Du Toit and others v Du Toit-Smuts & Partners and another
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Mashile J |
| Judgment Date | 12 April 2023 |
| Citation | 2023 JDR 1397 (MN) |
| Hearing Date | 12 April 2023 |
| Docket Number | 4748/2021 |
| Court | Mpumalanga Division, Mbombela |
Mashile J:
INTRODUCTION:
The Applicants, all trustees of the Mnandi Trust, seek relief against the First Respondent alternatively, Second Respondent. As against the First Respondent, they pleaded that the First Respondent be ordered to pay the Mnandi Trust the sum of R25 000.00 plus interest thereon at the Prescribed Legal Rate from 29 July 2021 to date of payment and costs on the scale as between attorney and client. The Applicants will henceforth be referred to as Mnandi Trust unless the context demands otherwise.
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Mashile J
In the event that the First Respondent has paid the amount of R25 000.00 to the Second Respondent by the time that the Application is heard, Mnandi Trust's claim in the alternative against the Second Respondent is that the Second Respondent be directed to repay the amount of R25 000.00 to Mnandi Trust together with interest thereon at the Prescribed Legal Rate from 29 July 2021 to date of payment. Furthermore, that the Second Respondent be directed to pay the Applicants' legal costs jointly and severally with the First Respondent on the scale as between attorney and client. Lastly, Mnandi Trust also seeks an order declaring the conduct of the First Respondent unlawful.
The Second Respondent does not oppose the claim but the First does. To that end, it has delivered a notice to oppose and thereafter, an answering affidavit wherein it sets out the basis of its opposition. The First Respondent contends that:
The claim of Mnandi Trust prescribed on 3 January 2021 in terms of Section 11(d) of the Prescription Act;
Similarly, the claim against Bateleur has become prescribed because the First Respondent received the amount of R25 000.00 as agent on behalf of Bateleur, the principal. As such, the claim of Mnandi Trust against Bateleur became prescribed 3 years after the debt became due thereby absolving the First Respondent;
The amount of R25 000.00 was paid by the First Applicant in his personal capacity. Mnandi Trust does not therefore have a claim against the First Respondent.
BACKGROUND:
The factual matrix is largely common cause. During September 2017, the First Applicant, acting on behalf of the Mnandi Trust, entered into a purchase agreement with the Second Respondent ("Bateleur") for the sale of portion 93 of Erf 4394, Nelspruit
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Mashile J
Extension 36. I have already mentioned that the First Respondent does not admit that the First Respondent made payment of the amount of R25 000.00 on behalf of Mnandi Trust instead, it avers that he made the payment in his personal capacity.
As part of the negotiations, Bateleur required a reservation deposit for the amount of R25,000.00 to reserve the property for Mnandi Trust pending the finalisation of the negotiations. During September 2017, a reservation agreement was duly entered into between the First Applicant acting on behalf of the Mnandi Trust and the First Respondent. The terms of the reservation agreement are, among others, that:
Mnandi Trust would pay an amount of R25 000.00, being the reservation costs into the trust bank account of the First Respondent. The R25 000.00 would be invested on behalf of Mnandi Trust by the First Respondent into an interest bearing trust bank account;
The abovementioned amount would serve as a deposit after the signing of the purchase and building agreement with Bateleur, the developer ("Bateleur");
Should Mnandi Trust not sign the agreements within 14 days after being presented therewith, the reservation deposit would be forfeited and the reservation agreement will be cancelled;
The deposit was to be paid within 48 hours of the signing of the agreement, where after the reservation agreement lapses;
The agreement further provides that Mnandi Trust agrees that the agreements (purchase and building) would be provided to it no later than _________________ (date left blank in the reserve agreement), if not, the reservation cost will be refunded to Mnandi Trust, unless otherwise agreed.
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Mashile J
On 8 September 2017, the First Respondent received in trust, an amount of R25 000.00 deposited into ABSA bank with the reference "BAT 93-4394 W du Toit". Despite the above having taken place, the parties could not reach an agreement on the building plans. As a result, the sales agreement fell through. On 3 January 2018, the First Respondent received a letter addressed to them from the Attorneys of Mnandi Trust informing the First Respondent that the transaction failed because of the parties' inability to reach agreement regarding the building costs. Additionally, the Attorneys for Mnandi Trust demanded payment of the R25 000.00.
On 29 January 2018, Bateleur answered this letter to Mnandi Trust and indicated that there were costs incurred by it pertaining to certain architect fees in the amount of R31 413.13 and proceeded to demand payment thereof from Mnandi Trust. The First Respondent, in an undated letter, also replied regarding the letter of 3 January 2018 indicating that the claim for payment from the trust account has prescribed. On 29 July and 11 August 2021, the Attorneys for Mnandi Trust wrote letters to the First Respondent demanding payment of the amount of R25 000.00.
On 18 August 2021, the Attorneys of Mnandi Trust threatened to report the matter to the Legal Practice Council ("LPC"). On 19 August 2021, the Attorneys of Mnandi Trust, arguing that the claim has not prescribed, once again wrote a letter and demanded payment of the amount of R25 000.00. The First Respondent wrote back to the Attorneys of Mnandi Trust on 26 August 2021 stating that the amount of R25 000.00 would be paid over to Bateleur.
On 28 September 2021, Mr Smuts of the First Respondent wrote a personal email to the First Applicant explaining the legal position and the facts pertaining to the matter. Refuting that prescription has intervened, the Attorneys of Mnandi Trust wrote to Mr Smuts personally on 29 September 2021 asserting that the amount of R25 000.00 should be repaid. On 4 October 2021, the Attorneys of Mnandi Trust requested a copy of the trust ledger indicating the flow of trust funds to which the First Respondent never acceded.
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Mashile J
ASSERTIONS ADVANCED BY THE PARTIES:
The Respondent has strenuously contended that the claim against both the First Respondent and Bateleur has prescribed. The essence of the argument is that on 8 September 201, the First Respondent received into its trust bank account payment of an amount of R25 000.00 on behalf of the Second Respondent. Upon the deposit of the amount into the trust bank account, ownership of the money became vested in the Bank and the depositor acquired certain rights against the First Respondent.
On 3 January 2018, the reservation agreement was repudiated and the debt by the First Respondent to the depositor became due as a result of the cancellation alternatively, as a result of the demand for payment dated 3 January 2018 as envisaged in section 12(1) of the Prescription Act, 68 of 1969 ("the Prescription Act"). When 3 January 2021 came and passed without any claim being launched, the debt became prescribed in terms of section 11(d) of the Prescription Act such that any claim brought thereafter could be resisted with prescription.
In the second place, the First Respondent asserts that Mnandi Trust has no claim against it because the First Applicant concluded the agreement in his personal capacity and made payment on his own behalf. In this regard, the First Respondent points out that there is no indication on the agreement that the First Applicant was signing on behalf of Mnandi Trust. Furthermore, argues the First Respondent, even the payment of the amount of R25 000.00 was made by the First Applicant without any indication that it was paid on behalf of some other entity.
In the third place, the First Respondent has referred to the case of Stopforth Swanepoel & Brewis Inc. v Royal Anthem Investments 129 (Pty) Ltd and others [1] where the Court had to consider the law applicable to a purchaser of immovable property that was contractually obliged to pay a deposit, and the nature of the transfer of funds which
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Mashile J
the purchaser had made to the seller's Attorney. The Constitutional Court considered the matter and concluded that the amount was not payment to the Attorney but payment to the seller, to be held for and on behalf of the seller in trust by the Attorney.
Conversely, Mnandi Trust asserts that there exists no client-attorney relationship between the First Respondent and it. Instead, it argues, the relationship exists between the First Respondent and Bateleur. To fortify their assertion, the Applicants point to the answering affidavit wherein the deponent states that in terms of the Reservation agreement an amount of R25 000.00 was paid into the trust bank account of the First Respondent as agent for the Second Respondent and the First Respondent received the reservation fee as agent on behalf of Bateleur.
The reservation deposit was paid into the trust bank account of the First Respondent at the request of Bateleur, the First Respondent's principal, in terms of the reservation deposit agreement. The amount of R25 000.00 was to be kept in trust pending the finalisation of the negotiations. Therefore, no debt became due by the First Respondent to the Applicants and the funds must be returned. This is different from the case of Ramdin v Pillay and Others [2] where the funds were not deposited under instructions from a third party on whose behalf they were held in trust.
Mnandi Trust further argues that if the argument of the First Respondent is to be entertained, and if one for the moment accepts that Mnandi Trust...
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