Sutherland v Drake Flemmer & Orsmond Incorporated and Another (1576/2015) [2015] ZAECPEHC 65 (24 November 2015)

Of Interest

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION – PORT ELIZABETH

Case No: 1576/2015

In the matter between:

WILLIAM ARNOLD WENTWORTH-REX SUTHERLAND Plaintiff

and

DRAKE FLEMMER & ORSMOND INCORPORATED First Defendant

LE ROUX INCORPORATED

Second Defendant

JUDGMENT

REVELAS, J:

[1] The plaintiff instituted an action against the two defendants, both being his erstwhile attorneys, for damages arising out of their (admitted) professional negligence. The only two issues remaining for determination at the trial, are causation and quantum. This judgment concerns the determination of a point in limine raised and argued by the defendants on the first day of trial.

Background

[2] On 02 July 1997, the plaintiff was involved in a motor vehicle accident during which he sustained certain injuries. In the same year the plaintiff instructed the first defendant to institute action against the Road Accident Fund (“the Fund”) for the recovery of the damages he suffered as a result of his injuries. Mr Orsmond of the first defendant, lodged a claim on behalf of the plaintiff (on a MMF form) with the Fund for the amount of R150,770.54. The aforesaid amount comprised of general damages in the amount of R100,000.00 and the remaining R150,770.54, comprised of future and past medical and hospital expenses.

[3] The plaintiff’s injuries were the following: A head injury which resulted in brain damage and concomitant emotional and mental difficulties; a comminuted fracture at the junction of the middle and lower third of the right femur and an open book type fracture of the pelvis with separation of the symphysis pubis and damage to one of his sacro-iliac joints. The latter two injuries caused, inter alia, a considerable shortening of the plaintiff’s right leg and severe pain in his right side. He presently walks with a limp.

[4] The claim lodged by the first defendant made no provision for the plaintiff’s past and future loss of earnings and, according to the plaintiff, general damages as claimed then, were not commensurate with the disfigurement, pain and suffering and the several problems allegedly caused by the injuries. The plaintiff, on 21 December 1999, in ignorance, accepted the offer made by the Fund to settle the claim in the amount of R98,334.24. He did so on the advice of Mr Orsmond.

[5] The crucial question of the plaintiff’s truncated future employment was not investigated and the plaintiff’s case is that, consequently he was not examined by the requisite medical expert, so as to fully determine the nature and extent of the injuries. As a result, there was no proper quantification of his claim. The plaintiff later came to the realisation that he had been ill advised to accept the settlement offer, and engaged the services of the second defendant to institute an action for damages against the first defendant, premised on professional negligence and breach of contract. In the hands of the second defendant, the plaintiff’s claim prescribed.

[6] The plaintiff then instructed his present attorneys of record to institute action against both defendants to recover the damages suffered by him and to place him in the position he would have been, had the first defendant diligently pursued his claim against the Fund.

[7] The plaintiff contends that he suffered damages, as a result of his injuries as follows:

Future Medical Expenses appliances and the like R1,860,080.00 Past Loss of Income R2,393,330.00 Future Loss of Earnings Capacity R4,346,125.00 General Damages R1,500,000.00 Past Hospital and Medical Expenses R18,034.89 TOTAL R10,117,569.00

[8] The plaintiff contends that the damages suffered as a result of the first defendant’s negligence was the difference between the damages suffered by him, and the compensation received from the Fund. That difference is the sum of R10,019,235.63. In addition, the costs of the curator bonis to be appointed (7,5% of the total claim) for the plaintiff, brought the total amount claimed by the plaintiff in this case to

R10,770,678.30 plus interest.

Point raised in limine

[9] Several medical reports were obtained by the plaintiff in respect of his injuries and their sequela, after the matter was settled on 21 December 1999.

[10] The point in limine raised by the defendants is to the effect that the plaintiff can only claim damages with reference to the date of the first defendant’s breach of contract, which is the date upon which the plaintiff accepted the Fund’s offer, i.e. 21 December 1999. The defendants submitted that all the medical and other reports obtained after the aforesaid date are legally irrelevant. Since the plaintiff did not specify a date on which the breach was committed and averred that the breach occurred over a period of time, the defendants also objected to the plaintiff’s notice to increase his claim in their plea. In turn, the plaintiff contended that the defendants fell foul of the provisions of Rule 21 raising this aspect in their plea. The defendants are evidently concerned with the increasing quantum of the plaintiff’s claim since 21 December 1999.

[11] In support of their argument, the defendants stressed that the plaintiff’s claim was one for damages arising from a breach of contract, which kind of damages can only be assessed as at the date of breach (and not thereafter), as opposed to a delictual claim for damages, where there is generally no “cut-off” date.

[12] In response, the plaintiff argued that the point raised by the defendants is flawed and submitted the following:

[12.1] As of the date of the settlement, Mr Orsmond had been furnished with information, but had not investigated the plaintiff’s damages. He had not, for example:

(a) considered the claim for general damages;

(b) claimed for past and future loss of earnings;

(c) obtained reports to deal with:

(i) the plaintiff’s mental condition and head injury that he sustained. He was not in a position to ascertain the nature of the head injury or that plaintiff had suffered a brain injury;

(ii) a report from an occupational therapist to determine whether the plaintiff would be able to perform his work;

(iii) a follow-up report from an orthopaedic specialist to determine what the plaintiff’s physical injuries were and what his prognosis was with regard thereto;

(iv) obtained the services of an industrial psychologist to determine whether there was a claim for loss of earnings.

[12.2] The only way that such damages could be computed, the plaintiff submitted, was to lead evidence in respect thereof, supported by experts that could only have furnished reports after the date of settlement of the action with the Fund.

[12.3] If this were not so, the argument continued, then an attorney who under-settles, would be in a more advantageous position if he does not obtain any reports at all, or the fewer reports the better.

Applicable Principles

[13] The liability of an attorney towards his or her client for damages resulting from that attorney’s negligence, is based on a breach of contract between the parties.

“It is a term of the mandate that the attorney will exercise the skill adequate knowledge and diligence expected of an average practicing

attorney. An attorney may be held liable for negligence even if he or she committed an error of judgment on matters of discretion, if the attorney failed to exercise the required skill, knowledge and diligence.”[1]

[14] The defendants, emphasized the difference between contract and delict in the context of awarding damages, and in this regard relied on the following passage from the judgment in Trotman & Another v Edwick:[2]

“A litigant who sues on contract sues on contract sues to have his bargain or its equivalent in money or in money and kind. The litigant who sues on delict sues to recover the loss which he has sustained because of the wrongful conduct of another, in other words that the amount by which his patrimony has been diminished by such conduct should be restored to him.”

[15] The defendants further relied on the judgment in Fourie v Ronald Bobroff and Partners Incorporated [2015] 2 All SA 210 (GJ). In that matter the plaintiff (Fourie), as in the present case, sued her former attorneys for their alleged negligent breach of their mandate to institute and pursue her claim against the Fund with the standard of diligence, care and skill reasonably expected of attorneys. Fourie’s case similarly arose out of an alleged under-settled claim against the Fund. In summing up the relevant legal principles applicable to the liability of an attorney for negligence, Weiner J referred to JR Midgley : Lawyers’ Professional Liability,[3] where the learned author deals with the liability in the context where a lawyer (or an attorney) is alleged to have under-settled the matter, resulting in a loss for his client. These are:

“a. Where a plaintiff alleges that he/she has suffered a loss because a settlement was too low, he/she needs to prove that the amount recovered is less than the amount which would have been determined by a properly negotiated settlement or that which a Court would have ordered. The award will be the difference between the two amounts (page 172).

b. Every lawyer has a duty to establish the facts and evidence which can best assist his client. Where the settlement figure, as a result of his failure to investigate properly was too low, an attorney will be held liable.

c. Damages suffered by a client as a result of breach of the mandate should be assessed at the time when the agreement was concluded containing the alleged under-settlement. It is then when the loss is crystallised. The Court dealing with a second action to claim the damages suffered as a result of the under-settlement will thus have to establish the amount which would have been recovered on a balance of probabilities at the time of the under-settlement and with the information then available (page 68).” (Emphasis added)

[16] In Fourie, Weiner accepted as trite that in order to assess whether the defendant was negligent, that one has to look at the situation as it was at the date on which the alleged under-settlement occurred.[4] As a general proposition, that view is correct.[5]

[17] However, the judgment in Fourie does not constitute authority for the defendants’ proposition in this matter, i.e. that a court may not look at any evidence (in this case, reports relating to quantum), obtained after 21 December 1999. Weiner J had to determine, inter alia, whether negligence was established or not, and clearly, in that context she had to have regard at the situation at the time of the breach. In the present matter, negligence has been conceded. Fourie’s case concerned a claim for loss of support (one of the claims) which could be computed with far more certainty and reference to fixed dates, than a claim for loss of future and past income and certain items under general damages. In the determination of quantum in these type of cases, the date of breach may be relevant but, is not necessarily a “cut-off” point beyond which no evidence can be led. The aforesaid question was in any event not raised in Fourie.

[18] In Rens v Coltman[6] the following was said in relation to the rule that damages are generally assessed as at the date of breach:

“The application of this rule will ordinarily require in many cases, and typically the case of a breach of a contract of sale by the purchaser, that the date for the assessment of damages be the date of performance, or as it has often been expressed, the date of the breach. But even in contracts of this nature, there is no hard and fast rule (cf Culverwell and Another v Brown 1990 (1) SA 7 (A) at 30G - 31H) and in each case the appropriate date may vary depending upon the circumstances and the proper application of the fundamental rule that the injured party is to be placed in the position he would have occupied had the agreement been fulfilled. The position is the same in England. In Miliangos v George Frank (Textiles) Ltd [1975] 3 All ER 801 (HL) Lord Wilberforce (at 813) recognised that ''as a general rule in English law damages for tort or for breach of contract are assessed as at the date of the breach'' but in the same passage emphasised that the general rule did not preclude the Courts in particular cases from determining damages as at some later date.”[7]

[19] In cases such as the present matter, involving professional negligence of attorneys, the distinction between claiming damages arising from a breach of contract and claiming damages arising in delict, is not as clear as the defendants would have it. In JR Midgleys work (referred to above),[8] reference was made (in relation to the aforesaid), to the case of Esso Petroleum Co v Mardon,[9] where Lord Denning MR observed that in the case of a professional person:

“[d]amages should be, and are, the same, whether he is sued in contract or in tort.”

The aforesaid proposition stands to reason. The type of action in question involves by its very nature, questions of contract (the breach thereof) and negligence in the form of an omission.

[20] In the present matter, one component of the breach of contract was the omission to pursue a claim for prospective loss (of income, past and present). If the plaintiff is prejudiced from leading evidence on the loss of earnings, which could obviously only have been obtained after 21 December 1999, the plaintiff would not be able to be placed, at least as far as his prospective losses are concerned, in the position in which he would have been had the contract been diligently performed. As a matter of logic and fairness this cannot be the position.

[21] The following passage from the judgment in Solomon NO and Others v Spur Cool Corporation (Pty) Ltd and Others[10] is particularly apt with regard to the facts of the present matter:

“[46] The judgments in Culverwell and Rens (supra) illustrate that, while on the facts of a case the dates of due performance, repudiation or cancellation may well be important in the appropriate computation of contractual damages, the overriding consideration is the calculation of a figure which fairly achieves the object of putting the innocent party in the position it would have occupied had the agreement been fulfilled. See also Mostert NO v Old Mutual Life Association Co (SA) Ltd 2001 (4) SA 159 (SCA) at 187B - E. Whichever approach to quantification achieves that object most effectively in the context of the peculiar facts of a case is the appropriate one. This entails the application of pragmatism and common sense rather than formalism. It will in general be appropriate in quantifying contractual damages which, from the perspective of the dates of breach or cancellation, involve a component of prospective loss, to have regard to the effect of relevant events intervening between those dates and the trial insofar as that will facilitate a more accurate achievement of the object.” (Emphasis added)

The aforesaid passage was also cited with approval in Standard Bank of South Africa v Renico Construction (Pty) Ltd.[11]

[22] In order to properly quantify the plaintiff’s claim, it is clearly necessary to have regard to reports obtained after the Plaintiff’s claim was settled. The defendants’ interpretation of the principles applicable to the type of case under consideration is simply incorrect as the authorities referred to above, have demonstrated.

[23] In the circumstances, the defendants’ point in limine is to be dismissed with costs.

____________________

E REVELAS

Judge of the High Court

Appearances:

For the plaintiff, Adv L A Schubart (SC) and Adv T Zietsman instructed by Pagdens, Port Elizabeth

For the defendants, Adv P E Jooste instructed by Joubert Galpin & Searle, Port Elizabeth

Date heard:

16 November 2015

Date of Order: 19 November 2015

Date of Reasons for Order: 24 November 2015

[1] Harms: Amler’s Precedents of Pleadings, Seventh Edition at page 59.

[2] 1951 (1) SA 443 (A) at 449 B-C.

[3] Juta (1 ed) 1992 at page 68.

[4] At paragraph [33] of the judgment.

[5] Midgley (supra) at 254-5: “Whether the claim is brought in contract or tort, the fundamental principle governing the measure of damages is that the plaintiff must be put, insofar as money can do it, in the position he would have occupied if the solicitor had discharged his duty. Broadly speaking, this may be achieved in one of two ways, depending on the particular facts of the case: (i) by paying the plaintiff the monetary equivalent of any benefits of which he has been deprived; (ii) by indemnifying the plaintiff against any expenses or liabilities which he has occurred. Damages are generally but not invariably, assessed as at the date of the breach.” (Emphasis added)

[5] Midgley (supra) at 254-5:

“Whether the claim is brought in contract or tort, the fundamental principle governing the measure of damages is that the plaintiff must be put, insofar as money can do it, in the position he would have occupied if the solicitor had discharged his duty. Broadly speaking, this may be achieved in one of two ways, depending on the particular facts of the case: (i) by paying the plaintiff the monetary equivalent of any benefits of which he has been deprived; (ii) by indemnifying the plaintiff against any expenses or liabilities which he has occurred. Damages are generally but not invariably, assessed as at the date of the breach.” (Emphasis added)

[6] 1996 (1) SA 452 (A) at 458E - H.

[7] See: Culverwell and Another v Brown 1990 (1) SA 7 (A) at 30G-31H and Mosterd NO v Old Mutual Life Assurance Co SA Ltd 2001 (4) SA 159 (SCA) paragraph [76].

[8] At 163.

[9] [1976] 2 All ER 5 (CA).

[10] 2002 (5) SA 214 (C), para [46].

[11] 2015 (2) SA 89 (GJ) at paragraphs 25.