Sasfin (Pty) Ltd v Jessop and Another

• Jurisdiction: South Africa
• Citation: 1997 (1) SA 675 (W)

Sasfin (Pty) Ltd v Jessop and Another
1997 (1) SA 675 (W)

1997 (1) SA p675

Citation	1997 (1) SA 675 (W)
Case No	7544/93
Court	Witwatersrand Local Division
Judge	Wunsh J
Heard	August 25, 1996
Judgment	September 15, 1996
Counsel	P M Wulfsohn (with him F Vaccaro) for the applicant; N B Tuchten (with him LJ Morison) for the second respondent

Flynote : Sleutelwoorde B

Prescription — Extinctive prescription — Period of prescription — When it commences — Generally in negligence actions cause of action accruing at time plaintiff actually suffering damage even though consequences not becoming apparent until later and not at date of negligent act or omission — Question of C fact in each case whether actual damage established and, if so, when occurred — Normally injury contemporaneous with wrongful act but not necessarily so — However, because negligence not becoming actionable without proof of damage, only after damage suffered cause of action becoming complete and time beginning to run — Real issue not whether period of prescription of debt D arising from lex Aquilia beginning to run when there is culpable act or omission without any damage, but when damage arising to complete cause of action — No hard and fast rule as to time when damages suffered and cause of action established, or when to ascertain 'what damage is or could be recognised as constituting the minimum of an actionable claim' — In some cases cause of E action depending on occurrence of reasonably foreseeable event causally linked to negligent conduct, even if that taking place some time after that conduct — Prescription Act 68 of 1969, ss 11(d), 12.

Headnote : Kopnota

Generally in negligence actions, the cause of action accrues at the time when the plaintiff actually suffers the damage, even though the consequences may not become F apparent until later, and not at the date of the negligent act or omission. It is a question of fact in each case whether actual damage has been established and, if so, when it had occurred. 'Normally the injury is contemporaneous with the wrongful act but it is not necessarily so. . . .' However, because negligence does not become actionable without proof of damage, it is only after damage has been suffered that the cause of action G becomes complete and time begins to run. (At 694F-H, approving Charlesworth and Percy Negligence 8th ed para 3-136.)

The applicant had been a creditor of Roadhouse CC ('the corporation') which had been placed in liquidation in September 1991. On 23 September 1991 the respondents, both insolvency practitioners, had been appointed liquidators. On 19 H November 1991 M submitted to the first respondent a written offer to purchase the corporation's farm ('the property') for R2,6 million. The offer was open for acceptance for five days. The respondents purported to accept the offer on 25 November 1991, outside the specified period, with the result that no sale arose pursuant to the offer. On 18 March 1993 the applicant instituted action against the first respondent for damages. The applicant alleged that the first respondent had wrongfully and negligently failed to I accept an offer for the property, resulting in financial loss to the applicant as creditor of the corporation. The trial, which was to have taken place on 1 August 1994, was postponed sine die as the applicant wanted to join the second respondent as a second defendant in the case by reason of his appointment as joint liquidator. On 22 J September 1994 the respondents disposed of the property to a third party for the sum

1997 (1) SA p676

of R700 000, the whole of which was paid to the first bondholder, resulting in the A respondents not having any proceeds of the sale for the benefit of the applicant. The notice of motion in the application for an order that the second respondent be joined as a second defendant in the action and consequential relief, including amendments to the summons which extended beyond the consequences of the joinder, had been served on the second respondent on 20 December 1994. The second respondent opposed B the application on the grounds that the claim against him had arisen on 25 November 1991, the last date on which the offer to purchase the property could have been accepted, and had therefore prescribed (see ss 11(d) and 12 of the Prescription Act 68 of 1969). The applicant contended that the cause of action had arisen on 22 September 1994 when the property was disposed of for R700 000. The second C respondent contended further that if the cause of action had arisen on 22 September 1994 the applicant had not only instituted proceedings against the first respondent before its cause of action was complete, but that the trial would, but for the postponement sought, have been completed before its cause of action arose. D

Held, that the debt had become due when it had been claimable and when an action could be brought against the second respondent; the second respondent had to be under an obligation to pay immediately. This would apply to damages even before they were liquidated. (At 689C-C/D.)

Held, further, that the enquiry had to be: when had the applicant acquired its cause of action (or right of action); and when had it been entitled to institute proceedings against the second respondent? (At 689E/F.) E

Held, further, that it was obvious that time could begin to run against a creditor by reason of a failure to sue only when he or she was entitled to sue, ie when there was a cause of action: although generally a cause of action in delict arose when the wrongful act was committed or the wrongful omission occurred, it was clear that there were deviations from the general rule and, in any event, there was in most cases no wrongful conduct unless damage was caused. (At 689G/H, read with 690B.) F

Held, further, that the real issue was not whether the period of prescription of a debt arising from the lex Aquilia began to run when there was a culpable act or omission without any damage but when the damages arose to complete the cause of action. (At 692D.) G

Held, further, that a plaintiff who had suffered pure economic loss as a result of the defendant's wrongful negligence acquired a cause of action when and only when that loss was sustained. One had to distinguish between the identification of the damages which formed the gist of an action and the determination of the scope of the damages to be awarded which might be governed by different considerations. (At 693D/E-E/F.) H

Held, further, that while generally damage might be suffered as soon as the wrongdoer acted or failed to act, there were obviously cases where the plaintiff's cause of action was not complete and liability did not arise until a further event had occurred. (At 693I-I/J.)

Held, further, that there could be no hard and fast rule as to the time when the damages were suffered and the cause of action established, or when to ascertain 'what I damage is or could be recognised as constituting the minimum of an actionable claim'. In some cases the cause of action would depend on the occurrence of a reasonably foreseeable event causally linked to the negligent conduct, even if that took place some time after that conduct. (At 694E-F.)

Held, further, that in the present case, on the basis of the claim which it had framed, if the applicant had a maintainable claim for damages it had to have J

1997 (1) SA p677

arisen from the negligent failure of the respondents to exploit an opportunity to sell the A property for a price which they would not otherwise have achieved. The liability did not arise from and the claim against them was not based on their delay in selling the property. (At 698E/F-F/G.)

Held, further, that the applicant's claim could only arise from the diminution in the value of its security and concurrent claim by reason of the respondent's objective inability to sell the property for that price, in other words from the fact that the price offered had B exceeded the market or realisable value of the property and that that value had been ascertainable when M's offer had lapsed more than three years before the proceedings had been launched. (At 698G/H-H/I.)

Held, further, that there was merit in the second respondent's submission that, if the applicant's claim for damages was based on the foreseeability on the part of a C reasonable person that the property would probably not realise R2 600 000, the applicant should also have been able to foresee that and that that disposed of the applicant's submission that until the eventual sale of the property there had been a 'material uncertainty' whether it would realise an adequate liquidation dividend and that that question was 'only cleared up' when the sale had taken place. (At 698H/I-J.) D

Held, further, that the present case was not one where the applicant's case had been contingent upon the sale of the property at a later date for a price which was not sufficient to provide funds for the payment of its claim. (At 698J-699A.)

Held, accordingly, that if the second respondent were joined as a joint defendant in the action, as it had been framed in the summons, he would be able successfully to resist E the applicant's claim on the ground of prescription and that his participation in the action would, therefore, be futile. On the same ground, without examining the excuse for the applicant's failure to involve the second respondent timeously, its prayer for leave to sue despite the close of pleadings and the absence of a notice to the second respondent in terms of s 2(2) of the Apportionment of Damages Act 34 of 1956 F would have to be refused. (At 699I-700A/B.)

Cases Considered

Annotations

Reported cases

The following decided cases were cited in the judgment of the Court:

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