Act is a legal conclusion. That conclusion is arrived at by
having regard to the text of the Alienation of Land Act
and applying
it to the purported exercise of the option with the resultant
conclusion being that the attempt to exercise the option
was invalid
in the absence of written authority granted by the Le Rouxs to
Mr Coetzee.
[130]
That it may also constitute a fact from which the debt arises,
namely the fact of a breach, does not change its character as a legal
conclusion but it does lend itself to a measure of conceptual
confusion which may be inevitable. It is difficult to consider
a legal conclusion as constituting a fact for the purpose of section
12(3), but the consequences of not doing so in appropriate
cases are
far-reaching and in conflict with the spirit of the
Prescription Act
as
well as the Constitution.
[131]
In
such circumstances, the general rule must yield to the exception even
if it must be at the expense of blurring the distinction,
to a
limited extent, between the facts and legal conclusions. For
all the reasons I have advanced the general rule cannot
remain
unyielding against the need for a just process in determining the
bounds of extinctive prescription in claims of professional
negligence by former clients against their erstwhile legal
practitioners. For the reasons given, it may be best to
approach
it on the basis that it constitutes a narrow and limited
exception to the rule in
Truter
– that conclusions of law are not facts for the purposes of
section 12(3).
[99]
[132]
In the result, I conclude that as a general proposition
knowledge of the facts that section 12(3) requires for
prescription
to commence running may, in cases involving negligence
on the part of legal practitioners, include knowledge of a legal
conclusion,
namely that legal advice given was incorrect or that a
mandate given was not discharged in the way required by law. In
these
proceedings, and on the agreed facts, the applicants did not
acquire actual knowledge of the breach of the mandate by Mr Coetzee
until this was raised in the cross examination of Mr le Roux in
November 2007. That such knowledge would have arisen
as a
result of a legal conclusion arrived at during the cross-examination
must mean that it should be treated as falling within
the exception
to the general rule to which reference has been made earlier in this
judgment.
[133]
I have read the judgment by my Colleague Van Zyl AJ in
which he reaches the same conclusion as I do but for different
reasons.
Further, I have read the third judgment of my
Colleague Rogers J in which he concurs with this judgment’s
reasoning
and conclusion and, in addition, advances reasons why the
approach in the second judgment is not sustainable. I concur in
the third judgment. The second judgment says that the knowledge
that the applicants acquired (that the advice was erroneous)
was
knowledge of a fact and not of a legal conclusion. On this
basis, the second judgment argues that there is no exception
required
as that knowledge falls within section 12(3). There are a
number of reasons for underpinning this conclusion
which I deal with.
[134]
The second judgment takes the stance that a stand-alone
exception under the general rule is not desirable as it would create
uncertainty.
I do not agree. The general rule is that,
for purposes of section 12(3), legal conclusions do not
constitute facts and
therefore knowledge of such legal conclusions is
not required by a creditor for section 12(3). The second
judgment accepts
this proposition. The deviation from the
general rule is warranted where the cause of action by a client
against their legal
practitioner involves a legal conclusion.
It is not that legal practitioners are to be singled out from other
expert professions,
but, rather, as I point out, to ensure that there
is parity in the process as the rule on legal conclusions does not
affect claims
brought against professionals, other than legal
practitioners. Central to the attorney-client relationship is
the provision
of legal services, the correctness of which the client
invariably does not have knowledge of and relies on the legal
practitioner
to furnish with due care. As a result, a claim
based on negligence against a legal practitioner, in some
circumstances, will
include a legal conclusion, not on negligence,
but on a central element of the claim – knowledge of the breach
of the contract.
The exception carved out is not a general
exception, rather, it is one narrowly tailored to such instances.
Further, it is
warranted as it avoids the undesirable conflation of
facts and legal conclusions which has been avoided in our law thus
far.
[135]
The
second judgment says that the postulated legal conclusion (that the
purported exercise of the option was invalid for want of
compliance
with section 2(1) of the Alienation of Land Act) is not a legal
conclusion in respect of the constituent elements of
the applicants’
claim. This is not correct. The second judgment accepts
that a material element of the applicants’
claim is the breach
of the duty to perform.
[100]
[136]
The applicants’ case is that they only became aware of
the breach during the cross examination of Mr le Roux and
this as a result of a legal conclusion. Leaving aside for a
moment whether this was knowledge of a legal conclusion or knowledge
of a conclusion of fact, it was a material and constituent element of
the applicants’ claim. The applicants’
case was
that the breach of a duty to perform was based on the failure by Mr
Coetzee to exercise the option in accordance with
the requirement of
the Alienation of Land Act. This failure, it is accepted from
the statement of agreed facts, only became
evident during the
cross-examination of Mr Coetzee and so the postulated legal
conclusion was a material and constituent element
in support of the
claim and without which the applicants would not have acquired
knowledge of the breach of the duty owed to them.
[137]
The
second judgment seeks to distinguish between a legal requirement as
constituting a “legal fact” and the effect and
consequences of such a requirement. Whatever name one assigns
to a legal requirement, knowledge of it constitutes knowledge
of the
law. If such knowledge is considered to be knowledge of a fact
for the purpose of section 12(3), as the second
judgment
suggests, then this would have a radical and unsettling effect on the
law of prescription. It would mean that, unless
a claimant has
knowledge of the facts from which the debt arises and those facts
include knowledge of the law as in the legal rules,
requirements and
rights, then prescription would not commence to run until such
knowledge is acquired. This is not only contrary
to the state
of our current law
[101]
but
would have the effect of postponing indefinitely the running of
prescription – something the second judgment accepts
would be
at odds with the rationale for extinctive prescription.
[138]
Further and in relation to the argument that the applicants
became aware of the erroneous advice they received though a legal
conclusion,
the second judgment says that, having acquired knowledge
of a fact in relation to the provisions of the Alienation of
Land
Act, “this in turn meant that they acquired knowledge of
the fact that Mr Coetzee gave them erroneous advice”.
This too cannot be correct.
[139]
This
Court said in
Mtokonya
that when a conclusion is reached by applying a rule, that conclusion
is a legal conclusion.
[102]
The conclusion that the option was not validly exercised was reached
by applying section 2(1) of the Alienation of Land
Act –
section 2(1) is a rule and its application resulted in a legal
conclusion. That legal conclusion was that
the purported
exercise of the option was invalid. It is the knowledge of that
conclusion which is at the heart of this application.
That
conclusion as I have demonstrated by reference to
Mtokonya
,
is a legal one and the knowledge the applicants acquired of it was
therefore knowledge of a legal conclusion. The leap in
the
reasoning of the second judgment that knowledge of a legal fact then
results in knowledge of the fact that the advice based
on that fact
was erroneous is not sustainable. What is missing is the step
involving the application of the legal fact to
reach a conclusion
which we know then results in a legal conclusion.
[140]
The second judgment says that the applicants acquired
knowledge of the fact that erroneous advice was given to them.
However,
the knowledge that the advice was erroneous and which they
acquired could only be reached through a conclusion of law which was
essential in reaching the conclusion that the advice was erroneous.
Simply to illustrate the point, the proposition that
was put to Mr le
Roux during his cross examination was that the purported
exercise of the option was invalid because there
was no compliance
with the provisions of the Alienation of Land Act. This was a
legal conclusion of the kind described in
Mtokonya
that was
put to him and which resulted in him acquiring the knowledge of the
invalidity of the purported exercise of the option.
Again, it
could only constitute knowledge of a legal conclusion and not of a
fact.
[141]
Finally,
the second judgment suggests that a layperson, could draw the
conclusion that the advice was incorrect from a cursory reading
of
the Act and the services of a trained lawyer were not required.
[103]
This takes the argument outside of the agreed facts. The
question of whether the provisions of section 2(1) of the Alienation
of Land Act are self-evident to a layperson was never an issue that
arose in these proceedings.
[142]
It
also ignores the narrow and limited scope within which this matter
arises. It is confined to instances where a person consults
a
legal practitioner for advice, receives the wrong advice, relies on
the wrong legal advice and only later discovers that the
advice was
erroneous. The Le Rouxs acquired the knowledge that the option
was not properly exercised in law during Mr le
Roux’s
cross-examination. If regard is had to the proposition put to
Mr le Roux during cross-examination,
[104]
it is clear that this proposition was based on a conclusion of law,
and not a fact.
[143]
In
these circumstances, the reliance on the advice is reasonable
[105]
and no more can be reasonably expected of the reasonable client in
such a position. It must be accepted that the client will
not
have knowledge of the “legal facts” and it is for this
purpose that the services of a legal practitioner are engaged.
Ascertaining the state of the law and drawing conclusions from it is
precisely why a legal practitioner is consulted and why the
Le Rouxs
consulted with Mr Coetzee. The exception which I seek to carve
out is specifically tailored to prevent prescription
from commencing
to run until the client has knowledge that there has been a breach of
the mandate through erroneous legal advice.
[144]
It is for these reasons that I persist with the reasoning in
support of the conclusion that I reach.
Conclusion
[145]
In the circumstances, the appeal must succeed with costs.
There is no reason why the applicants should also not be entitled
to
their costs in this Court which, given the complexity of the legal
issues involved, warrant the costs of two counsel.
[146]
The following order is made:
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:
“
The
appeal is dismissed with costs.”
4.
The respondents are to pay the applicants’ costs, including the
costs of
two counsel.
VAN
ZYL AJ (Makgoka AJ and Potterill AJ concurring):
Introduction
[147]
I have had the pleasure of reading the judgment prepared by my
Colleague, Kollapen J (first judgment). I agree that the
applicants must be granted leave to appeal, and that the appeal must
succeed with costs. However, in my view, the appeal
must
succeed for reasons different from those given in the first judgment.
[148]
The
first judgment concludes that a claim for damages arising from an
attorney’s failure to exercise his or her mandate with
the
necessary skill, diligence and care as required from a reasonable
attorney, may include knowledge of a legal conclusion.
Therefore, an exception to the general rule in
Truter
[106]
is deemed necessary. The general rule as referred to in
Truter
,
is the finding that knowledge as envisaged in
section 12(3)
of
the
Prescription Act
[107
]
is limited to knowledge of facts and does not require knowledge of a
legal conclusion. The general rule as stated by the
Court in
Truter
is that—
“
[s]ection
12(3) of the
Prescription Act requires
knowledge only of the material
facts from which the debt arises for the prescriptive period to begin
running – it does not
require knowledge of the relevant legal
conclusions (i.e. that the known facts constitute negligence) or of
the existence of an
expert opinion which supports such
conclusions.”
[108]
[149]
The
first judgment reasons that a client’s knowledge of the fact
that his legal representative gave him incorrect advice or
failed to
discharge his mandate properly may emerge much later as a result of a
legal conclusion, such as an opinion, advice or
a ruling by a court.
This premise is based on the respondents’ submission that when
the first applicant was informed
during his cross-examination in the
first trial that the respondents’ purported exercise of the
option was ineffective for
a failure to comply with section 2(1)
of the Alienation of Land Act,
[109]
he acquired knowledge, not of a fact, but of a legal conclusion.
[150]
I am of the firm view that there is no need for an exception
to the general rule in
Truter
. The rationale for the
exception is, in essence, that strict adherence to the distinction
between a fact and a legal conclusion,
may make it difficult for a
creditor to acquire knowledge of a fact that requires some knowledge
of the law. The first judgment
reasons that this difficulty
arises due to the distinction drawn in
Truter
between the
knowledge of facts on the one hand, and the knowledge that those
facts support the formulation of a legal conclusion,
on the other.
It then grapples with the distinction between a fact and a legal
conclusion.
The factual background
[151]
I do not intend to deal extensively with the facts, as that
has been comprehensively done in the first judgment. I will
simply
provide some background and highlight certain facts to
contextualise the circumstances in which the applicants were said to
have
had knowledge of a legal conclusion as opposed to a fact.
[152]
The applicants obtained a written option from Mr Steenkamp
to purchase his farm in Nieuwoudtville in the province of the
Northern Cape.
The option expressly required the
applicants to exercise it within two months of the death of
Mr Steenkamp.
[153]
Following Mr Steenkamp’s passing, the applicants
approached an attorney, Mr Coetzee from the firm Johannes
Coetzee
& Seuns. They instructed Mr Coetzee to represent
them as their attorney, to advise them on the steps necessary to
exercise
the option, and therefore exercise it on their behalf.
After reading the option document, Mr Coetzee advised the
applicants
that it was a valid agreement. He made notes and
informed them that he would send a letter to the executor of
Mr Steenkamp’s
deceased estate. The second applicant
pertinently asked Mr Coetzee whether it was necessary for them
to sign any documents,
to which Mr Coetzee responded that it was
not. It is common cause that the applicants, being laypersons,
possessed no
knowledge of the law relating to the sale of the land.
[154]
Mr Coetzee carried out his instructions to exercise the option
by writing a letter to the executor of the estate.
Subsequently,
it emerged that the deceased had, during his lifetime,
sold the farm to a Mr Nel, and pursuant to the sale, the farm
had been
transferred to him. When the applicants became aware
of the sale and the transfer, they instituted an action against
Mr Nel
and the executor of the estate in the High Court,
Northern Cape Division (High Court). In this action (the first
action),
the applicants essentially sought a court order declaring
that they were entitled to the transfer of the farm into their
names.
Additionally, they also claimed damages for the alleged
profits they would have accrued from farming activities had they
received
the transfer of their farm. Throughout the
proceedings, the applicants were represented by Mr Coetzee and
his firm.
[155]
The first action was founded on a supposed valid exercise of
the option, allegedly resulting in a binding sale of the property to
the applicants. However, unbeknown to the applicants, the
exercise of the option did not comply with the provisions of
section 2(1)
of the Alienation of Land Act, which requires that
a contract for the sale of land, if not signed by the principal, must
be signed
by his agent duly authorised in writing.
Consequently, there was no valid contract of sale that the applicants
could enforce
against Mr Nel and the executor.
[156]
At no stage were the applicants advised by either Mr Coetzee
or by the firm of NME Nilssens Attorneys, whom they later
appointed
in Mr Coetzee’s stead before the finalisation of the
action against Mr Nel and the executor, that the failure to
comply
with the provisions of the Alienation of Land Act was fatal to
the success of their action. Only during the first applicant’s
cross-examination in the first action was he alerted for the first
time that Mr Coetzee’s exercise of the option was
ineffective for want of compliance with section 2(1) of the
Alienation of Land Act. Needless to say, the applicants
were
unsuccessful in their action to obtain transfer of the farm.
[157]
Following an unsuccessful appeal against the dismissal of
their action against Mr Nel and the executor of Mr Steenkamp’s
estate, the applicants instituted an action against the respondents
for damages in the sum of R859 000 in the High Court.
The respondents raised a special plea of prescription, which was
determined as a separate issue. The plea was dismissed
and the
respondents were granted leave to appeal to the
Supreme Court of Appeal. As the record of
proceedings
had gone missing, the appeal was determined based on a
statement of agreed facts. The appeal was successful; the plea
of
prescription was upheld, and the applicants’ action was
resultantly dismissed with costs. It is against this order of
the Supreme Court of Appeal that the applicants are
currently seeking leave to appeal.
The distinction
between a fact and a conclusion of law (legal conclusion)
[158]
There
is undoubtedly, a conceptual distinction between a fact and a
conclusion of law. A fact, as defined in Black’s
Law
Dictionary, is an “actual or alleged event or circumstance, as
distinguished from its legal effect, consequence or
interpretation”.
[110]
A legal conclusion is in turn defined as a “statement that
expresses a legal duty or result but omits the facts creating
or
supporting the duty or result”.
[111]
[159]
This
distinction usually arises in the context of judicial
decision-making, where the court is required, in the exercise of its
judicial functions, to make findings of fact and to draw conclusions
therefrom, by applying the law to the established facts.
In
jurisdictions with jury trials, the distinction between matters of
law and fact is of particular significance. Matters
of law are
determinable by the judge and matters of fact by the jury.
[112]
Appreciating the manner in which this distinction is dealt with in
those jurisdictions may be of valuable assistance in the
context of
the issue arising in this matter.
[160]
The
distinction between fact and law does not have the same significance
in our own legal system. Its importance is dictated
more by
procedural matters, the nature of the particular proceedings and the
enquiry a court is called upon to conduct. The
distinction
between law and fact is by way of example relevant to the approach on
appeal to the findings of a trial court.
[113]
In pleadings, conclusions of law must be supported by facts and in
motion proceedings, a party may make any legal contention
which is
open to him on the facts.
[114]
[161]
In matters of prescription, there is no need to attempt to
define with any precision the boundary between a fact and a legal
conclusion.
This is because the material facts and the legal
conclusions that are to be drawn from those facts, are determined by
the plaintiff’s
pleaded claim. The distinction between
fact and law, for purposes of deciding a plea of prescription, is as
a result determined
within the confines of the creditor’s
pleaded claim. The reason is found in
section 12
of the
Prescription Act and
its interpretation in previous decisions.
[162]
Moreover,
professionals, including legal practitioners, may be mandated to
provide advice on a range of matters. Such advice
may be acted
upon to the detriment of the person seeking it. It would be
unjust to differentiate between legal professionals
and other
categories of professionals whose advice may similarly require
specialised knowledge, by applying a different standard
of knowledge
in cases involving negligence on the part of legal professionals.
All cases should be treated similarly.
In my view, creating
exceptions and applying different principles to cases involving legal
or other professional persons is undesirable.
Creating an
exception to the rule in
Truter
is not conducive to considerations such as certainty, predictability
and uniformity, which are inseparable components of the rule
of
law.
[115]
[163]
Conceptually,
I am of the view that the first judgment does not adequately justify
the proposed exception within the context of
the above-mentioned
components of the rule of law. As Hahlo and Kahn correctly
point out, when exceptional circumstances
arise, courts may deviate
from a general rule.
[116]
However, this deviation must be justifiable in order to maintain
legal certainty. For the rule of law to function,
the role of
the Court is to weigh up the need for certainty against the
uniqueness of the exceptional circumstances.
[117]
[164]
The proposed exception will create unnecessary uncertainty
with regard to the soundness of the rule in
Truter
, which is
based on the plain wording of
section 12(3).
What
section
12(3)
requires is knowledge of the “facts”.
Logically, the section does not require the creditor to know what the
legal
consequences of those facts are. This makes it
unnecessary for the creditor to know that the alleged act or omission
on which
they rely as the cause for their harm constituted negligence
– precisely what was found in
Truter
. Correctly
interpreted, the scheme of
section 12
of the
Prescription Act
makes
it in my view unnecessary to treat legal practitioners
differently from any other debtors, including various categories of
professionals.
Correctly applied,
section 12(3)
provides
adequate protection to both a creditor and a debtor, eliminating the
need for the formulation of different principles
or qualifications.
These matters are dealt with more comprehensively in what follows.
Framework of
section
12
of the
Prescription Act
>
[165]
The
general position is that extinctive prescription begins to run “as
soon as the debt is due”.
[118]
This provision, however, is subject to exceptions, as referred to by
this Court in
Links
[119]
and
Mtokonya
.
[120]
The two qualifications relevant for present purposes are those found
in
section 12(3).
The first is that the debt is deemed not
to be due until the creditor has knowledge of the facts from which
the debt arises.
The second qualification, framed as a proviso
to the deeming provision in the first part of the sub section,
stipulates that
the creditor shall be deemed to have such knowledge
if he could have acquired it by the exercise of reasonable care.
[166]
On a
reading of
section 12(3)
, four factors emerge that determine the
commencement of the running of prescription, namely: the existence of
a “debt”;
that the debt must be “due”; and
the creditor must have “knowledge” of the “facts”
from which
the debt arises. Although the term “debt”
is not defined in the
Prescription Act, much
has been said about its
meaning, but it is generally accepted that the term is used
“primarily to describe the correlative
of a right or claim to
some performance, in other words, as the duty side of an obligation
(
verbintenis
)
produced by contract, delict, unjustified enrichment, statute or
other source”.
[121]
[167]
Prescription
begins to run when the debt is due – when it is owing and
payable. The commencement of the running of prescription
is
accordingly determined by when the debt is recoverable; that is, when
the creditor acquires a right to claim, and conversely,
the debtor
has the obligation to perform. The creditor acquires the legal
right to claim when every fact has happened that
is necessary for the
creditor to pursue his claim.
[122]
The creditor will only be able to pursue his right by instituting an
action when he has a complete cause of action in respect
of it.
In
Links
,
this Court cited with approval the following passage from
Truter
,
[123]
where the Supreme Court of Appeal stated that a claim is due for
purposes of the
Prescription Act—
“
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.”
[124]
[168]
What
are the facts of which a creditor must have knowledge of? The
plaintiff’s cause of action is the factual basis
that “begets”
the plaintiff’s right of action and its correlative, the
defendant’s debt.
[125]
It is best described as the procedural manifestation of the right
which the plaintiff seeks to enforce, and it does not exist
independently from the underlying right itself.
[126]
Since an enforceable legal right cannot exist without a remedy, the
creditor’s chosen cause of action is the mechanism
provided to
them by the law to enforce that right and obtain remedial relief.
[169]
In
determining what the facts are of which a creditor must have
knowledge for purposes of the
Prescription Act, the
focus is on the
combination of facts that constitute the creditor’s pleaded
cause of action.
[127]
The caveat is that the creditor need not have knowledge of every such
fact, but only those facts which constitute the essence
of the
creditor’s pleaded claim, that is, “the minimum facts
that are necessary to institute action”,
[128]
and a “cause of action does not comprise every piece of
evidence which is necessary to prove each fact”.
[129]
The requisite knowledge is, therefore, knowledge of those facts which
constitute the essence of a creditor’s claim.
[170]
What those essential or material facts are must be distilled
from the essential elements of the creditor’s pleaded claim.
A fact is considered material if, without proof of its existence, a
court would be unable to find that the creditor had succeeded
in
proving a constituent element of their pleaded claim. For
instance, an essential or material fact that a creditor who
pursues a
delictual remedy must have knowledge of, is the act or omission which
is causally relevant for the purposes of an allegation
of
negligence. In a contractual setting, such as the present
matter, it is the act or omission which causally gives rise
to a
conclusion of a breach of the terms of the contract.
[171]
It is not necessary for the creditor to also possess knowledge
that a material fact supports a conclusion regarding the constituent
elements of his claim, such as negligence or a breach of contract.
The term “knowledge” does not imply knowing
or becoming
aware that, as a matter of law, an act or omission did, or did not,
amount to negligence. Instead, the creditor
must have knowledge
of the facts that may be described as constituting the negligence or
breach of the contract of which they complain.
In other words,
the creditor is only required to have knowledge of the material facts
underlying the essential elements of their
pleaded cause of action
and not the legal consequence of those facts. It is the legal
consequence of a material fact to which
Truter
referred to
when it spoke of a “relevant” legal conclusion that must
be drawn from the facts, such as the requirements
of fault and
unlawfulness in the context of a delictual claim for damages.
[172]
This
finding in
Truter
is correct.
Section 12(3)
limits knowledge to fact not
law, and prescription is not postponed until a creditor becomes aware
of the full extent of their
rights or until they appreciate the legal
consequences which flow from the material facts.
[130]
To hold otherwise would raise the bar too high and not afford a
debtor the protection from “undue delay by litigants
who are
laggard in enforcing their rights”;
[131]
and would be at odds with the rationale that extinctive prescription
promotes certainty and stability to social and legal affairs
and
maintains the quality of adjudication.
[132]
Deemed or constructive
knowledge
[173]
The
final aspect concerns when a creditor can be said to have had
“knowledge” or constructive knowledge of the material
facts as envisaged in
section 12
of the
Prescription Act. A
creditor may possess actual knowledge of a material fact signifying a
“mental state of awareness of facts that is produced
by
personally witnessing or participating in events, or by being the
direct recipient of first-hand evidence about them.”
[133]
Knowledge extends to a conviction or belief fostered by or from the
surrounding circumstances,
[134]
encompassing what may conveniently be referred to as non-material
facts of which the creditor may have actual knowledge.
[174]
Whether
or not actual knowledge of a material fact can be inferred requires
the existence of a conviction or belief that transcends
beyond a
“mere suspicion not amounting to conviction or belief
justifiably inferred from attendant circumstances”.
[135]
The conviction or belief only becomes knowledge when the
justification for the belief exists – a belief sustained by
the
relevant surrounding circumstances and the known facts.
[175]
For
purposes of
section 12(3)
, a creditor’s knowledge includes
knowledge which he may reasonably be expected to have acquired.
In the absence of
justification, knowledge of non-material facts may
therefore be sufficient to lead the court to conclude that the
creditor had
constructive knowledge as envisaged in the proviso to
sub-section (3). A creditor will be deemed to have had
knowledge of
the identified facts at the time when a reasonable
person in the position of the creditor would have deduced the
material facts
from which the debt arose, or if it was reasonable for
a person in the position of the creditor to have made such enquiries
relevant
to ascertaining the material facts.
[136]
[176]
Accordingly,
while the test for reasonable care for purposes of
section 12(3)
is objective, what is reasonable is measured against the standard of
a reasonable person with the characteristics of the creditor.
It is crucial to emphasise that, by reason of the nature of the
enquiry envisaged in
section 12(3)
, the enquiry is
fact-specific. In other words, what is reasonable must be
determined in the context of the factual circumstances
of each case.
Consequently, it serves very little purpose to seek guidance in the
decisions of other cases.
[137]
[177]
The
statement in
Links
that a creditor in a medical negligence case lacks knowledge of the
necessary facts until he has knowledge “of the facts
that would
have led him to think that possibly there had been negligence and
that this had caused his disability”
[138]
and
in
Loni
[139]
that “facts which would cause the plaintiff, on reasonable
grounds to suspect that there was fault on the part of the medical
staff”
[140]
requires some commentary. These statements have faced
considerable criticism, with the point being made that they are
inconsistent
with
Truter
and knowledge of facts as opposed to the legal consequences of those
facts.
[141]
[178]
What was said in
Links
and
Loni
was not intended to be a departure from what is envisaged by
section 12.
The statements must be read in the context of
the nature of the enquiry envisaged in
section̨ 12(3).
The aim of the enquiry is to determine at what point in time the
creditor acquired knowledge, or could reasonably have acquired
knowledge, of facts that would have caused a reasonable person in the
position of the creditor to have formed the belief (and not
a
suspicion) in broad terms that the medical care he received might be
the possible cause of his injury.
[179]
From a linguistic point of view, the use of
terminology in
Links
and
Loni
indicative of fault that falls outside the scope of “facts”
in
section 12.
However, as stated in
Haward
—
“
[s]ometimes
the essence of a claimant’s case may lie in an alleged act or
omission by the defendant which cannot easily be
described, at least
in general terms, without recourse to language suggestive of fault:
for instances, that ‘something had
gone wrong’ in the
conduct of the claimant’s medical operation, or that the
accountant’s advice was ‘flawed’.
Use of such
language does not mean the facts thus compendiously described have
necessarily stepped outside the scope of
section 14A(8)(a).
In
this context there can be no objection to the use of language of this
character so long as this does not lead to any blurring
of the
boundary between the essential and the irrelevant.”
[142]
Issues raised by the
respondents in their plea
[180]
This
Court found in
Links
that a defendant who raises a plea of prescription must demonstrate
what the facts are that a plaintiff is alleged to have had
knowledge
of and that the plaintiff had knowledge of those facts on the date
prescription is alleged to have commenced.
[143]
The Court in
Links
made the following statement:
“
In
the context of
section 12(3)
a defendant must show what the
facts are that the applicant was required to know before prescription
could commence running.
The respondent must also show that the
applicant had knowledge of those facts.”
[144]
This
statement is consistent with an acceptance that the defendant bears
the burden of proving, as a matter of probability, that
prescription
commenced to run and expired before the creditor instituted his
action.
[145]
[181]
Prescription
is raised by way of a special plea in abatement. A
determination of the issues raised by it proceeds on the basis
that
the plaintiff’s allegations in their particulars of claim are
correct, except where they have specifically been denied
for purposes
of the plea in abatement.
[146]
In the present matter, the respondents accepted for purposes of the
special plea the correctness of the allegations made
by the
applicants in their particulars of claim. Instead, they based
their plea of prescription on matters extraneous to
the pleadings to
show that the applicants could have acquired knowledge of the facts
by the exercise of reasonable care and must
consequently be deemed to
have had the required knowledge as envisaged in the proviso to
section 12(3).
[182]
They placed reliance on the fact that Mr Nel, in his plea
in the first action, placed the validity of the exercise of the
option
by the applicants in dispute. Furthermore, they pleaded
that the fact that the applicants’ termination of the
respondents’
mandate in January 2005 and the appointment of
another firm of attorneys to pursue their claim for transfer of the
property meant
that the applicants would have, alternatively ought to
have, become aware of their claim against the respondents more than
three
years before they served their summons on the respondents on
29 September 2009.
[183]
In the statement of agreed facts in the Supreme Court of
Appeal, the respondents effectively expanded the grounds on which
they
relied on for prescription. They contended that the
applicants’ knowledge that Mr Coetzee did not ask them to sign
anything when they instructed him to exercise the option on their
behalf constituted knowledge of the facts from which the debt
arose.
They further contended that the applicants’ failure to
appreciate that Mr Coetzee’s lack of authority
amounted to a
failure to comply with section 2(1) of the Alienation of Land
Act, and that he could not validly exercise the
option on their
behalf, was not a fact as envisaged by
section 12(3)
of the
Prescription Act, but
a legal consequence of the facts which were
known to them. Alternatively, the respondents persisted with
their plea that
the applicants could have acquired the requisite
knowledge by exercising reasonable care when they terminated
Mr Coetzee’s
mandate and appointed another firm of
attorneys in January 2005 to represent them in the first action.
Findings of the
Supreme Court of Appeal
[184]
The Supreme Court of Appeal found that the applicants had
knowledge of the minimum facts necessary to institute their action
when
they first consulted with Mr Coetzee, or alternatively,
when the option expired. The facts identified by the Court were
that: (a) the applicants gave Mr Coetzee the mandate to exercise the
option on their behalf; (b) that he told them that he would
send a
letter to the executor of the deceased’s estate; and (c) that
the applicants did not sign anything. The Court
concluded that
the applicants’ lack of awareness regarding the provisions of
the Alienation of Land Act was found to be a
legal conclusion, and
not a fact from which their claim arose.
[185]
If one has regard to the agreed statement of facts, and the
submissions that were based thereon, what this finding presumably
means
is that the applicants’ unawareness that the exercise of
the option had not complied with the Alienation of Land Act was
regarded by the Supreme Court of Appeal as unawareness of a legal
conclusion. Consequently, the applicants acquired knowledge
of
a legal conclusion. They acquired knowledge of this legal
conclusion during cross-examination when they were informed
that the
exercise of the option by Mr Coetzee produced no legal
consequence due to non-compliance with section 2(1) of
the
Alienation of Land Act. The Supreme Court of Appeal
alternatively found that the applicants must be deemed to have had
the requisite knowledge when they terminated Mr Coetzee’s
mandate and instructed another firm of attorneys. The reasons
for this finding are unclear. It is presumably based on the
facts identified in the judgment of the Court, referred to in
the
previous paragraph.
Applicants’
pleaded case
[186]
The applicants’ pleaded case was that they instructed
the respondents, who accepted the instructions, to perform the
following
professional services:
(a)
to advise the applicants as to the procedure which had to be adopted
in order to exercise
their option; and
(b)
to do all things that were necessary for and on behalf of the
applicants in order to exercise
the applicants’ option and to
enforce their rights under the agreement.
[187]
According to the applicants, it was an implied term of the
agreement entered into between themselves and the respondents that
they
would perform their services in a professional manner and
without negligence. They alleged that the respondents were
negligent
in the exercise of their mandate in one or more of the
following respects:
“
14.1
They failed to realise that the option could only be exercised
validly if all of the requirements of
section 2
of the
Alienation of
Land Act 68 of 1981
were complied with;
14.2
They failed to cause the Plaintiffs to sign a written authority duly
authorising them (the defendants)
to exercise the option on the
Plaintiffs’ behalf;
14.3
They failed to advise the Plaintiffs that they (Defendants) required
written authority duly authorising
them (the Defendants) to
exercise the option on their behalf before they (the Defendants)
purported to do so.”
[188]
The applicants alleged in paragraph 15 of their particulars of
claim that the respondents, by the exercise of such care that could
reasonably be expected of an average attorney, would have ascertained
the true facts and they would have:
“
15.1
Realised that it was necessary for them to cause the Plaintiffs to
sign a written authority duly authorising them
(the Defendants) to
exercise the option on their behalf;
15.2
Caused the Plaintiffs to sign a written authority duly authorising
them (the Defendants) to exercise
the option on their behalf
before they purported to do so.”
[189]
The applicants further alleged that a reasonable attorney
would have advised his clients to sign a written authority before the
option was exercised and that, as a result of the defendants’
incorrect and negligent advice and/or conduct, the option was
not
exercised validly.
[190]
The applicants’ pleaded claim is a contractual one for
damages arising from the respondents’ alleged breach of a
material
term of the agreement in terms of which they were obligated
to exercise their mandate without negligence and in a professional
manner with the necessary skill, care and diligence. The
respondents’ mandate was twofold—
(a)
to advise the applicants with regard to the exercise of the option
which they held for the
purchase of the property in question; and
(b)
acting upon that advice, the instruction to exercise the option on
their behalf.
[191]
The applicants’ evidence was that Mr Coetzee’s
advice to them was that it was not necessary for them to sign any
documentation and that all it would take for the option to be
exercised, was for him to write a letter to the executor of the
seller’s estate.
[192]
The
acceptance of instructions by a legal practitioner to provide legal
services to a client establishes a contract of mandate.
[147]
An implied term of the agreement is that the legal practitioner will
perform the service without negligence and with the
necessary skill,
care and diligence required from the average attorney.
[148]
A failure to comply with this obligation, resulting in damage,
constitutes a “debt” for purposes of the
Prescription Act. This
debt is due when the creditor has
knowledge, or deemed knowledge, that the legal practitioner breached
his obligation arising from
the terms of the agreement.
[149]
A correct formulation of an attorney’s legal liability towards
their client is as follows—
“
[a]n
attorney’s liability arises out of contract and his exact duty
towards his client depends on what he is employed to do.
(See
Charlesworth on
Negligence
,
4th ed, paras 1032 42;
Clark
and Another v Kirby Smith
(1964) 2 All ER 835
, and
Bagot
v Stevens Scanlen & Co
(1964) 3 All ER 577).
In the performance of his duty or
mandate, an attorney holds himself out to his clients as possessing
adequate skill,
knowledge and learning for the purpose of conducting
all business that he undertakes. If, therefore, he causes loss
or damage
to his client owing to a want of such knowledge as he ought
to possess, or the want of such care he ought to exercise, he is
guilty
of negligence giving rise to an action for damages by his
client.”
[150]
[193]
No different from any other contract, the material elements
comprising a right of action based on the breach of a contract of
mandate
are the following:
(a)
the
existence of a valid and enforceable contract giving rise to a right
to claim performance and the corresponding duty to perform;
[151]
(b)
a breach of
the duty to perform in terms of the contract;
[152]
and
(c)
the harm
caused by the breach of the contract.
[153]
Analysis
[194]
The question is then: What are the facts and the legal
conclusions that are to be deduced from those facts in the context of
the
applicants’ pleaded case? It was necessary for the
respondents to prove the applicants’ knowledge of facts that
support a conclusion that Mr Coetzee acted in breach of the
agreement of mandate by failing to perform the required services
in a
professional and non-negligent manner. It was implicit that
Mr Coetzee would advise the applicants correctly and
exercise
the option on the applicants’ behalf, in a manner that would
result in a valid and binding agreement of sale.
Section 2(1)
of the
Alienation of Land Act requires
an agent who acts on behalf of
a party to the sale of land to do so on the written authority of that
party. By advising the
applicants that it was not necessary to
sign any documentation and that he could exercise the option on their
behalf by simply
writing a letter to the executor of the estate,
Mr Coetzee gave the applicants wrong advice and was, as a
result, never in
a position to comply with his mandate to exercise
the option.
[195]
The
damage-causing event, in the sense of the identified causative act
that constituted a breach of the contract of mandate and
gave rise to
a “debt” which became due within the meaning of the
Prescription Act, was
the erroneous advice provided by Mr Coetzee
to the applicants and his failure to take the necessary steps to
enable the applicants
to exercise their option.
[154]
It is this conduct which is the very essence of the applicants’
claim, demonstrating a lack of the knowledge, skill
and care that can
be expected of the average attorney.
[155]
Mr Coetzee’s failure to correctly advise the applicants
was the factual cause of subsequent events and an indispensable
primary fact in relation to the applicants’ pleaded cause of
action. The debt became due and recoverable when the respondent
failed to exercise the option by the date agreed to in the option
agreement. It was then that the applicants suffered a loss,
completing their cause of action for damages.
[156]
[196]
The
applicants further pleaded the facts from which they sought to draw
the conclusion that Mr Coetzee acted negligently.
This,
together with the aforementioned facts, constituted the combination
of the material facts indispensable for the applicants
to prove at
the trial in order to succeed with their claim.
[157]
They were the facts that would enable the trial court to arrive at
conclusions regarding the constituent elements of their
claim, such
as that the respondents acted in breach of the express or implied
terms of their contract of mandate, and that the
applicants suffered
damages as a result.
[197]
From the evidence presented, it is clear that the applicants
did not have actual knowledge of the fact that the advice they were
given by Mr Coetzee was wrong or that he failed to assist them to
exercise the option validly. On the probabilities, their
conduct simply does not support such a conclusion. They acted
upon Mr Coetzee’s advice by instructing him to exercise
the
option and enter into an agreement on their behalf for the purchase
of the land. They subsequently sought to enforce
what they
clearly thought was an agreement of sale by instituting an action for
ownership of the property to be transferred to
them. They
persisted with this action until they were informed that there was no
enforceable contract of sale due to the
lack of a signed written
mandate authorising Mr Coetzee to act as their agent.
[198]
In
my view, knowledge of the material facts underlying Mr Coetzee’s
failure to perform his mandate with the necessary care
and diligence
can also not be inferred from any of the non-material facts that were
known to the applicants. There can be
no suggestion that such
knowledge must be inferred from the fact that the applicants knew
that they were not asked by Mr Coetzee
to sign any documentation.
They did so based on the advice given to them by Mr Coetzee in the
exercise of his mandate.
There was no reason for the applicants
not to rely on that advice and there was, in the circumstances, no
justification for any
belief that may be said to have been engendered
by that fact.
[158]
[199]
The respondents’ reliance on the fact that in their plea
to the applicants’ particulars of claim in the action, they
pleaded that the applicants “attempted” to exercise the
option, similarly cannot support such a finding. The
pleading
is vague in the extreme and nowhere in their plea did the respondents
place the validity of the alleged sale of the property
in dispute by
reason of a failure to comply with
section 2(1)
of the
Alienation of Land Act.
[200
]
From the common cause facts, it is evident that only during
the course of the trial in the first action did the applicants become
aware of the erroneous nature of the advice they received from Mr
Coetzee and his failure to exercise the option in accordance
with
their instructions. It was at this juncture that they
discovered that the letter by Mr Coetzee to the executor
of Mr
Steenkamp’s estate did not result in a legally binding and
enforceable contract of sale due to non-compliance with
section 2(1)
of the
Alienation of Land Act.
[201
]
On the authority of
Truter
, the Supreme Court of Appeal
held that this knowledge constituted a legal conclusion rather than a
fact as envisaged in
section 12(3).
In my opinion, this
view is incorrect. Firstly, it was made in isolation and
without any reference to the material
facts of which the applicants
had to have knowledge of before prescription commenced running and
the legal conclusions to be drawn
therefrom. What the Supreme
Court of Appeal found to be the facts of which the applicants had
knowledge of, bears no relation
to the material facts underlying the
applicants’ pleaded case. As stated earlier, the issue of
prescription is dealt
with in a manner similar to an exception, in
that it proceeds on the basis that the plaintiff’s allegations
in their particulars
of claim are correct, unless specifically denied
for purposes of the plea of prescription. The focus of the
enquiry in
section 12(3)
is on what the material facts are of which
the creditor must have knowledge. Without first making that
determination, any
further enquiry is rendered aimless. What
the respondents claim to be a legal conclusion bears no relation to
the material
facts from which the debt that the applicants sought to
enforce in their pleadings arose and the legal conclusions to be
drawn
from those facts in terms of the pleaded cause of action.
[202]
The postulated legal conclusion is not a legal conclusion in
respect of the constituent elements of the applicants’ claim.
The legal conclusion that the applicants seek to draw from the
pleaded facts, is that the respondents acted in breach of their
contract of mandate. When the Court in
Truter
said that
section 12(3)
does not require knowledge of a legal conclusion,
the “relevant” contemplated legal conclusion in the
context of the
pleaded case in that matter, was that of negligence –
a constituent element of the applicant’s pleaded claim in that
matter. A legal conclusion that bears no relation to the
elements that make up the creditor’s pleaded cause of action,
or which is based on facts which are not material to the creditor’s
pleaded claim, is irrelevant for purposes of deciding
when
prescription started running. This position is supported by the
Court in
Truter
when it said the following:
“
In
a delictual claim, the requirements of fault and unlawfulness do not
constitute factual ingredients of the cause of
action, but
are legal conclusions to be drawn from the facts:
‘
A
cause of action means the combination of facts that are
material for the plaintiff to prove in order to succeed with
his
action. Such facts must enable a court to arrive at
certain legal conclusions regarding unlawfulness and fault, the
constituent elements of a delictual cause of action being a
combination of factual and legal conclusions, namely a causative act,
harm, unlawfulness and culpability or fault.’”
[159]
[203]
Secondly,
the finding fails to acknowledge that a legal conclusion is an
outcome that is premised on facts. The factual basis
indicating
that that no legally enforceable contract of sale came into being
arises from the legal requirement stipulated in the
Alienation of
Land Act. Section
2(1) provides that an agent who acts on
behalf of any one of the parties to the sale of land must do so on
the written authority
of the party whom he represents. This
provision is a legislative requirement that reflects a statement of
what the law is.
It is a representation of a factual assertion
regarding what the law is in relation to the sale of land, as opposed
to the legal
consequences which flow from a failure to comply
therewith. It is a legal fact, that is, “a fact that
triggers a particular
legal consequence.”
[160]
[204]
The
fact that it is a legal fact makes it no less a fact which is the
existence of a “circumstance” as distinguished
from its
legal effect, consequence or interpretation.
[161]
The finding of the Supreme Court of Appeal does not reflect the
distinction between, on the one hand, the existence of the
requirement in
section 2(1)
of the
Alienation of Land Act as
a
legal fact, which is objectively determinable with reference to the
provisions of the
Alienation of Land Act, and
, on the other hand, the
legal consequences which flow from a failure to comply with the
provisions of the said section.
[205]
When
the applicants were told that the exercise of the option did not
produce a valid and enforceable contract of sale due to
non-compliance
with the provisions of the
Alienation of Land Act, the
applicants consequently also acquired knowledge of the fact that
underlies the conclusion of invalidity, namely, what the
Alienation
of Land Act determi
nes the law is in relation to the sale of land.
This in turn meant that they acquired knowledge of the fact that Mr
Coetzee
gave them erroneous advice and that he had failed to assist
them in enforcing their contractual rights in the option agreement.
These facts are material facts that serve to prove a breach of the
terms of the contract of mandate. It is conduct that supports
a
conclusion that the respondents acted negligently and not with the
necessary skill, care and diligence expected of the average
attorney.
[162]
[206]
That
the applicants acquired knowledge of a material fact in this manner
is irrelevant, as is the fact that there is a legal component
to the
conclusion drawn from the facts with regard to one of the material
facts, namely that the advice was wrong in law.
As stated in
Eaglesfield
v Marquis of Londonderry
:
[163]
“
It
is not the less a fact because that fact involves some knowledge or
relation of law. There is hardly any fact which does
not
involve it. If you state that a man is in possession of an
estate of £10 000 a year, the notion of possession
is a
legal notion, and involves knowledge of law; nor can any other fact
in connection with property be stated which does not involve
such
knowledge of law. To state that a man is entitled to £10 000
Consols involves all sorts of law. Therefore
this is a
statement of fact, and nothing more; and I hold the argument to be
wholly unfounded which maintained that it was a statement
of
law.”
[164]
[207]
The erroneous nature of the advice is clear from a cursory
reading of
section 2(1)
of the
Alienation of Land Act. It
does not require a trained lawyer to arrive at that conclusion.
It is a conclusion of fact inferred from the nature of the
advice
received from Mr Coetzee and the mandatory requirements of
section 2(1)
of the
Alienation of Land Act.
[208
]
In
British
Launderers Association v Hendon Rating Authority
[165]
Lord Denning explained it as follows:
“
The
conclusions from primary facts are, however, inferences deduced by a
process of reasoning from them. If and in so far
as those
conclusions can as well be drawn by a layman (properly instructed on
the law) as by a lawyer, they are conclusions of
fact for the
tribunal of fact and the only questions of law which can arise on
them are whether there was a proper direction in
point of law and
whether the conclusion is on which could reasonably be drawn from the
primary facts: see
Bracegirdle
v. Oxley (10
).
If and in so far, however, as the correct conclusion to be drawn from
primary facts requires, for its correctness, determination
by a
trained lawyer – as, for instance, because it involves the
interpretation of documents, or because the law and the facts
cannot
be separated, or because the law on the point cannot properly be
understood or applied except by a trained lawyer –
the
conclusion is a conclusion of law on which an appellate tribunal is
as competent to form an opinion as the tribunal of first
instance.”
[166]
[209]
At this point, it may be convenient to address some of the
aspects raised by my Colleague Rogers J in his judgment insofar
as it may be necessary. I strongly disagree with the
proposition that this judgment seeks to radically depart from
established
law and that it “may open the door to all sorts of
claims”. The first judgment evidently recognises a
problem
in the finding of the Supreme Court of Appeal, regarding what
a legal conclusion is. Otherwise, there would be no need for
the introduction of an exception, or as it has also been referred to,
“a limited carve-out”. The difference between
this
judgment and the first lies in the approach to the problem.
While the first judgment regards the problem as being the
rule in
Truter
itself and seeks to rectify it by introducing an
exception thereto, this judgment on the other hand, aims to highlight
that the
problem lies in the incorrect interpretation and application
of the judgment in
Truter
by the Supreme Court of Appeal.
This judgment seeks to reaffirm the correct interpretation and
application of what
section 12(3)
entails, and it goes no further
than that. How this could result in the outcomes contemplated
by my Colleague, Rogers J,
in his judgment, is unclear.
[210]
The reference above to the statement of Lord Denning simply
illustrates that not every statement with some legal component to it
must necessarily be a conclusion or a matter of law for purposes of
Truter
. The fact is that a simple statement of what the
law is, as found in a statute, which is a public document, is a
matter of
fact. The existence of the legal rule is proven with
reference to the statute itself. On the other hand, the legal
consequences which are to flow from the non-compliance of such a
legal rule by its application to the facts of a matter, are matters
of law. The factual existence of a legal rule and the
consequences of its non-compliance are two different matters.
In the case before us, the essence of the applicants’ pleaded
case is based on the provision of incorrect advice, that is,
advice
that departed from the fixed rule of law as found in the
Alienation
of Land Act. It
allows for no debate of what the correct legal
position is, and that by comparison to the actual advice given by Mr
Coetzee to
the applicants, the applicants were erroneously advised.
The fact that
section 2(1)
of the
Alienation of Land Act
requires
an agent to have written authority to conclude a sale on
behalf of a principal is accordingly a fact. Its content is
known
and is proved by the statute itself.
[211]
To reiterate, what the facts are for purposes of
section 12(3)
and what the legal conclusions are which are to be drawn from those
facts, are determined with reference to a plaintiff’s
chosen
pleaded cause of action. A legal conclusion that has no bearing
on the pleaded case merely hovers unsubstantiated
and is therefore
irrelevant. The difficulty that arises when a court is
determining the issue of prescription when raised,
is the failure to
first establish the facts of which a creditor must have knowledge of
as envisaged in
section 12(3)
and the legal conclusions which the
creditor seeks to draw from those facts. The result of such a
failure is that it leads
to an avoidable discussion around the issue
of a legal conclusion and consequently, an incorrect finding.
In this matter,
the applicants are required to prove that Mr Coetzee
breached the terms of his mandate. For purposes of
section
12(3)
, this required them inter alia, to have had knowledge of
the fact that the advice they were given by Mr Coetzee was
erroneous.
The fact that they acquired that knowledge in the
manner in which they did is, for the reasons stated in this judgment,
irrelevant.
[212]
The
remaining question is whether the applicants must be deemed to have
had knowledge of the material facts more than three years
before they
instituted their action. I agree with the finding in the first
judgment that on the facts of this matter, the
respondents failed to
prove that the applicants failed to meet the standard of care
required by
section 12(3).
It is negligent, and not innocent,
inaction that the section seeks to prevent.
[167]
Further, whether a creditor, by exercising reasonable care, could
have acquired the relevant knowledge is determined with
reference to
a reasonable person in the position and the particular circumstance
of the creditor. In the context of the present
matter, the
nature of the professional relationship created by the contract of
mandate should be considered in determining whether
the applicants
could reasonably have been expected to know that Mr Coetzee failed to
exercise his mandate with the necessary skill,
care and diligence
expected from the average attorney.
The duty to act in
good faith
[213]
An
attorney owes his client a contractual duty to act in good faith.
In
Goodriche
[168]
the Court dealt with the content of this duty by referring with
approval to the following statement by Van Zyl:
[169]
“
The law exacts
from an attorney uberrima fides – that is, the
highest possible degree of good faith. He must
manifest in all
business matters an inflexible regard for truth; there must be a
vigorous accuracy in minutiae,
a high sense of honour and
incorruptible integrity; he must serve his client faithfully and
diligently.”
[170]
[214]
The
attorney-client relationship further imposes fiduciary obligations on
the attorney,
[171]
which is consistent with the duties of legal practitioners to
“maintain the
highest
standard of honesty and integrity”;
[172]
“treat the interest of their clients as paramount”
[173]
and “maintain legal professional privilege and confidentiality
regarding the affairs of the present or former clients or
employers,
according to law.”
[174]
In
Robinson
[175]
Innes CJ stated that—
“
[w]here
one man stands to another in a position of confidence involving a
duty to protect the interests of that other, he is not
allowed to
make a secret profit at the other’s expense or place himself in
a position where his interests conflict with his
duty. The
principle underlies an extensive field of legal relationships.
A guardian to his ward, a solicitor to his
client, an agent to his
principal, afford examples of persons occupying such a position.”
[215]
The applicants are laypersons who entrusted their affairs to a
trained lawyer. The fiduciary relationship and the respondents’
duty to act in good faith entitled them to reasonably rely on the
advice given to them by Mr Coetzee. Before they were told
that
the exercise of the option did not produce a valid and enforceable
contract of sale, there were no facts that were known to
the
applicants that would have caused an ordinary prudent person in their
position to make enquiries and begin to investigate whether
or not Mr
Coetzee has complied with his mandate.
Conclusion
[216]
For these reasons the appeal must succeed. I am in
agreement with the terms of the order proposed in the first judgment.
ROGERS J
(Maya DCJ, Kollapen J, Madlanga J, Majiedt J and
Theron J concurring):
[217]
I have had the pleasure of reading the judgments by my
Colleagues Kollapen J (first judgment) and Van Zyl AJ
(second
judgment). I wish to add a few words to explain my
concurrence in the first judgment.
[218]
Both judgments recognise, I think, that it would be an
unacceptable outcome for prescription in this case to have started
running
on 13 November 2003, the date by which it was no longer
possible for the applicants (plaintiffs) to validly exercise their
option
to purchase the late Mr Steenkamp’s farm. By that
date, the plaintiffs had a complete cause of action against the
present
respondents (defendants). But they did not know that
the advice given to them by Mr Coetzee was wrong in law. This
was something they only discovered in November 2007 during Mr le
Roux’s cross examination in the action against Mr Nel.
On what basis, in justice, can an attorney contend that prescription
began to run despite the fact that the client’s ignorance
of
the law was the very subject of wrong advice by the attorney and the
very subject of the client’s subsequent claim against
the
attorney?
[219]
The
two judgments reach the same outcome along different paths. The
first judgment acknowledges that, ordinarily for the purposes
of
prescription, the content of
section 2(1)
of the
Alienation of
Land Act
[176
]
and the invalidity of the purported exercise of the option would be
knowledge of the law rather than knowledge of the facts, and
ignorance thereof would thus not delay the commencement of the
running of prescription in terms of
section 12(3)
of the
Prescription
Act.
[177
]
The first judgment carves out an exception by which such knowledge is
treated as knowledge of a fact where the claim against
the attorney
arises from the very circumstance that the attorney wrongly advised
the client as to the content of the law in question.
[220]
The second judgment protests that the first judgment’s
carve-out constitutes an unnecessary and unjustified exception, one
which will be at odds with certainty, predictability and uniformity,
which are components of the rule of law. Instead, the
second
judgment posits that there is a difference between “legal
facts”, which are facts for purposes of
section 12(3)
, and
“legal conclusions”, which are not facts for purposes of
section 12(3).
That
section 2(1)
of the
Alienation of Land Act
requires
an agent to have written authority to conclude a sale on
behalf of a principal, including a sale concluded by the exercise of
an
option, is regarded by the second judgment as a mere fact.
Conversely, the legal conclusion from this fact, namely that the
option was never validly exercised, is treated by the second judgment
as not being a fact.
[221]
In my view, the second judgment’s reasoning is unsound
and constitutes a far more radical departure from our existing law
than the first judgment’s limited carve out. It
would open the door to all sorts of claims that hitherto would
have
been treated as shut by prescription. I have been unable to
find, in our authorities, any support for the distinction,
insofar as
prescription is concerned, between the objective content of the law
(supposedly a fact, available to lawyer and layperson
alike) and the
legal conclusions to be drawn from the objective content of the law
(supposedly a matter of law requiring a lawyer’s
skill).
[222]
Section 2(1)
of the
Alienation of Land Act expressly
states
that an alienation of land that does not comply with the formalities
laid down in the Act, including the requirement of
signed written
authority by the principal in favour of an agent, is of no force or
effect. The content of the formality and
the legal consequences
of non compliance are both express provisions of the Act.
Why should the one be regarded as a
fact and the other a legal
conclusion? Even where legislation does not expressly state
that a contract concluded contrary
to its terms is of no force and
effect, the validity of the resultant contract remains a matter of
the proper interpretation of
the legislation. It is not as if
some hidden field of law visits nullity on the contract.
[223]
The objective content of the law determines all the
consequences flowing from a particular set of facts. The
consequence of
non-compliance with a particular legal provision is as
much part of the objective content of the law as the legal provision
itself,
whether it is express (as with
section 2(1)
of the
Alienation
of Land Act) or
implied or a matter of construction. A
distinction between legal matters which laypeople could supposedly
find out by a “cursory”
reading and those which only
lawyers could supposedly know about is wholly impractical. Is
the content of a regulation made
under an empowering provision a
fact, even though it would be a matter of some difficulty to access
it? And if that is a
fact, is the interpretation of the
regulation contained in the law reports also a fact? What about
knowledge of the common
law, which can be found stated in textbooks
and authoritative judgments?
[224]
In
distinguishing between facts and law for purposes of prescription,
the cases, including
Truter
,
[178]
talk about the “set of facts” a creditor must prove in
order to succeed. The content of the law is not part of
the
“set of facts” a creditor need prove and it is not
something that needs to have “happened” to complete
a
cause of action. It is neither necessary nor permissible to
call a witness to establish the content of the
Alienation of
Land Act. Although
a plaintiff or defendant may allege the
content of the law in their pleadings, this is not strictly
necessary. For example,
in the first action against Mr Nel,
neither side pleaded or needed to plead the content of the
Alienation
of Land Act. Whether
, on the facts pleaded, the option was
or was not validly exercised was a matter of law.
[225]
In
Van
Staden
,
[179]
the question was when prescription started to run in respect of a
statutory right of recovery in terms of section 18(1) of the
Share
Blocks Control Act
[180]
arising from a purported sale of a share block that did not comply
with section 17 of that Act. The Supreme Court of
Appeal
did not regard the content of either of those sections as facts.
Prescription was held to have started running as
soon as the creditor
paid money under the contract in question, despite the creditor’s
ignorance of sections 17 and
18(1).
[181]
Although non-compliance with section 17 was a prerequisite for
bringing a claim in terms of section 18(1), and was in that
sense
part of the creditor’s cause of action, it was not among the
facts of which the creditor needed to be aware before
prescription
started to run.
[226]
In
Claasen
,
[182]
a client sued his attorney because an agreement for the repurchase of
land, although in writing, left the purchase price to be
determined
at the time of repurchase
.
The Supreme Court of Appeal held that time started to run as soon as
the contract was concluded. That section 2(1)
required the
contract to contain all the material terms, including the price, and
that non-compliance rendered the contract invalid
and of no force or
effect, were regarded as a legal conclusion.
[183]
Although non compliance with section 2(1) was a prerequisite for
claiming against the attorney, and was in that sense
part of the
creditor’s cause of action, it was not among the facts of which
the creditor needed to be aware of before prescription
started to
run.
[227]
The
Supreme Court of Appeal reached a similar conclusion in
Fluxmans
.
[184]
The creditor was unaware of the requirements of the Contingency Fees
Act
[185]
and of the invalidity at common law of contingency fee agreements.
This ignorance was not regarded as ignorance of a fact
for purposes
of prescription. Once again, non compliance with the
Contingency Fees Act was a prerequisite for the claim
to recover
money from the attorneys, and was in that sense part of the
creditor’s cause of action, but it was not among the
facts of
which the creditor needed to be aware before prescription started to
run.
[228]
Whether
Claasen
and
Fluxmans
,
which were claims against attorneys, would be decided the same way
under the carve-out proposed in the first judgment is unnecessary
to
debate. I am merely making the point that the second judgment’s
analysis, while professing to apply existing authority,
is at odds
with decisions of the Supreme Court of Appeal. And the second
judgment’s analysis finds no support in the
decisions of this
Court either, in particular
Links
[186]
and
Mtokonya
.
[187]
[229]
In
Mtokonya
,
a wrongful arrest and detention case, this Court held that the
“facts” of which a creditor needed to be aware in terms
of section 12(3) do not, in a delictual claim, include that the
defendant’s conduct was wrongful and actionable. This
Court, referring to
Fluxmans
,
observed that the invalidity of an agreement is not a fact but a
legal conclusion, adding that by the same token to say that conduct
is wrongful and actionable is a legal conclusion and not a
fact.
[188]
To hold otherwise would, the Court said, render the law of
prescription so ineffective that it might as well be abolished.
[189]
[230]
One
of the bases on which the plaintiff in that case claimed to lack the
relevant knowledge was that he was unaware that, following
his
arrest, the police had a statutory duty to bring him before a court
within 48 hours.
[190]
On the second judgment’s approach, this statutory duty would
presumably be a “legal fact” rather than a
“legal
conclusion”. However, this Court in
Mtokonya
plainly regarded knowledge of this statutory duty, as well as
knowledge of resultant wrongfulness and actionability, as equally
irrelevant when it came to the “facts” from which the
debt arose. If the plaintiff in that case had to know about
the
statutory duty as a “fact”, this Court would have been
bound to dismiss the Minister of Police’s reliance
on
prescription, because the stated case did not establish that the
plaintiff had been aware of the statutory duty. If a
debtor
always needs to establish that the creditor had knowledge of some
primary “legal fact” before being able to
rely on the
irrelevance of subsequent “legal conclusions”,
prescription might, as this Court warned, become completely
ineffective.
[231]
Accordingly, when the cases refer, as they sometimes do, to
its being unnecessary for the creditor to know the “legal
conclusions”
flowing from the facts, they are talking about the
full gamut of the law as applied to the facts, not some secondary
process of
legal reasoning flowing from some primary legal
proposition. That the creditor pleads the law in his
particulars of claim
does not convert the assertion of law into an
allegation of fact.
[232]
The second judgment states that the plaintiffs’ pleaded
case required them to prove that Mr Coetzee had “breached”
his contract with them, in particular his duty to advise them and act
on their behalf without negligence; and that they thus needed
to know
that his advice to them had been “wrong” and that he had
failed to exercise the option “validly”.
However,
the words I have placed in quotation marks each embody an assertion
as to the law. If the plaintiffs had sued the
defendants in
delict (and leaving aside the permissibility of concurrent causes of
action in contract and delict), the counterpart
of “breach of
contract” by the giving of “wrong” advice and
failing to exercise the option “validly”
would have been
allegations of “wrongful” and “negligent”
conduct. The legal grounds on which conduct
is wrongful or
negligent are not ordinarily among the “facts” referred
to in section 12(3).
[233]
It is for these reasons that there needs to be special
treatment of the case where a client who has been brought under a
misapprehension
as to the law by his or her attorney later sues the
attorney for loss caused by the wrong advice.
[234]
In addition to what has been stated in the first judgment, the
following may be urged as further justification for a carve-out.
In an action to enforce a contract for the sale of land, the
plaintiff and defendant do not need to plead the content of the
Alienation of Land Act. They
need only plead the facts from
which the conclusion may be drawn that the contract did or did not
comply with the Act.
[235]
By
contrast, in a case such as the present, where a former client sues
an attorney for wrong advice about the requirements of the
Alienation
of Land Act, the
creditor would be expected to allege (a) the advice
he or she did receive; and (b) the advice he or she should have
received.
To make the second of these allegations, the creditor
would need to know not only what the law is but whether the attorney
fell
short of the standards of a reasonable attorney by being
ignorant of the legal requirement in question. Although
evidence
as to the law is not admissible, evidence as to the
standards expected of a reasonable attorney might in some
circumstances be.
[191]
For
the First and Second Applicants:
C
Cutler and J Hamers instructed by NME Nilssen and Associates.
For
the First and Second Respondents:
S
Budlender SC, G Porteous and M Nombewu instructed by Bow
man Gilfillian
Attorneys.
[1]
68 of 1969.
[2]
See [35] below.
[3]
68 of 1981.
[4]
Le Roux
v Johannes G Coetzee & Seuns
,
unreported judgment of the Northern Cape High Court, Kimberley, Case
No 1682/09 (13 December 2019) at para 9.6 (High Court
judgment).
[5]
Id at paras 29-31.
[6]
Johannes
G Coetzee & Seuns v Le Roux
[2022]
ZASCA 47
; 2022 JDR 0773 (SCA) at paras 11-7 (Supreme Court of
Appeal judgment).
[7]
Truter
v Deysel
[2006]
ZASCA 16; 2006 (4) SA 168 (SCA).
[8]
Mtokonya
v Minister of Police
[2017] ZACC 33
;
2018 (5) SA 22
(CC);
2017 (11) BCLR 1443
(CC)
at
para 36.
[9]
Yellow
Star Properties 1020 (Pty) Ltd v Department of Development Planning
and Local Government (Gauteng)
[2009] ZASCA 25; 2009 (3) SA 577 (SCA).
[10]
Supreme Court
of Appeal judgment above n 6 at para 13.
[11]
Links v
Member of the Executive Council, Department of Health, Northern Cape
Province
[2016] ZACC 10
;
2016 (4) SA 414
(CC);
2016 (5) BCLR 656
(CC) at para
22.
[12]
McMillan
v Bate Chubb & Dickson Inc
[2021] ZASCA 45; [2021] JOL 50108 (SCA).
[13]
Van
Heerden & Brummer Inc v Bath
[2021] ZASCA 80; [2021] JOL 50855 (SCA).
[14]
WK
Construction (Pty) Ltd v Moores Rowland
[2022] ZASCA 44
;
2022 (6) SA 180
(SCA).
[15]
Beadica
231 CC v Trustees for the time being of the Oregon Trust
[2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC).
[16]
Links
above n 11 at paras 42 and 45.
[17]
Id at para 47.
[18]
Fluxmans
Inc v Levenson
[2016] ZASCA 183; 2017 (2) SA 520 (SCA).
[19]
Id
Fluxmans
;
Mtokonya
above n 8.
[20]
Links
above
n 11 at para 22;
Mtokonya
above n 8 at para 9.
[21]
Paulsen
v Slip Knot Investments 777 (Pty) Ltd
[2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR 509 (CC).
[22]
Id at para 23.
[23]
Barkhuizen
v Napier
[2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC).
[24]
Id at para 31.
[25]
Chief
Lesapo v North West Agricultural Bank
[1999] ZACC 16; 2000 (1) SA 409 (CC); 1999 (12) BCLR 1420 (CC).
[26]
Id at para 22.
[27]
Road
Accident Fund v Mdeyide
[2010] ZACC 18; 2011 (2) SA 26 (CC); 2011 (1) BCLR 1 (CC).
[28]
Id at para 2.
[29]
The MEC
for Health, Western Cape v Coboza
[2020] ZASCA 165
; 2020 JDR 2720 (SCA).
[30]
Id
at para 8.
[31]
See
also
S
v Makwanyane
[1995] ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR 665
(CC) at para
9.
[32]
Awareness
is the ability to feel or sense things, while knowledge is about
skills and information.
[33]
Brand v
Williams
1988 (3) SA 908 (C).
[34]
Id
at 916.
[35]
Truter
above
n 7 at para 21.
[36]
Id at para 17.
[37]
Links
above n 11 at paras 31-2.
[38]
Mtokonya
above n 8 at para 36.
[39]
Links
above n 11 at para 45.
[40]
Mtokonya
above n 8 at para 63.
[41]
Haward
v Fawcetts
[2006] UKHL 9.
[42]
Id at para 13.
[43]
Links
above
n 11 at para 47.
[44]
WK
Construction
above n 14.
[45]
Id at para 38.
[46]
Goodriche
& Son v Auto Protection Insurance Co Ltd (In Liquidation)
1967
(2) SA 501
(W);
[1967] 2 All SA 437
(W)
at
503H.
[47]
Ramonyai
v LP Molope Attorneys
[2014] ZAGPJHC 65;
[2014] JOL 32399
(GJ) at para 16 with reference
to Charlesworth and Percy
Negligence
4 ed (Sweet and Maxwell, 1962) at paras 1032-42;
Clark
v Kirby Smith
[1964] 2 All ER 835
;
Bagot
v Stevens Scanlan & Co
[1984] 3 All ER 577
;
Honey
& Blanckenberg v Law
1966 (2) SA 43
(R) at 46 (
Honey
and Blanckenburg
);
Halsbury’s
Law of England
3 ed (LexisNexis, 1964) 36 at para 135.
[48]
S v
Waglines (Pty) Ltd
1986 (4) SA 1135 (N).
[49]
Id at 1145.
[50]
Id.
[51]
Truter
above n 7;
Mtokonya
above n 8.
[52]
Links
above n 11 at para 47.
[53]
Mtokonya
above
n 8 at para 43;
see
also
Morris
“Law and Fact”
(1942) 5
Harvard
Law Review
1303
at 1328 9, 1304 and 1331.
[54]
Ditedu
v Tayob
[2005] ZAGPHC 86; 2006 (2) SA 176 (W).
[55]
Fluxmans
above n 18.
[56]
66 of 1997.
[57]
Ronald
Bobroff & Partners Inc v De La Guerre; South African Association
of Personal Injury Lawyers v Minister of Justice and
Constitutional
Development
[2014] ZACC 2; 2014 (3) SA 134 (CC); 2014 (4) BCLR 430 (CC).
[58]
Fluxmans
above
n 18 at para 42.
[59]
Id
at para 23.
[60]
McMillan
above
n 12 at para 1.
[61]
Id
at para 37.
[62]
Ditedu
above n 54 at
paras
8-9.
[63]
Id
Ditedu
;
Fluxmans
above n 18 at para 23.
[64]
Links
above n 11 at para 47.
[65]
Mtokonya
above n 8 at para 63.
[66]
Truter
above n 7 at para 19.
[67]
Samuel Beswick “Error of Law: An Exception to the
Discoverability Principle?”
Osgood
Hall Law Journal
57 (2020) 295 at 296.
[68]
Section 14A of the English Limitation Act states in relevant parts
as follows:
“
(1)
This section applies to any action for damages for negligence, other
than
one to which section 11 of this Act applies, where the starting
date for reckoning the period of limitation under subsection (4)(b)
below falls after the date on which the cause of action accrued.
.
. .
(5)
For the purposes of this section, the starting date for reckoning
the period of limitation under subsection (4)(b) above is the
earliest date on which the plaintiff or any person in whom the
cause
of action was vested before him first had both the knowledge
required for bringing an action for damages in respect of
the
relevant damage and a right to bring such an action.
. . .
(9)
Knowledge that any acts or omissions did or did not, as a matter
of
law, involve negligence is irrelevant for the purposes of subsection
(5) above.”
[69]
Truter
above n 7;
Mtokonya
above n 8.
[70]
Haward
above n 41
.
[71]
Id at para 15.
[72]
Id at para 113.
[73]
Id at para 59.
[74]
Test
Claimants in the Franked Investment Income Group Litigation v
Commissioners for Her Majesty’s Revenue and Customs
[2020] UKSC 47.
[75]
Id
at para 195.
[76]
Taylor
v Legal and General Partnership Services Ltd
[2022] EWHC 2475 (Ch).
[77]
Id
at para 106.
[78]
Witcomb
v J Keith Park Solicitors (A Firm)
[2021]
EWHC 2038
(QB) and on appeal
Witcomb
v J Keith Park Solicitors
(A
Firm)
[2023] EWCA Civ 326.
[79]
Id at paras 36-7.
[80]
O’Sullivan “Limitation, Latent Damage and Solicitors’
Negligence” (2004) 20
Journal
of Professional Negligence
218 at 237.
[81]
See [53] to [54] above.
[82]
Beswick above n 67 at 324.
[83]
Central
Trust Co v Rafuse
[1986] 2 SCR 147.
[84]
Id at 224.
[85]
Hatch
v Cooper
2001
SKQB 491.
[86]
Id at paras 19-21.
[87]
36 of
1963.
[88]
Section 5 states as follows:
“
Extension
of prescribed period in certain cases.—Any appeal or any
application, other than an application under any of the
provisions
of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908),
may be admitted after the prescribed period if
the appellant or the
applicant satisfies the Court that he had sufficient cause for not
preferring the appeal or making the application
within such period.
Explanation.—
The
fact that the appellant or the applicant was misled by any order,
practice or judgment of the High Court in ascertaining or
computing
the prescribed period may be sufficient cause within the meaning of
this section.”
[89]
Collector,
Land Acquisition, Anantnag v Mst Katiji
AIR
1987 SC 1353.
[90]
Basu
Commentary
on Law on Limitation Act
6 ed (
Delhi
Law House, 2007) at 103-7; Mallick
The
Limitation Act 1963
21 ed (Eastern Law House, Kolkata 2005) at 213-9; Mitra
Law
of Prescription & Limitation
12 ed (Wadhwa and Company Nagpur, New Delhi 2006) at 221-5;
Desai and Desai
Commentary
on the Limitation Act
(Universal Law Publishing Co Pty Ltd, Delhi 2005) at 173-8.
[91]
21 of 1968
(Chapter
22).
[92]
Section 30 of the Kenyan Limitation of Actions Act provides as
follows:
“
(1)
. . .
(2)
For the purposes of sections 27, 28 and 29 of this Act any of the
material facts relating to a cause of action shall be taken, at any
particular time, to have been facts of a decisive character
if they
were facts which a reasonable person, knowing those facts and having
obtained appropriate advice with respect to them,
would have
regarded at that time as determining, in relation to that cause of
action, that (apart from section 4(2) of this
Act) an action
would have a reasonable prospect of succeeding and of resulting in
the award of damages sufficient to justify
the bringing of the
action.
(3)
. . .
(4)
In the application of subsection (3) of this section to a person
at
a time when he was under a disability and was in the custody of a
parent, a reference to that person in paragraph (a), paragraph
(b)
or paragraph (c) of that subsection shall be construed as a
reference to that parent.
(5)
In this section, “appropriate advice” in relation to
any
fact or circumstances means the advice of a competent person
qualified, in their respective spheres, to advise on the medical,
legal or other aspects of that fact or those circumstances, as the
case may be.”
[93]
Bernard
M Mbithi v Mombasa Municipal Council
[1993] eKLR.
[94]
Id
at para 7.
[95]
McMillan
above
n 12 at para 35.
[96]
Jacobs
v Adonis
1996 (4) SA 246 (C).
[97]
Truter
above n 7 at para 20.
[98]
Mtokonya
above n 8.
[99]
Truter
above n 7.
[100]
Second
judgment at [193].
[101]
See
Links
above n 11.
[102]
Mtokonya
above
n 8.
[103]
Second judgment at [207].
[104]
See [6](g) above.
[105]
Waglines
above
n 48.
[106]
Truter
above n 7.
[107]
Above
n 1.
[108]
Truter
above
n 7 at para 19.
[109]
Above
n 3.
[110]
Garner
Black’s
Law Dictionary
8 ed (Thomson West Publishing, Minnesota 2004) at 1775.
[111]
Id
at 2615.
[112]
Howard
Phipson
on Evidence
15
ed
(Sweet & Maxwell, London 2000) at 19.
[113]
R v
Dhlumayo
1948 (2) SA 677
(A);
[1948]
2 All SA 566
(A)
at
698. See also
Ndlovu
v AA Mutual Insurance Association Ltd
1991 (3) SA 655
(E) at 659E-F.
[114]
Rule 18(4) of the Uniform Rules of Court provides:
“
Every
pleading shall contain a clear and concise statement of the material
facts upon which the pleader relies for his claim,
defence or answer
to any pleading, as the case may be, with sufficient particularity
to enable the opposite party to reply thereto.”
See
also
Radebe v Eastern Transvaal Development
Board
[1988] ZASCA 8
;
1988 (2) SA 785
(A);
[1988]
2 All SA 271
(A)
at 793D E;
Van
Rensburg v Van Rensburg
1963 (1) SA
505
(A);
[1963] 1 All SA 572
(A)
at
509H-510A; and
Cusa v Tao Ying Metal
Industries
[2008] ZACC 15
;
2009 (2)
SA 204
(CC);
2009 (1) BCLR 1
(CC) at para 68.
[115]
Affordable
Medicines Trust v Minister of Health
[2005] ZACC 3
;
2006 (3) SA 247
(CC);
2005 (6) BCLR 529
(CC) at para
108:
“
The law must
indicate with reasonable certainty to those who are bound by it what
is required of them so that they may regulate
their conduct
accordingly.”
[116]
Hahlo and Kahn
The
South African Legal System and its Background
(Juta
& Co Ltd, Cape Town 1968) at 35 7. See also
Malan
“The rule of law versus decisionism in the South African
constitutional discourse” 45
De
Jure
272 at 279.
[117]
Id.
[118]
Above n 1 at
sections
12(1) and 12(3).
[119]
Links
above n 11.
[120]
Mtokonya
above n 8.
[121]
Loubser
Extinctive
Prescription
2 ed (Juta & Co Ltd, Cape Town 2019) at 32. See also
Evins
v Shield Insurance Co Ltd
1980 (2) SA 814
(A);
[1980] 2 All SA 40
(A) (
Evins
)
at 842F and
Makate
v Vodacom (Pty) Ltd
[2016] ZACC 13
;
2016 (4) SA 121
(CC);
2016 (6) BCLR 709
(CC) 709 at
paras 187-193.
[122]
See Du Bois et al
Wille’s
Principles of South Africa Law
8 ed (Juta & Co Ltd, Cape Town 1991) at 38:
“
A
legal right is ‘an interest conferred by, and protected by the
law, entitling one person to claim that another person
or persons
either give him something or do on an act for him, or refrain from
doing an act.’”
[123]
Truter
above n 7 at para 16.
[124]
Links
above
n 11 at para 31.
[125]
CGU
Insurance v Rumdel Construction (Pty) Ltd
[2003]
ZASCA 45
;
2004 (2) SA 622
(SCA) at para 6;
Evins
above n 121 at 825F-G; and
Links
above n 11 at para 32.
[126]
First
National Bank of SA Ltd v Lynn N.O.
[1995]
ZASCA 158
;
1996 (2) SA 339
(A) at 352C-D.
[127]
Coboza
above n 29 at para 7. This is consistent with the position in
other jurisdictions such as the United Kingdom.
See
Haward
above n 41 at paras 49 and 120; and
Ministry
of Defence v AB
[2012] UKSC 9
at para 34. See also Hoffman LJ in
Broadley
v Guy Clapham & Co
[1994] 4 All ER 439
at para 448J:
“
Section 14(1)(b)
requires that one should look at the way the plaintiff puts his
case, distil what he is complaining about and
ask whether he had in
broad terms, knowledge of the facts on which that complaint is
based.”
[128]
Links
above
n 11 at paras 32-5.
[129]
McKenzie
v Farmers’ Co-operative Meat Industries Ltd
1922 AD 16
at 23.
[130]
Minister
of Finance v Gore N.O
.
[2006] ZASCA 98
;
2007
(1) SA 111
(SCA); [2007] (
Gore
)
at para 17. See also
Yellow
Star Properties
above n 9 at para 37.
[131]
Id
Gore
at
para 16.
[132]
Mdeyide
above n 27 at para 8.
[133]
Gore
above
n 130 at para 19.
[134]
Id.
[135]
Id.
[136]
Leketi
v Tladi N.O.
[2010] ZASCA 38
;
[2010] 3 All SA 519
(SCA) at para 18. See
also
Gunase
v Anirudh
[2011] ZASCA 231
;
2012 (2) SA 398
(SCA) at para 15.
[137]
See by way of analogy:
Trinity
Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
[2017] ZACC 32
;
2018 (1) SA 94
(CC);
2017 (12) BCLR 1562
(CC) at
para 77. See also
Kruger
v Coetzee
1966 (2) SA 428
(A);
[1966] 2 All SA 490
(A) at para 430G:
“
[W]hat
steps would be reasonable, must always depend upon the particular
circumstances of each case. No hard and fast basis
can be laid
down. Hence the futility, in general, of seeking guidance from
the facts and results of other cases.”
[138]
Links
above
n 11 at para 45.
[139]
Loni
v Member of Executive Council for Health, Eastern Cape
[2018]
ZACC 2
;
2018 (3) SA 335
(CC);
2018 (6) BCLR 659
(CC) (
Loni
).
[140]
Id
at para 23.
[141]
See
Loubser
Extinctive
Prescription
above n 121 at 182 and Saner
Prescription
in South African Law
(Lexis Nexis,
Durban 2019) at 157-163.
[142]
Haward
above n 41 at para 13.
[143]
Links
above
n 11 at para 24.
[144]
Id.
[145]
Van
Zijl v Hoogenhout
[2004] ZASCA 84
;
2005 (2) SA 93
(SCA) at para 41.
[146]
Dease v
Minister of Justice
1962 (3) SA 215
(T) at para 217F;
Patterton
v Minister Van Bantoeadministrasie en Ontwikkeling
1974
(3) SA 684
(C) at 687C-D. See also Daniels
Beck’s
Theory
and
Principles of Pleading in Civil Actions
6 ed (Lexis Nexis Butterworths, Durban 2002) at 155-56.
[147]
Blakes
Maphanga Inc v Outsurance Insurance Company Ltd
[2010] ZASCA 19
;
2010 (4) SA 232
(SCA) at para 16. The Court
stated that the relationship between attorney and client is based on
the contract of
mandatum
,
wherein, an attorney, in the absence of a contrary agreement, is
entitled to payment of fees on performance of the mandate or
on
termination of the relationship.
[148]
Bruce,
N.O. v Berman
1963 (3) SA 21
(T) at 23F-G and
Honey
and Blanckenberg
above
n 47 at 46F.
[149]
Ramonyai
above n 47 at para 16:
“
An
attorney’s liability arises out of contract and his or her
exact duty towards his or her client depends on what he or
she is
employed to do. In the performance of his or her duty or
mandate, an attorney holds himself or herself out to his
or her
clients as possessing the adequate skill, knowledge and learning for
the purpose of conducting all business that he or
she undertakes.
If, therefore, he or she causes loss or damage to his or her
client owing to a want of such knowledge as
he or she ought to
possess, or the want of such care he or she ought to exercise, he or
she is guilty of negligence giving rise
to an action for damages by
his or her client against him or her.”
[150]
Honey
and Blanckenberg
above
n 47 at 46F;
Bruce
N.O.
above n 148 at 23G;
Tonkwane
Sawmill Co Ltd v Filmalter
1975 (2) SA 453
(W) at 454H-455C;
Mouton
v Die Mynwerkersunie
1977 (1) SA 119
(A) (
Mouton
);
Slomowitz
v Kok
1983 (1) SA 130
(A);
1 All SA 242
(A) at 142;
and
Steyn
N.O. v Ronald Bobroff & Partners
[2012]
ZASCA 184
;
2013 (2) SA 311
(SCA
)
at para 14.
[151]
Mlenzana
v Goodrick and Franklin Incorporated
2012 (2) SA 433
(FB) (
Mlenzana
)
at paras 12 and 37.
[152]
Id
at para 40.
[153]
Dendy
“
Legal
Practice: Ethics and Common Law”
in
LAWSA
3 ed (2022) at para 955 ff.
[154]
In
LTA
Construction Ltd v Minister of Public Works and Land Affairs
1992 (1) SA 837
(C) at 849H, the Court held that the term debt means
whatever is due under any obligation, an obligation to do something
or refrain
from doing something. Therefore, in terms of the
contract of mandate, Mr Coetzee was obligated to conduct himself in
a
manner demonstrating a lack of the knowledge, skill and care that
can be expected of the average attorney in the provision of his
services as an attorney, including him providing advice to his
clients.
[155]
Mouton
above
n 150 at para 142.
[156]
Deloitte
Hoskins & Sells v Bowthorpe
Herselman
Deutch
[1990] ZASCA 136
;
1991 (1) SA 525
(A);
1 All SA 400
(A) at 532H-I;
Drennan
Maud & Partners v Pennington Town Board
[1998]
ZASCA 29
;
1998 (3) SA 200
(SCA) at 211F.
[157]
Links
above
n 11 at para 32.
[158]
Gore
above
n 130 at paras 19-20.
[159]
Truter
above
n 7 at para 17. See also
Evins
above n 121 at paras 838H-839A:
“
[T]he
basic ingredients of the plaintiff’s cause of action are
(a)
a wrongful act by the defendant causing bodily injury,
(b)
accompanied by fault, in the sense of
culpa
or
dolus
,
on the part of the defendant, and
(c)
damnum
, ie loss
to plaintiff’s patrimony, caused by the bodily injury. The
material facts which must be proved in order
to enable a plaintiff
to sue (or
facta probanda
) would relate to these three basic
ingredients and upon the concurrence of these facts the cause of
action arises.”
[160]
Black’s
Law Dictionary
above
n 110 at 1777.
[161]
Id
at 1775.
[162]
Ramonyai
above n 47 at para 18.
See
also Code of Conduct for All Legal Practitioners, Candidate Legal
Practitioners and Juristic Entities, GN 168
GG
42337, 29 March 2019 at para 18.14.
[163]
(1875) 4 Ch D 693.
[164]
Id
at 703. Quoted with approval in
Taylor
Fashions Ltd v Liverpool Victoria Trustees Co Ltd; Old &
Campbell Ltd Liverpool Victoria Trustees Co Ltd
[1981] 1 All ER 897
at 921.
[165]
[1949]
1 All ER 21.
[166]
Id
at
25H-26A
.
[167]
Macleod
v Kweyiya
[2013] ZASCA 28
;
2013 (6) SA 1
(SCA) at para 13.
[168]
Goodriche
above n 46
.
[169]
Van
Zyl
The
Theory of Judicial Practice in South Africa
(
Juta
& Co Ltd, Cape Town 1931) at 33.
[170]
Goodriche
above
n 46 at 504G-H.
[171]
Midgely
Lawyers’
Professional Liability
(
Juta
& Co Ltd, Cape Town 1981) at 77; Wessels
The
Legal Profession in South Africa
(Juta & Co Ltd, Cape Town 2021) at 176. See also
Fourie
v Van der Spuy and De Jongh Inc
2020 (1) SA 560 (GP) at paras 18-9;
Nash
v Mostert
2017 (4) SA 80
(GP) at para 63.
[172]
Code
of Conduct for All Legal Practitioners and Juristic Entities above n
162 at para 3.1.
[173]
Id
at para 3.3.
[174]
Id
at para 3.6.
[175]
Robinson v Randfontein
Estates Gold Mining Co Ltd
1921
AD 168
at paras 177-80. Endorsed in
Phillips v Fieldstone
Africa (Pty) Ltd
[2003] ZASCA 137
;
[2004] 1 All SA 150
(SCA) at para 30.
[176]
Above
n 3.
[177]
Above
n 1.
[178]
Truter
above
n 7.
[179]
Van
Staden v Fourie
[1989]
ZASCA 36; 1989 (3) SA 200 (A); [1989] 2 All SA 329 (A).
[180]
59 of 1980.
[181]
Van
Staden
above n 179
at
216C-E.
[182]
Claasen
v Bester
[2011] ZASCA 197; 2012 (2) SA 404 (SCA).
[183]
Id
at paras 15-6.
[184]
Fluxmans
above
n 18.
[185]
Above
n 56.
[186]
Links
above
n 11.
[187]
Mtokonya
above
n 8.
[188]
Id
at para 51.
[189]
Id
at para 63.
[190]
This
statutory obligation of the police is imposed in terms of
section
50(1)(c)
of the
Criminal Procedure Act 51 of 1977
.
[191]
In England, compare
Patel
v
Daybells (
A
Firm)
[2001]
EWCA Civ 1229
,
[2001] 32 EGCS 87
, [2002] PNLR 6 at para 44,
Shaw
v Leigh Day (A Firm)
[2018] EWHC 2034
(QB) at paras 8-9 and
Mason
Hayes and Curran v Queally
[2018] IEHC 614
at para 57; but see
West
Wallasey Car Hire Ltd v Berkson & Berkson (A Firm) & Anor
[2009] EWHC B39
(Mercantile);
[2010] PNLR 14
at paras 19-20.
In Australia, see
A.I.McLean
Pty Ltd v Hayson
[2008]
NSWSC 927
at paras 225-36 (a case coincidentally about the alleged
negligence of solicitors in failing validly to exercise options),
Attard
v James Legal Pty Ltd
[2009] NSWSC 811
at para 59 and
Lucantonio
v Kleinert
[2009] NSWSC 853
at para 8. In Canada, expert evidence is
often allowed, but is not always necessary: see, e.g.,
Sports
Pool Distributors Inc v Dangerfield
2008 BCSC 9
at paras 61-2,
King
Lofts Toronto I Ltd v Emmons
2013 ONSC 6113
at paras 74-7 and
Odobas
v Yates
2022 BCSC 186
at paras 101-8.
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