K R & D Holdings (PTY) LTD v Abdo & Abdo Attorneys (4084/2009) [2013] Zaecghc 111 (21 November 2013)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO: 4084/2009

Debt Heard: 31 October 2013

Debt Delivered: 21 November 2013

In the matter between

K R & D HOLDINGS (PTY) LTD …………………………………………………………………Plaintiff

and

ABDO & ABDO ATTORNEYS ………………………………………………………………..Defendant

JUDGMENT

GOOSEN, J.

1. The plaintiff instituted action against the defendant on 4 December 2009 in which it claimed damages in the amount of R 5,058,500.00. The particulars of claim as originally formulated based the plaintiff’s claim upon an instruction furnished to the defendant, a firm of attorneys, to prepare deeds of sale in respect of two portions of land. The first portion was described as Portion 1 of the Farm Tower Hill, number 1338 whilst the second portion was described as being an undivided portion of the Farm Tower Hill approximately 6 ha in extent. It was alleged that it was an implied term of the agreement concluded between the plaintiff and the defendant that the defendant would perform its services in a proper and professional manner and without negligence. It was further pleaded that it was within the contemplation of the parties at the time of conclusion of the agreement that the plaintiff wished to acquire the aforementioned properties with the intention of leasing the properties to a third party which would develop upon the said properties a quarry and a site for the sale of quarried product. The undivided portion was integral to the exploitation of the quarry in that it provided access to the National Road via which the quarry product would be distributed. It was further alleged that it was critical that a servitude granting access between the two properties was provided for and that in the event that the plaintiff did not acquire the undivided portion and such servitude access, the exploitation of the quarry would be compromised to the extent that it would not be able to obtain as great a rental as would have been possible if it did include the undivided portion as well as access to the National Road. The plaintiff’s cause of action was further founded upon the allegation that the defendant was negligent in the performance of its mandate in that it failed to advise the plaintiff that it was not lawful to sell or purchase an undivided portion of agricultural land without the prior consent of the Minister of Agriculture and that the agreement was therefore void. Founded upon this alleged breach of the mandate the plaintiff formulated its claim for damages based upon an alleged loss of rental income in respect of portion 1 of the Farm Tower Hill together with the costs incurred by the plaintiff in having to develop a suitable alternative access junction with the National Road.

2. On 30 May 2013 the plaintiff gave notice of its intention to amend its particulars of claim by the insertion of an alternative claim. The said amendment was effected on 14 June 2013. Thereafter on 22 July 2013 the defendant filed a special plea relating to the alternative claim. This special plea alleges that the plaintiff’s cause of action arose no later than 2006 and that more than three years has elapsed since 2006 alternatively since the issue of summons during December 2009. It is further pleaded that the alternative claim is premised on different facts and that the calculation of the damages set out in the alternative claim employs a different methodology. The relief sought in the alternative claim is consequently not the same relief as is sought in the main claim and accordingly that the plaintiff’s alternative claim is one for a different debt.

3. The parties were in agreement that the special plea relating to prescription should be adjudicated separately. They were further in agreement that the resolution of the special plea involves a determination of a legal issue and that it is common cause that in the event that the court finds that the alternative claim is indeed one based upon a different debt to that set out in the main claim then such alternative claim has indeed prescribed. No evidence was presented at the trial on the special plea, the relevant facts being those set out in the pleadings.

4. The alternative claim upon which the plaintiff now seeks to rely is one founded in delict and based upon an alleged breach of a duty of care owed by the defendant to the plaintiff. The plaintiff alleges in its alternative claim that prior to November 2004 a partner of the defendant drafted two deeds of sale between the seller and the plaintiff. These deeds of sale were in respect of the two properties aforementioned. The partner of the defendant was acting as the attorney for the seller and the deeds of sale provided that the defendant should be the conveyancing attorneys and transfer the properties from the seller to the plaintiff. It is alleged that in drafting the agreements and by accepting the mandate to be the conveyancing attorney the defendant assumed a duty of care towards the plaintiff. That duty of care required of the defendant that the defendant act as a reasonable and competent attorney; that the defendant ensure that the agreements were valid and enforceable and to warn the plaintiff should there be any legal impediment to the enforcement of either of the agreements. It is alleged that both agreements were in respect of land defined as agricultural land by the Subdivision of Agricultural Land Act 70 of 1970. It is further alleged that the second agreement, namely that in respect of the undivided portion of land referred to above, was void by virtue of non-compliance with the provisions of the said Act and that the defendant failed to notify the plaintiff of said invalidity. The plaintiff further alleges that acting on the mistaken belief that the second agreement was valid and enforceable the plaintiff signed both agreements and subsequently that Portion 1 of Farm Number 1338 East London was transferred to the plaintiff. The plaintiff alleges that in November 2006 the seller sold the remainder of Farm Number 1338 East London, of which the undivided portion was part, to a third party. It is alleged that the two agreements of sale concluded by the plaintiff and drafted by the defendant as conveyancer for the seller were linked by virtue of an obligation imposed on the seller to grant to the plaintiff a servitude between the two portions. The allegation is made that it was known to the seller and also to the defendant that it was the intention of the plaintiff to obtain a mining permit in respect of Portion 1 of Farm 1338 East London and to utilise the undivided portion for the purpose of access to Portion 1 and for purposes ancillary to the mining operations on Portion 1. The plaintiff alleges that without being the owner of the undivided portion the value of Portion 1 was considerably reduced. Upon this basis and in consequence of the alleged breach of the duty of care owed by the defendant to the plaintiff the plaintiff claims damages calculated upon the difference between the two values of Portion 1 of Farm 1338 East London.

5. The defendant submitted that the alternative claim is one which is not recognisable at all from the original particulars of claim. Although in broad terms the original claim and the alternative claim appear to be premised on the alleged professional negligence of the defendant, it was submitted that the basis of such negligence is different. It was also argued that the quantification of the damages and the relief sought is entirely different. The original claim was quantified as being a loss of rental as well as the costs to develop a suitable alternative access to the National Road. The alternative relief is based upon an alleged difference in value of portion 1 had it been acquired together with the servitudinal right and the ownership of the undivided portion of the farm and its value without such access. On this basis it was argued that the alternative claim now introduced is not one for the enforcement of the same debt inasmuch as the debt is premised upon different facts and is based upon a different computation of the loss allegedly suffered. It was therefore submitted that the basis of the alternative claim constitutes a wholly different and new cause of action which, upon the agreed facts, has prescribed.

6. The plaintiff concedes that the alternative claim is one based on delict and is founded on a breach of the duty of care by the defendant attorneys in exercising the mandate granted by the seller as opposed to the plaintiff as contended for in the main claim. It is however submitted that the cause of action set out in the alternative claim is one founded on the same debt.

7. In CGU Insurance Ltd v Rumdell Construction (Pty) Ltd [2003] 2 All SA 597 (SCA) Jones AJA said the following at para 6:

“…[T]he plaintiff claimed payment of the debt, to use the language of the new Act, or enforcement of a right to payment in the language of the old Act. While these concepts are “merely opposite poles of one and the same obligation” (Cape Town Municipality and Another v Allianz Insurance Co Ltd), it is important to bear in mind that the courts are now specifically concerned with prescription of a “debt” within the meaning of the 1969 Act. The Act does not define “debt” and “there is… a discernible looseness of language” in its use thereof with the result that “debt” means different things in different contexts. For this reason “debt” in the context of section 15(1) must bear “a wide and general meaning”. It does not have the technical meaning given to the phrase “cause of action” when used in the context of pleadings (Standard Bank of South Africa Ltd v Oneanate Investments (In Liquidation)). In Evans v Shield Insurance Co Ltd Trollip JA made a point of the distinction between ‘debt’ and ‘cause of action’, and describes the latter in the following way:

“cause of action” is ordinarily used to describe the factual basis, the set of material facts, that begets the plaintiff’s legal right of action and, complementarily, the defendant’s “debt”, the word used in the Prescription Act.”

The debt is not the set of material facts. It is that which is begotten by the set of material facts.”

(Footnotes omitted)

8. In Associated Paint & Chemical Industries (Pty) Ltd t/a Alberta Paint and Lacquers v Smith 2000(2) SA 789 (SCA) the court stated (at para 13) that:

As a general rule a plaintiff is not precluded by prescription from amending his claim, provided the debt which is claimed in the amendment is the same or substantially the same debt as originally claimed, and provided of course that prescription of the debt has been duly interrupted. See Sentrachem Ltd v Prinsloo (supra) at 15A- 16D, and more particularly 15J-16D where Eksteen JA held as follows:

‘Die eintlike toets is om te bepaal of die eiser nog steeds dieselfde, of wesenlik dieselfde skuld probeer afdwing. Die skuld of vorderingsreg moet minstens uit die oorspronklike dagvaarding kenbaar wees, sodat ‘n daaropvolgende wysiging eintlik sou neerkom op die opklaring van ‘n gebrekkige of onvolkome pleitstuk waarin die vorderingsreg, waarop deurgaans gesteeun is, uiteengesit word.’

9. The plaintiff, in advancing the submission that the alternative claim in this instance was based upon the same debt and was accordingly recognisable in the original claim, relied upon the judgement in Sentrachem v Prinsloo 1997(2) SA 1 (A). In that matter the plaintiff had sued the defendant for damages suffered by him in consequence of his use of a product marketed and recommended to him by the defendant which had the effect of destroying the biological control of another pest and which resulted in the failure of his crop. The plaintiff’s particulars of claim were amended to reflect a main claim based on breach of contract and further alternative claims based on a negligent misstatement inducing contract; a negligent failure to ensure that the product would not harm the biological pest controls used at the time and the negligence on the part of the defendant’s representatives in that they were representatives of a merchant seller who professed to have attributes of skilled and expert knowledge in relation to the product. The defendant in that matter had filed a special plea of prescription upon grounds similar to those set out in this matter.

10. The court came to the conclusion that the real test in determining the issue was whether the same claim had been advanced in the early process and whether the debt as set out in the amended summons was recognisable from the original summons. On the facts it was held that the plaintiff had from the outset claimed payment of the same debt, namely the damage suffered as a result of the use of the product on the farmer’s crop. The court per Eksteen JA said the following at 16 D-F:

In die onderhawige saak het die respondent deurgaans dieselfde skuld van die appellant gevorder, nl die skade wat hy gely het as gevolg van die gebruik van AC 92-1000 in sy sitrusboorde. Hy het geen nuwe partye probeer voeg nie en sy eis was deurgans opeisbaar. Die uiteensetting van die skuldoorsake waarin hy hierdie skuld regtens geklee het was moontlik gebrekkig of onduidelik en dit was hierdie tekortkominge wat die wysiging gepoog het om op te klaar. Die skuld soos dit tans in die gewysigde pleitstukke uiteengesit word en selfs die skuldoorsake waarop nou gesteun word, was myns insiens uit die oorspronklike besonderhede van eis kenbaar.

11. Based upon this approach plaintiff’s counsel argued that the main claim was essentially one founded upon the defendant providing inadequate advice to the plaintiff or failing to provide advice consequent upon the defendant’s duty to exercise professional skill and care which it owed to the plaintiff. On this basis, in the light of the fact that the alternative claim similarly is founded upon the provision of inadequate advice or advice consequent upon the defendant’s duty to exercise professional skill and care, the debt is the same and the claim set out in the alternative claim is recognisable as the same right of action upon which the plaintiff relied in the main claim. It was furthermore submitted that the fact that the calculation of damages is on a different basis to that set out in the main claim does not alter the underlying right of action upon which plaintiff relies in its alternative claim.

12. The fact that the main claim is one based on contract and the alternative claim is one based on delict is of no consequence. As noted in Lillicrap, Wassenaar and Partners v Pilkington Bros (SA) (Pty) Ltd 1985(1) SA 475 (A) at 496 F-I:

“In modern South African law we are of course no longer bound by the formal actions of Roman law, but our law also acknowledges that the same facts may give rise to a claim for damages ex delictoas well as ex contractu, and allows the plaintiff to choose which he wishes to pursue… The mere fact that the respondent might have framed his action in contract therefore does not per se debar him from claiming in delict. All that he need show is that the facts pleaded establish a cause of action in delict. That the relevant facts may have been pleaded in a different manner so as to raise a claim for contractual damage is, in principle, irrelevant.”

13. The plaintiff’s claim in both the main claim and the alternative claim is founded upon an alleged legal duty owed by the defendant to the plaintiff. A legal duty may arise in a wide variety of circumstances either because of the particular relationship between parties (e.g. a contractual relationship) or because of the particular office occupied by the defendant. It may indeed arise in relation to third parties in certain circumstances (see for example Compass Motors Industries (Pty) Ltd v Callguard (Pty) Ltd 1990 (2) SA 520(W)). In this instance the plaintiff in its alternative claim pleads that the legal duty upon which it relies arose in consequence of a contractual relationship between the defendant and the seller rather than one between the plaintiff and the defendant. There is nothing objectionable about such pleading. No doubt the plaintiff will be placed upon an election as to the evidence to be tendered at trial. The fact that a different set of material facts may need to be proved in order to establish the existence of the legal duty does not alter the fact that the plaintiff relies upon the existence of the same legal duty the breach of which it is alleged founds a claim for damages. In my view, having regard to the wide meaning to be assigned to the term “debt” as contemplated in the Prescription Act, the debt which the plaintiff seeks to claim in the alternative claim is the same debt as that upon which its main claim is founded.

14. The defendant argued that the different basis upon which damages are calculated in the alternative claim is indicative that the alternative claim is one based upon a wholly different debt. I do not agree. Counsel for the defendant could point to no authority which holds that a different formulation of the calculation of damages as between alternative claims per se renders the claims wholly distinct and separate rights of action.

15. I am satisfied that upon a proper reading of the right of action upon which the plaintiff relies in the main claim and that upon which the alternative claim is founded indicates that the alternative claim is indeed one founded upon the same debt as that upon which the main claim is based. It follows from this that the defendant’s special plea of prescription in relation to the alternative claim must fail.

16. In the result I make the following order:

The defendant’s special plea of prescription is dismissed with costs.

G. GOOSEN

JUDGE OF THE HIGH COURT

Appearances: For the Plaintiff

Mr. A. Beyleveld SC

Instructed by Wheeldon Rushmere & Cole

For the Defendant

Mr. P. Jooste

Instructed by Nettletons Attorneys