Professional negligence claim: Carve-out exception explained

Note: Footnotes omitted, emphasis added and certain personal details redacted to comply with law.

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 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. 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, 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, 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 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). 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, 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. 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. The creditor was unaware of the requirements of the Contingency Fees Act 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 and Mtokonya.

[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. To hold otherwise would, the Court said, render the law of prescription so ineffective that it might as well be abolished.

[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. 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

[Footnote 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.]

Flynote:

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

Executive summary:

1.Based on the provided factual background, it seems there are legal complexities regarding prescription and the interpretation of the Prescription Act in the context of professional negligence claims against legal practitioners.
2. Here’s a breakdown of the key points:
3. Option Agreement: Mr. Steenkamp and the applicants entered into an option agreement in July 2000, granting the applicants the right to purchase a farm upon Mr. Steenkamp’s death.
4. Exercise of Option: After Mr. Steenkamp’s death in September 2003, the applicants consulted with Mr. Coetzee, who advised them that the option was valid. They then mandated Mr. Coetzee to exercise the option on their behalf.
5. Failure to Exercise Option: Mr. Coetzee attempted to exercise the option, but the farm had already been sold to someone else before Mr. Steenkamp’s death.
6. Legal Proceedings: In October 2004, the applicants sued Mr. Steenkamp’s estate for damages, but the case was dismissed in 2007 due to non-compliance with the Alienation of Land Act.
7. Breach of Mandate Claim: In 2009, the applicants sued the respondents (Mr. Coetzee and his law firm) for professional negligence in failing to properly exercise the option on their behalf.
8. Prescription Issue: The respondents argued that the claim was prescribed (time-barred) under the Prescription Act, contending that the knowledge of the non-compliance with the Alienation of Land Act was not a factual matter but a legal conclusion. They claimed that prescription began in September 2003 when the applicants consulted with Mr. Coetzee.
9. Appeals: The High Court dismissed the special plea of prescription, but the Supreme Court of Appeal ruled in favour of the respondents, stating that the knowledge of legal consequences did not delay the start of prescription. The applicants then appealed to the higher court.
10. Applicants’ Argument: The applicants argued that prescription should start from November 2007 when they first learned of the non-compliance with the Alienation of Land Act during cross-examination. They contended that the breach of mandate was a primary fact necessary to start prescription.
11. Respondents’ Argument: The respondents maintained that prescription began in September 2003 when the alleged breach occurred, and knowledge of legal consequences did not affect the start of prescription.
12. Court Decision: The matter is now before the Constitutional Court to consider whether the Supreme Court of Appeal’s interpretation of the Prescription Act was correct and whether the applicants’ claim against the respondents has prescribed.
13. In summary, the case revolves around the interpretation of the Prescription Act and the determination of when the applicants’ claim against the respondents for professional negligence began to prescribe. The court will need to weigh the arguments presented by both parties and make a decision based on the law and the specific circumstances of the case.

Executive summary of third judgment

This legal excerpt seems to be a judicial opinion written by Justice Rogers, with concurrence from Justices Maya, Kollapen, Madlanga, Majiedt, and Theron. The case concerns prescription in a matter involving legal advice provided by an attorney.

Here’s a breakdown of the key points and arguments presented:

1. Issue of Prescription: The central issue revolves around the commencement of prescription (the expiration of the legal time limit for bringing a claim). Prescription typically begins when the plaintiff knows or ought to have known about the facts giving rise to their claim.

2. Knowledge of Law vs. Knowledge of Facts: There is a debate about whether knowledge of the law or knowledge of factual circumstances triggers the commencement of prescription. The plaintiffs in this case received incorrect legal advice from their attorney, leading to their ignorance of the law and, consequently, their delay in bringing a claim.

3. The Carve-Out Exception: Justice Rogers discusses a proposed exception in the first judgment, which suggests that in cases where an attorney’s wrong advice forms the basis of the client’s claim, ignorance of the law due to the attorney’s error should delay the commencement of prescription.

4. The Second Judgment’s Argument: The second judgment opposes the carve-out exception, arguing that it undermines legal certainty, predictability, and the rule of law. It distinguishes between “legal facts” and “legal conclusions,” suggesting that only the former trigger the commencement of prescription.

5. Analysis of Legal Precedents: Justice Rogers examines various legal precedents, including previous court decisions, to support the argument that ignorance of the law due to an attorney’s error should delay prescription.

6. Justification for Special Treatment: Justice Rogers provides further justification for the carve-out exception, emphasizing the unique nature of cases where clients sue attorneys for wrong legal advice.

7. Pleading Requirements: There’s a discussion about the differences in pleading requirements between cases involving contracts for the sale of land and cases where former clients sue attorneys for negligence.

In summary, Justice Rogers argues for a carve-out exception to the general rule of prescription in cases where an attorney’s wrong advice leads to the client’s ignorance of the law. This exception would allow the delay of prescription until the client discovers the error in legal advice.