KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd (1135/2016) [2017] ZASCA 98; [2017] 3 All SA 739 (SCA); 2017 (6) SA 55 (SCA) (6 July 2017)

KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd (1135/2016) [2017] ZASCA 98; [2017] 3 All SA 739 (SCA); 2017 (6) SA 55 (SCA) (6 July 2017)

The Supreme Court of Appeal held that an acknowledgment of liability made in a without prejudice settlement communication cannot be admitted in evidence for the purpose of interrupting prescription under section 14 of the Prescription Act. The court reasoned that the without prejudice rule is founded on public policy and contractual principles, encouraging parties to negotiate freely without fear that admissions will be used against them. Recognizing an exception for prescription would undermine the rule's effectiveness and create legal and practical uncertainty. The court found that the Prescription Act does not expressly override the common law without prejudice rule, and the...

Citation
[2017] ZASCA 98
Parties
Appellant: KLD Residential CC; Respondent: Empire Earth Investments 17 (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
6 July 2017
Case Number
1135/2016
Procedural Posture
Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town
Outcome
Appeal upheld; special plea of prescription dismissed; orders of the court a quo set aside and replaced.
Judges
Lewis, Tshiqi, Mbha, Fourie, Schippers
Legal Topics
Prescription Act Section 14, Without Prejudice Rule, Acknowledgment of Liability, Settlement Negotiations, Admissibility of Evidence
Civil Procedure Commercial and Corporate Prescription Act Section 14 Without Prejudice Rule Acknowledgment of Liability Settlement Negotiations Admissibility of Evidence

Case Brief

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Parties

KLD Residential CC

Appellant

Empire Earth Investments 17 (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town

Legal Issues

  1. 1 Whether an acknowledgment of indebtedness made in a 'without prejudice' settlement communication may be admitted in evidence solely to interrupt prescription under section 14 of the Prescription Act.
  2. 2 Whether South African law should recognize an exception to the without prejudice rule for the purpose of proving interruption of prescription.
  3. 3 Whether public policy or statutory interpretation supports such an exception.

Ratio Decidendi

The Supreme Court of Appeal held that an acknowledgment of liability made in a without prejudice settlement communication cannot be admitted in evidence for the purpose of interrupting prescription under section 14 of the Prescription Act. The court reasoned that the without prejudice rule is founded on public policy and contractual principles, encouraging parties to negotiate freely without fear that admissions will be used against them. Recognizing an exception for prescription would undermine the rule's effectiveness and create legal and practical uncertainty. The court found that the Prescription Act does not expressly override the common law without prejudice rule, and the...

Court Disposition

Appeal upheld; special plea of prescription dismissed; orders of the court a quo set aside and replaced.

Orders

  • The appeal is upheld with the costs of two counsel.
  • The orders of the court a quo in subparagraphs (a) and (b) of para 66 of the judgment are set aside and replaced with the following: (a) The issue identified in para 3.1 of the stated case is determined in favour of the plaintiff. (b) The special plea of prescription is dismissed with costs, including those of two...