ATB Chartered Accountants (SA) v Edna Bonfiglio

The respondent, Edna Bonfiglio, was the sole member of M Klisser CC, a stationery retail business experiencing financial hardship. On 5 April 2002, she entered into an oral agreement with the appellant, ATB Chartered Accountants (SA), to procure a buyer and provide professional advice. On the same day, ATB introduced her to Jacobus Wilhelm Raath (another ATB client) as a buyer. Venter (representing ATB) drafted an "Offer to Purchase" for R825,000, to be paid in monthly instalments starting 30 April 2002. Raath failed to make the first payment. The respondent's attorneys wrote to ATB on 7 August 2002 indicating she would hold ATB liable for damages. A new payment schedule was negotiated with Raath but he continued to breach it. On 19 March 2003, the respondent sued Raath and obtained summary judgment on 22 May 2003. A warrant of execution issued on 26 June 2003 resulted in a nulla bona return on 7 July 2003. On 1 April 2003, Raath's attorney advised that C Klisser Co (Pty) Ltd (into which the corporation had been converted) had been liquidated and Raath could not pay. The respondent instituted action against ATB on 30 June 2006, claiming damages for failure to properly advise and ensure Raath was financially sound.

• When does prescription commence to run in relation to a claim based on professional negligence and breach of contract to provide professional advice?
• Whether the debt became due on 5 April 2002 when the sale agreement was concluded, on 7 August 2002 when liability was communicated to ATB, on 1 April 2003 when liquidation was confirmed, or on 7 July 2003 when the nulla bona return was filed?
• Whether the respondent had knowledge of the facts from which the debt arose for purposes of section 12(3) of the Prescription Act 68 of 1969?
• Whether the action instituted on 30 June 2006 was prescribed under section 11(d) of the Prescription Act (three-year prescription period)?

The appeal was upheld with costs. The order of the North Gauteng High Court was set aside in its entirety and substituted with: "The special plea of prescription is upheld and the plaintiff's action is dismissed with costs."

For purposes of section 12(3) of the Prescription Act 68 of 1969, prescription commences to run when the creditor has knowledge (actual or deemed) of the identity of the debtor and the facts from which the debt arises. A creditor is deemed to have such knowledge if it could have been acquired by exercising reasonable care. In a claim based on professional negligence and breach of contract, the debt becomes due and prescription begins to run when the creditor has knowledge of all facts constituting the complete cause of action. Where a debtor advises that they are unable to pay and their company has been liquidated, this constitutes sufficient knowledge of the facts from which the debt arises, such that prescription begins to run from that date. It is not necessary to await further confirmation such as a nulla bona return to establish when the creditor had knowledge of the material facts. The three-year prescription period under section 11(d) runs from when the creditor has such knowledge.

The court noted that it was not necessary to decide precisely when the right of action arose, as it was clear that by no later than 3 April 2003 the respondent had knowledge of all relevant facts. The court also commented on the respondent's submission that the right of action was only complete upon the nulla bona return, observing that on such an approach "it might just as well be said it would not be known that Raath was unable to discharge his debt to the respondent until the judgment debt had expired after the period of thirty years because at any time before then he may have acquired the necessary funds to do so" - highlighting the impracticality of such a position. The court referenced Burger v Gouws & Gouws (Pty) Ltd regarding when a single completed wrongful act gives rise to a claim, even though damages may only manifest later, though it did not ultimately rely on this principle for its decision.

This case provides important guidance on the application of sections 12(1) and 12(3) of the Prescription Act 68 of 1969 in claims based on professional negligence and breach of contract to provide professional advice. It clarifies that prescription begins to run not merely when a wrongful act occurs, but when a creditor has knowledge (actual or deemed through reasonable care) of the facts from which the debt arises. The judgment emphasizes that once it becomes apparent as a matter of probability that loss has been suffered (such as when a debtor is liquidated and unable to pay), the creditor's right of action has accrued for prescription purposes, even if further steps (like obtaining a nulla bona return) might later confirm the loss. The case demonstrates the practical application of prescription principles in professional negligence claims against accountants and the importance of timely action once the material facts giving rise to a claim become known.