KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Rogers J
• Judgment Date: 24 June 2016
• Citation: 2016 (5) SA 485 (WCC)
• Docket Number: 9861/13
• Hearing Date: 14 June 2016
• Counsel: A la Grange SC (with CR Cilliers) for the plaintiff. RJ Howie for the defendant.
• Court: Western Cape Division, Cape Town

Rogers J:

Introduction

[1] The issue in this case is whether the plaintiff (KLD) can rely on a C without prejudice letter as an acknowledgment of liability interrupting prescription. The issue has been presented in the form of a special case as contemplated in rule 33. The stated case was supplemented by certain formal admissions to which I shall presently refer.

KLD's claim against Empire D

[2] KLD's pleaded claim against the defendant (Empire) is the following. In terms of a written mandate concluded in November 2006 and extended during March 2007, KLD was authorised to market erven in a development and to receive commission on sales of which it was the effective cause, such commission to be regarded as earned once the E relevant purchaser took transfer. KLD was the effective cause of 99 sales set out in a schedule to the particulars of claim. It was thus entitled to commissions totalling R2,147 million, which commissions were earned on the registration dates specified in the schedule.

[3] Save in one instance (the sale of Erf 884 to Werner Grift), the F registration dates specified in KLD's schedule range from October 2008 to November 2009.

[4] KLD issued summons in June 2013. According to the sheriff's return, service was effected on 26 June 2013. Empire alleges in its special plea that summons was served on or about 25 June 2013. Nothing turns on G this.

[5] In its special plea Empire alleged that KLD's alleged right to commissions became due on the registration dates specified in KLD's schedule and that, save for the Grift sale, those registration dates were more than three years before service of summons. KLD's claim to all commissions H other than on the Grift sale had thus prescribed.

[6] Empire pleaded over on the merits. Empire alleged inter alia that KLD had breached the mandate in various respects and that Empire had certain claims arising from the breaches. Empire also alleged in general I terms that the consequence of the breaches was that KLD was not entitled to commission in the amount claimed or at all. The plea concluded with a prayer that KLD's claim be reduced by an amount of R428 000 plus interest and that judgment thereon in any event be postponed pending determination of the claims advanced by Empire in an action already instituted by it against KLD. J

Rogers J

A [7] In its replication to the special plea KLD alleged that on 29 July 2011 Empire's then attorneys, Webber Wentzel, acting as Empire's authorised representatives, wrote a letter to KLD's then attorneys, Jooste Leidig Attorneys, acting in their capacity as KLD's authorised representatives, in which Empire acknowledged that, pursuant to the mandate as B extended, KLD had become entitled to commissions totalling R2 105 960. This was alleged to have been an acknowledgment interrupting prescription in terms of s 14 of the Prescription Act 68 of 1969. I shall refer to this letter as the Webber Wentzel letter.

Empire's claims against KLD

C [8] The Webber Wentzel letter and Empire's plea mention a summons Empire issued against KLD in 2007. By order made in September 2013 the cases were consolidated on the basis that Empire was to be treated as a claimant in reconvention in KLD's action. At the commencement of the hearing before me Mr La Grange SC, who appeared for KLD with Mr Cilliers, agreed that I could have regard to all pleadings in the D consolidated cases to ascertain, insofar as might be relevant, when the pleadings were filed and what assertions the parties were making. Mr Howie, who appeared for Empire, agreed with this course which was in accordance with his client's position in earlier procedural skirmishing on the stated case.

E [9] Empire issued its summons in November 2007, ie about three and a half years before the Webber Wentzel letter and about five and a half years before KLD's summons. Empire relied on the written mandate and extension thereof. Empire alleged breaches by KLD in terms similar to those subsequently alleged in Empire's plea to KLD's claim. Empire F alleged that KLD owed it R428 000 in respect of KLD's contribution to an advertising and marketing fund and R35 889 as damages in respect of expenses incurred by Empire in performing administrative functions which KLD should have performed. Empire also alleged that, because of the breaches, it had lawfully cancelled the extended mandate on 29 August 2007.

G [10] In March 2008 Empire amended its particulars of claim in respects to which it is unnecessary to refer.

[11] KLD filed its plea in May 2008. This was about six months before the earliest registrations of transfer on which KLD relies for its commission H claim. KLD admitted the initial mandate but denied the extension. On this basis KLD denied the alleged breaches.

[12] On 14 June 2011 Empire further amended its particulars of claim to add an additional claim for damages of R15 312 220, being alleged loss of profits it had suffered when various purchasers cancelled their sale I agreements.

[13] The Webber Wentzel letter followed on 29 July 2011. Webber Wentzel were Empire's attorneys of record until their substitution by Empire's present attorneys during July 2013.

[14] In January 2015 Empire again amended its particulars by deleting J the additional claim of R15 312 220.

Rogers J

The stated case A

[15] On 19 March 2015 the parties' legal representatives signed a stated case for determination of the special plea. In the stated case the parties agreed that the Webber Wentzel letter, which they attached, was sent and received by authorised representatives and that a cheque of B R1 082 334,55 attached to the Webber Wentzel letter was never presented for payment. The parties recorded that there were two issues for determination, which would dispose of the special plea: (i) whether the Webber Wentzel letter was, regardless of its admissibility for other purposes, admissible as evidence of an interruption of prescription; and (ii) whether, assuming the letter was admissible for that purpose, the letter did in fact interrupt prescription. C

[16] The Webber Wentzel letter reads as follows (references therein to Seeff being to KLD):

'1.

As you know, our client instituted a claim against Seeff on D 20 November 2007 for the payment of certain amounts for which Seeff is indebted to our client.

2.

Certain moneys have now become due and payable to Seeff by our client. These are comprised of commissions to which Seeff has become entitled in terms of the agreement dated 27 November 2006 and the extension thereof dated 23 March 2007 (collectively the agreement) entered into between our client and Seeff. E

3.

We remind you that in terms of the agreement Seeff would become entitled to a four percent commission for each successful sale which Seeff effected, upon transfer of the sold property. For your convenience we include undercover hereof a list of the property sold by Seeff which was successfully transferred to the purchasers.

4.

Accordingly Seeff has become entitled to commission in the F amount of R2 106 960.

5.

By virtue of the operation of set-off this amount has been reduced by the following amounts for which Seeff is indebted to our client:

5.1

the amount of R441 903,45 being Seeff's unpaid contribution to the development's media advertising and marketing fund. This amount is arrived at as follows: G

5.1.1

R700 000 required marketing contribution less R97 253,75 contribution by Mortgage SA less R160 842,80 (R180 360,79 incl VAT) made up of payments made directly to Empire Earth, which totals R441 903,45; H

5.2

the amount of R35 889 being expenses incurred by our client in attending to the administration of sales by Seeff;

5.3

interest of R241 515,81 and R19 650,48 respectively on the above amounts since 20 November 2007, at the rate of 15.5% per annum; and

5.4

R284 666,71 in respect of our client's estimated legal costs to I date on the High Court party and party scale.

6.

From the aforegoing, it is apparent that Seeff's indebtedness to our client amounts to R1 023 625,45.

7.

Accordingly we include undercover hereof a cheque for R1 082 334,55 including VAT (being R2 105 960,00 commission less the total indebtedness of R1 023 625,45) in full and final J

Rogers J

A settlement of any and all claims that Seeff may have against our client, and of the litigation forming the subject matter of case number 16844/2007.'

[17] Save for the omission of the Grift transaction, the schedule attached to the Webber Wentzel letter listed the same sales as in the schedule B attached to KLD's particulars of claim.

[18] The stated case was set down for argument on 11 June 2015. Due to the unavailability of counsel who had signed the stated case on Empire's behalf, Mr Howie was briefed. Pursuant to advice from him, Empire's attorneys wrote to KLD's attorneys on 3 June 2015 to advise C that Empire's legal team now considered that further matters should be included in the agreed facts. The further facts specifically mentioned were: the institution of Empire's action in 2007; some of the terms of the mandate, the alleged breach of which gave rise to Empire's action; the filing of KLD's plea of 8 May 2008; the fact that KLD disputed some of the terms alleged by Empire and denied the conclusion of the D extended mandate; and the absence of a counterclaim for commission in the 2007 action. The letter continued that these were the only further matters which had emerged to date though —

'in due course there may be further common cause facts which our client would like to be agreed to for the purposes of arguing the stated case'.

E KLD's attorneys were asked to say whether their client was willing to revisit the ambit of the agreed facts.

[19] KLD refused. On 10 June 2015 Empire served an application in...