Case summary written by Blake Liam Hamilton and checked by Khotso Mmatli.
Background
On 13 October 2017, Bruce Gordon McMillan (“the “Appellant”) instituted an action in the Eastern Cape Division of the High Court, East London (the “Court a quo”), against Bate Chubb & Dickson Incorporated (the “Respondent”) for damages for breach of an oral mandate. The Respondent delivered a special plea in terms of which it contended that the Appellant’s claim had prescribed.
According to the Appellant, the express and material terms of the oral mandate were that the Respondent should prepare a written antenuptial contract, which would exclude all community of property between the Appellant and his former wife, and for the accrual system to apply to their marriage. The Respondent accepted the aforesaid mandate and prepared an antenuptial contract which they presented to the Appellant and his former wife for signature on 1 December 1998. In May 2014, the Appellant’s former wife instituted divorce proceedings, wherein the Appellant’s former wife contended that the antenuptial contract was void ab initio. Upon receipt of the aforesaid plea, in the divorce proceedings, the Respondent orally advised the Appellant that there seems to be an error and mistake with the antenuptial contract, which may be attributable to the drafter thereof and notary public, both of whom were in the employ of the Respondent at the time and thus, without any admission of liability or negligence, a claim against the Respondent may ensue. Consequently, the Respondent filed a notice of withdrawal as an attorney on record and further advised the Appellant to seek independent legal advice regarding the aforesaid claim. As such, a new attorney represented the Appellant in the divorce proceedings, which culminated in an order declaring the antenuptial contract to be void ab initio.
The Respondent argued that as of May 2014, the Appellant was made aware of all the material facts upon which the purported claim against it could be formulated, but he failed to institute any action within three years from the aforementioned date. The Respondent thus contended that the Appellant’s claim had prescribed in terms of Section 12 (1) of the Prescription Act 68 of 1969 (“the Act”).
The Appellant replicated the Respondent’s special plea and denied that his claim had become prescribed. The Applicant asserted that he could not have acquired knowledge of any potential claim prior to the delivery of final judgment in the divorce action.
In Casu, the Appellant challenged the findings of the Court a quo on the following grounds:
- That the Court a quo erred in holding that the Appellant had a complete cause of action for professional negligence against the Respondent on 12 May 2014; and
- Furthermore, the Appellant submitted that Prescription-only began to run in 2016 once the Judge delivered his judgment regarding the invalidity of the antenuptial contract, in the divorce proceedings.
Legal dispute
In Casu, the main issue before this Court is, inter alia, whether or not the Court a quo was correct to hold that when the action was instituted in October 2017, the Appellant’s claim had become prescribed and that the Appellant had a complete cause of action to sue the Respondent for professional negligence.
Court held
The Court rejected the Appellant’s contention that, prior to the judgment regarding the invalidity of the antenuptial contract in 2016, he could not have had knowledge of all the material facts he needed before he could institute legal proceedings against the Respondent. The Court further highlighted that in order to succeed in an action for damages against an attorney for professional negligence, a plaintiff is required to allege and prove:
- a mandate was given to and accepted by the attorney;
- a breach of the Mandate;
- negligence in the sense that the attorney did not exercise the degree of skill, knowledge and diligence expected of an average practicing attorney;
- that he/she had suffered damages; and
- that the damages were within the contemplation of the parties when the mandate was extended.
In Casu, there can be little dispute about 1, 2, 3 and 5. However, 2 is arguable since the Appellant had been sued by his wife for half of his estate and consequently approached the Respondent to defend his claim, wherein the Respondent advised him that there was an error with the antenuptial contract and that he should seek legal advice regarding same.
This Court stated in Minister of Finance and Others v Gore[1]:
“that the period of prescription begins to run against a creditor when the creditor has the minimum facts which are necessary to institute action”.
Furthermore, this Court recently held in Fluxmans Incorporated v Levenson[2]:
“Knowledge 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.”
Section 12 requires knowledge only of the material facts from which the prescriptive period begins to run, it does not require knowledge of the legal consequences. The Judge concluded that the Appellants cause of action was complete as soon as he was notified by the Respondent on 9 May 2014 of the potential conflict of interest arising from the fact that the Respondent’s directors may have drafted the antenuptial contract incorrectly.
The Appellant’s second contention that, due to the Respondent’s directors’ failure to concede liability, he could not have had salient facts upon which to formulate a claim against the Respondent, until such a time where the High Court pronounced pertinently on the validity of the antenuptial contract, is also rejected. The Judge referred to Links, wherein it was held that it is not necessary for a party relying on prescription to accept liability.
In conclusion, the Judge dismissed the appeal with costs and held that the court a quo correctly found that the Appellant’s claim, which he instituted on 13 October 2017, had become prescribed. The Judge held that the Appellant acquired knowledge of all the material facts on which to institute his claim against the Respondent on 9 or 12 May 2014, when the Respondent informed/alternatively instructed the Respondent to seek legal advice, regarding a claim against the Respondent.
Value
The time periods for prescription being to operate once 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.
[1] Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA) para 17
[2] Fluxmans Incorporated v Levenson [2016] ZASCA 183; [2017] 1 All SA 313 (SCA); 2017 (2) SA 520 (SCA) para 42.
