Kelbrick & others v Nelson Attorneys & another

The three appellants sold their properties on 4 September 2006 to a property developer, Status Homes, for R1,400,000 each. Instead of receiving payment, they were to receive townhouse units in a sectional title development to be built on their consolidated properties. The respondent attorneys drafted the sale agreements and acted as conveyancers. The properties were transferred to Status Homes on 27 July 2007 and consolidated. An application to remove restrictive conditions was launched on 15 January 2008, with a final order granted on 26 August 2008. Construction commenced in October 2008 but halted in February 2009 when financiers refused further funding. Status Homes was liquidated. The appellants instituted action against the respondent on 30 August 2011 for negligence, alleging failure to advise them of risks. The respondent raised a special plea of prescription, contending that by 27 July 2008 it should have been apparent that construction would not proceed, making the claim prescribed by 26 July 2011.

• When did prescription commence to run in respect of the appellants' delictual claim against the attorneys?
• Whether the appellants had actual knowledge of the facts constituting their complete cause of action by 27 July 2008 (one year after transfer of the properties)?
• Whether the removal of restrictive conditions from the title deed was a critical factor in determining when the appellants could have known that the development would not proceed?
• Whether the respondent discharged its onus of proving both the inception and completion dates of the prescriptive period?
• Whether the separation of issues under Rule 33(4) was appropriate in this case?

1. The appeal is upheld with costs, including costs attendant upon the employment of two counsel. 2. The order of the court a quo is set aside and replaced with: 'The first defendant's special plea of prescription is dismissed with costs'.

For purposes of prescription under section 12(3) of the Prescription Act 68 of 1969, a debt is not deemed to be due until the creditor has knowledge of the facts from which the debt arises. In a delictual claim for professional negligence arising from a failed property development, the creditor's cause of action against the attorney cannot arise before the creditor becomes aware that the developer will not fulfill its obligations. Where construction could not legally commence due to restrictive conditions on title, and these conditions were only removed after the alleged commencement date of prescription, the debtor (attorney) cannot prove that the creditor had knowledge of all requisite facts at the earlier date. The debtor bears the onus of proving both the inception and completion dates of the prescriptive period, including proving that the creditor had actual knowledge of the facts giving rise to the debt.

The Court made important observations about the application of Rule 33(4) of the Uniform Rules of Court concerning separation of issues. The Court reiterated principles from Denel v Vorster and subsequent cases that separation of issues should only be ordered after careful thought about the anticipated course of litigation as a whole. Courts must ensure that issues are clearly circumscribed and truly discrete before ordering separation. In this case, the Court observed that the prescription issue was inextricably linked with duty of care, negligence, and causation, and should not have been separated. The Court noted that the same witness (Nelson) would be relevant to all issues, and that hearing all issues together could have clarified inconsistencies between the attorney's evidence regarding the scope of duty and the admissions in the pleadings. The Court suggested that even though the separation order was made by a different judge, nothing precluded the trial judge from revisiting that determination if a vigilant examination of the pleadings revealed that issues should be heard together.

This case provides important guidance on the application of section 12(3) of the Prescription Act 68 of 1969, particularly concerning when a creditor has 'knowledge of the facts from which the debt arises' in professional negligence claims. The case establishes that where legal impediments prevent the materialization of damage, prescription cannot commence to run merely because of delay or difficulties in a transaction. The judgment also reinforces the principle that the debtor bears the onus of proving both inception and completion of prescription, and that this onus must be discharged with reference to actual knowledge of the creditor. Additionally, it provides further guidance on the proper application of Rule 33(4) concerning separation of issues, emphasizing that courts must carefully consider whether issues are truly discrete or inextricably linked before ordering separate trials.