Johannes G Coetzee & Seun and Another v Le Roux and Another

The respondents (plaintiffs) mandated the appellants (defendants), their attorneys, to exercise an option to purchase a farm from the late Mr Jan Harmse Steyn. On 26 September 2003, the plaintiffs consulted the second defendant who said he would write to the deceased's attorney, but told them no signature was necessary. The deceased passed away on 13 September 2003, having previously sold the property to another buyer on 8 July 2003. The option expired on 13 November 2003. The plaintiffs instituted action against the purchaser in October 2004, which was dismissed by Williams J in September 2009 on the basis that the option was not executed in compliance with s 2(1) of the Alienation of Land Act 68 of 1981. The plaintiffs then sued their former attorneys (defendants) for breach of mandate in September 2009. The defendants pleaded prescription. The plaintiffs argued they only became aware of the breach during cross-examination in November 2007 when non-compliance with the Alienation of Land Act was revealed, or when Williams J's judgment was handed down in September 2009.

• When does prescription commence to run under s 12(3) of the Prescription Act 68 of 1969?
• What constitutes 'facts from which the debt arises' under s 12(3) of the Prescription Act?
• Is knowledge of legal consequences or legal conclusions required before prescription begins to run?
• Does knowledge of non-compliance with s 2(1) of the Alienation of Land Act 68 of 1981 constitute a fact or a legal conclusion?
• When did the plaintiffs have the minimum facts necessary to institute action against their attorneys?

The appeal was upheld with costs. The order of the high court was set aside and substituted with an order upholding the special plea of prescription with costs and dismissing the plaintiffs' action with costs.

Section 12(3) of the Prescription Act 68 of 1969 requires knowledge only of the facts from which the debt arises - being the minimum essential facts that a creditor would need to prove to establish the debtor's liability - not knowledge of legal conclusions that may be drawn from those facts. Knowledge that conduct did not comply with statutory requirements (such as s 2(1) of the Alienation of Land Act) is a legal conclusion, not a fact from which a debt arises. Prescription begins to run when a creditor has the minimum facts necessary to institute action; it is not postponed until the creditor becomes aware of the full extent of legal rights or legal consequences flowing from the facts. The invalidity of an agreement or non-compliance with statutory formalities is a legal conclusion, not a fact. A creditor cannot delay the running of prescription by awaiting legal certainty or authoritative judicial pronouncements about the legal consequences of known facts.

The Court noted that distinguishing questions of fact from questions of law when determining whether prescription has started to run is not an easy task and cannot be dealt with mechanically or predetermined on the basis of previous cases - the difficulty varies from case to case (citing Mtokonya). The Court also observed that there may be some overlap of facts between the two distinct enquiries under s 12(3): determining the primary facts from which the debt arose, and determining the creditor's knowledge or deemed knowledge of those primary facts. The Court found it unnecessary to consider the alternative argument regarding whether knowledge of the plaintiffs' new attorney should be imputed to the plaintiffs.

This case reinforces and clarifies the important distinction between knowledge of facts and knowledge of legal conclusions for purposes of extinctive prescription under s 12(3) of the Prescription Act. It confirms that prescription begins to run when a creditor has the minimum facts necessary to institute action, not when the creditor becomes aware of the full extent of legal rights or legal consequences flowing from those facts. The judgment emphasizes that invalidity of conduct or non-compliance with statutory requirements constitute legal conclusions, not facts. It serves as an authoritative statement that creditors cannot delay the running of prescription by claiming they were unaware of legal consequences or awaiting judicial certainty about their legal position. The case is significant in the law of professional negligence, particularly regarding attorneys' duties, and illustrates the application of prescription principles in the context of the Alienation of Land Act.