Trying issues separately: Not when inextricably linked

Prescription : attorney sued for negligence : Prescription begins to run as soon as the creditor acquires knowledge of the facts necessary to institute action: whether knowledge of delay in constructing a sectional title scheme constituted knowledge of facts constituting a complete cause of action.

Note: Footnote omitted

“[1] The appellants sold their immovable properties to a property developer, Headline Trading 124 CC t/a Status Homes (Status Homes). They concluded written agreements on 4 September 2006, in terms of which they sold their immovable properties to Status Homes, each for a purchase price of R1 400 000. Status Homes was not able to comply with the terms of the agreements. It was eventually liquidated, and its sole member was sequestrated. The appellants instituted a claim for damages based on negligence against the first respondent as the attorneys who had drawn the agreements and acted as conveyancers in the transaction. The first respondent raised a special plea of prescription which was upheld by the court a quo. The appeal is with leave of the court a quo.

. . . . .

[6] As stated already, the appellants instituted action in the court a quo against the respondent, claiming payment of the amounts they could not recover from Status Homes. The combined summons was served on the respondent on 30 August 2011. In its particulars of claim, the appellants alleged that the respondent owed them a duty of care because it had drafted the sale agreements, and had acted as the conveyancer in the transaction. The appellants alleged that the respondent had breached the said duty of care by failing to advise them of the risks inherent in the transaction and the development of the sectional title scheme. In its plea to the appellants’ particulars of claim, the respondent admitted that it owed the appellants a duty of care in the terms pleaded by the appellants, but denied having breached it.

[7] In addition, the respondent raised a special plea, contending that the appellants’ claim had prescribed. The essence of the special plea was the following: the properties were transferred to Status Homes on 27 July 2007. As no construction had taken place for a period of a year since registration, it alleged that it must have been apparent to the appellants that no construction was going to commence and that Status Homes was in material breach of the agreement and that they (the appellants) would suffer damages as a result.

[8] In the circumstances, the first respondent contended that by 27 July 2008 the appellants had a completed cause of action. Accordingly, prescription commenced to run from that date and was completed on 26 July 2011. As the combined summons was served on 30 August 2011, more than three years after 26 July 2008, the appellants’ claims had prescribed. In the alternative, the first respondent contended that the appellants’ claims prescribed on 3 September 2009, three years after the signing of the agreements. This alternate contention was not pursued with any vigour in argument.

[9] The special plea was argued before the court a quo on 15 November 2016. It is trite that the respondent, as the debtor who invoked the special defence of prescription, bore the onus of establishing ‘both the date of the inception and the date of the completion of the period of prescription’. See Gericke v Sacks 1978 (1) SA 821 (A) at 827H-828A; Van Staden v Fourie 1989 (3) SA 200 (A) at 216B; Santam Ltd v Ethwar 1999 (2) SA 244 (SCA) at 256G.

. . . .

[15] In a judgment delivered on 2 March 2017, the respondent’s primary contention – that the appellants had a completed cause of action by 27 July 2008 – found favour with the court a quo. In the result, it held that the appellants’ claims had prescribed, and accordingly dismissed those claims with costs. The issue in the appeal is whether the court a quo was correct in finding that the appellants’ claims had prescribed.

[16] A convenient starting point is s 12 of the Prescription Act 68 of 1969 (the Prescription Act), the relevant parts of which read:

‘(1) Subject to the provisions of subsections (2) and (3), 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.’

[17] In Truter & another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) para 15 this court held that:

‘For the purposes of the Act, the term ‘debt due’ means a debt, including a delictual debt, which is owing and payable. A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim’. (Footnote omitted.)

[18] This court therefore has to determine the nature of the claim being advanced by the appellants and when it arose, before considering whether the appellants had actual knowledge of ‘the facts from which the debt arises’ from 27 July 2008 as alleged by the respondent. In my view, the court a quo failed to have regard to the evidence before it. Had it done so, it would have been apparent to it that the removal of the restrictive conditions was a critical consideration. This aspect received no attention at all in the judgment of the court a quo.

[19] That the construction of the townhouses could not commence without the removal of the restrictive conditions on the title deed of the consolidated property, was common cause. As stated earlier, Nelson conceded that much during cross-examination. The restrictive conditions were only removed on 26 August 2008. Therefore, on 28 July 2008, the date on which the respondent contended was the inception date of the prescriptive period, the construction could not have commenced. Nelson conceded further that in view of this fact, had the appellants approached him before 26 August 2008 with complaints about the development not commencing, he would have informed them to be patient as it was Status Homes’ intention to commence construction once the restrictive conditions had been removed.

[20] Indeed, that intention is manifest from objective sources. For example, on 13 August 2008, Nelson wrote a letter to a landowner whose property adjoins the consolidated property, and conveyed Status Homes’ intention to erect the townhouses on the consolidated] property. He further mentioned a need to remove the restrictive conditions for the development to proceed. Also, on 20 August 2008 Nelson deposed to an explanatory affidavit in support of a final order for the removal of the restrictive conditions, explaining the steps he had taken to give effect to the provisions of the provisional order. Once the restrictions were removed, the construction commenced shortly thereafter.

[21] In the founding affidavit in support of the application, the sole member of Status Homes stated that the removal of the restrictive conditions was necessary for the development to commence on the consolidated property. The application culminated in the order of 26 August 2008. According to Nelson, he attended to, and secured the removal of the restrictive conditions within a reasonable time after the conclusion of the agreements.

[22] I have gone to great length, perhaps unnecessarily, on the removal of the restrictive conditions. This is to demonstrate the importance of this issue for the determination of the special plea. It must also be borne in mind that the provisional order for the removal of the restrictive conditions was granted at the instance of the respondent, incidentally, on 15 July 2008, just over a week before 27 July 2008 – the respondent’s chosen date for the prescriptive period to commence.

[23] The respondent’s main difficulty is this: during July and August 2008 it was engaged in efforts to remove the restrictive conditions so that construction could commence. It is therefore difficult to see how a court can hold that by 27 July 2008, notwithstanding those efforts, there was no prospect that construction would go ahead and that the appellants had a completed claim against the respondent for alleged negligence. Even if the court could reach that conclusion, on the basis that the application to remove the restrictive conditions was a desperate last attempt by the developer, there is no basis on which it could be concluded that the appellants would have had knowledge of that fact. On the contrary, the respondent’s efforts would have given assurance to the appellants that once the restrictions were removed, construction would commence. This is in fact what happened. It is an untenable proposition, which in my view, exposes the flawed premise of the respondent’s argument.

[24] As a matter of fact, construction could not legally commence on 27 July 2008. As a result, the removal of the legal impediment occurred after the respondent’s ‘cut-off’ date. Nelson could not adduce any evidence that on 27 July 2008 the appellants had actual knowledge of all the requisite facts contemplated in s 12(3) of the Prescription Act. Indeed, as the very existence of the claims depended upon the failure of the development project, it is debatable whether the pleaded claims could have arisen before the conditions were removed, but if they did there is no reason to think that the appellants were aware of the facts giving rise to that claim.

[25] As already stated, the issue is whether the claims advanced in the particulars of claim have prescribed. These claims are in summary that the negligent and wrongful conduct of the respondent caused the appellants to suffer loss as a result of the breach by Status Homes of its obligation to construct the dwellings and make them available to the appellants. Therefore, the appellants would only have a claim against Status Home when they became aware that it would not construct the dwellings.

Their claim against the respondent could not arise any earlier. From the perspective of prescription it was therefore necessary for the respondent to prove that by 27 July 2008 Status Homes would not construct the development and that the appellants were aware of the fact. Working backwards, by February 2009, when construction ceased, they would have known that the development would not go ahead, but in July 2008 they were still awaiting the outcome of the application to remove the restrictive conditions. The respondent did not prove that by July 2008 the development would not proceed, nor that the appellants were aware of that fact. Accordingly, the respondent failed to prove that prescription started to run on 28 July 2008 and that the period of prescription had passed before the service of summons on 30 August 2011.

[26] In sum therefore, I take a view that the respondent’s allegation in the special plea that it must have been apparent to the appellants by 28 July 2008 that no construction was going to commence, is unsustainable. The court a quo ought to have found that the respondent had not acquitted itself of the onus to establish the defence of prescription.

[27] Before I conclude, I have to address one aspect. The special plea was adjudicated separately in terms of rule 33(4) of the Uniform Rules of Court in terms of an order made by Beshe J on 15 July 2014, following a substantive application. It is regrettable that this court has, once again, to give guidance on how the procedure set out in rule 33(4) of the Uniform Rules of Court should be applied. The process of dealing with a matter under rule 33(4) was clarified in Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3:

‘Rule 33(4) of the Uniform Rules – which entitles a Court to try issues separately in appropriate circumstances – is aimed at facilitating the convenient and expeditious disposal of litigation. It should not be assumed that that result is always achieved by separating the issues. In many cases, once properly considered, the issues will be found to be inextricably linked, even though, at first sight, they might appear to be discrete. And even where the issues are discrete, the expeditious disposal of the litigation is often best served by ventilating all the issues at one hearing, particularly where there is more than one issue that might be readily dispositive of the matter. It is only after careful thought has been given to the anticipated course of the litigation as a whole that it will be possible properly to determine whether it is convenient to try an issue separately. But, where the trial Court is satisfied that it is proper to make such an order – and, in all cases, it must be so satisfied before it does so – it is the duty of that Court to ensure that the issues to be tried are clearly circumscribed in its order so as to avoid confusion.’

See also ABSA Bank Ltd v Bernert 2011 (3) SA 74 (SCA) para 21 where the following was stated:

‘I[f] for no reason but to clarify matters for itself a court that is asked to separate issues must necessarily apply its mind to whether it is indeed convenient that they be separated, and if so, the questions to be determined must be expressed in its order with clarity and precision.’

[28] It is by no means clear that these principles informed the decision to separate issues in this matter. In my view, the issue raised in the special plea is inextricably linked with the separated issues of duty of care, negligence, and causation. It seems that Nelson would be a relevant witness in respect of each of the issues in dispute. This should have been clear to the court a quo at the commencement of the hearing of the special plea. In the circumstances, these issues could, and should have been ventilated in one hearing with the special plea, had a vigilant examination of the pleadings been undertaken. An order of separation should not have been made. I appreciate that the decision was made by a different judge. But to my mind, there was nothing that precluded the court a quo from re-visiting the earlier determination by another Judge, if it was of the view that the special plea should be heard in one hearing with the other issues. Had it done so, the inconsistency between Nelson’s evidence as to the scope of the legal duty resting on his firm and the admission of a general and unspecific duty in the pleadings could have been clarified.”