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OF INTEREST

IN THE HIGH COURT OF SOUTH AFRICA

(SOUTH EASTERN CAPE LOCAL DIVISION)

Case No: 4108/05

Date Delivered: 29/05/08

In the matter between

AVANTE FISHING ENTERPRISES Plaintiff

and

RAFEL ONDERNEMINGS CC Defendant

JUDGMENT

REVELAS J

[1] The principal issue for determination in this judgment, is whether the plaintiff’s claim for damages in the amount of R6 990 776.23, based on the defendant’s alleged breach of contract (failure to retransfer certain fishing rights and permits) had become prescribed. The contract in question was concluded on 29 December 1997 and the summons was issued by the plaintiff on 5 July 2005, some eight years later. The defendant raised a special plea, contending that the claim had become prescribed. Issuing summons was not the first step taken by the plaintiff towards litigation in this case. Five years prior thereto, on 5 July 2000, the plaintiff sought specific performance (the retransfer of the same fishing rights and permits) from the defendant in motion proceedings, based on the defendant’s breach of the same contract. Judgment was granted in favour of the plaintiff. I will return to this application and its aftermath below.

[2] The matter before me was set down in the form of a stated case, where in terms of Rule 33 (4) of the Rules of Court, two issues were to be separated from all further issues in dispute between the parties, namely:

(1) Whether the plaintiff’s claim had become prescribed.

(2) Whether in the light of the judgments and orders handed down by the High Court in respect of the application referred to, and subsequent judgments on appeal and in respect of an application by the defendant for a declator and the plaintiffs counter-application, the defendant is entitled to revisit or contest the relevant findings contained therein, within the context of the action for damages in trial proceedings, if the special plea fails.

[3] The relevant facts to be considered were also agreed upon. They appear from the stated case, the judgments in respect of the application for specific performance, and the pleadings.

[4] In 1997, the plaintiff, the owner of a vessel named “Kingcat”, was the holder of 23 BTC fishing permits issued in terms of the Sea Fishery Act, 12 of 1988 which has since been repealed and substituted with the Marine Living Resources Act No 18 of 1988. Because the vessel “Kingcat” became unseaworthy, the plaintiff had no use for the permits which entitled it to fish for squid with that vessel at the time. The defendant owned a seaworthy vessel, “Andejach”, with which it could fish for squid, but held no permits. The two parties then concluded the agreement in question on 29 December 1997, the material terms of which were the following:

1. The plaintiff was to transfer twelve BTC Squid Fishing permits from the vessel “Kingcat” to the vessel “Andejach”.

2. The transfer was subject to the plaintiff retaining ownership of the permits, and its right to require the retransfer of the rights arising from the permits, from the defendant, on reasonable notice.

3. The defendant was, on the basis of the fishing rights and permits transferred to it, obliged to sell all squid caught on the vessel “Andejach” to the plaintiff at current market value, from time to time, less a ten percent administration fee.

[5] The agreement was subject to the approval of the Department of Sea Fisheries (“The Department”) who subsequently granted its approval for the transfer of the fishing permits to the defendant. The retransfer of those permits to the plaintiff in the future, would also be subject to the approval of the Department.

[6] In November 1999 the plaintiff demanded the retransfer of the fishing rights and permits from the defendant, which it believed it was entitled to do in terms of the contract, but subject to the approval of the Department. The last paragraph of the letter of demand dated 30 November 1999 reads as follows:

“In this regard our client further reserves the right to institute a damages claim against yourselves and we do refer you (inter alia) to paragraph 6 of the agreement concluded on 29 December 1997”.

Paragraph 6 of the agreement provided that the squid caught on “Andejach” must be sold to the plaintiff.

[7] It appears that the letter of demand emanated from the defendant’s failure or refusal to sell squid to the plaintiff, since 22 November 1998, as it was obliged to do in terms of the agreement and that the plaintiff, in the belief that the defendant was in breach of the agreement concluded, repudiated the contract and sought specific performance in respect of the retransfer of the squid fishing rights and permits, and reserved its right to claim damages in respect of the failure, since November 1998, to sell the squid caught with those permits, to the defendant.

[8] The plaintiff, in the motion court proceedings, brought in 2000, sought the retransfer of the fishing permits. The matter was referred to oral evidence, and after a somewhat lengthy trial, an order was granted in favour of the plaintiff in September 2001, that, subject to the approval of the Minister responsible for the Department of Environmental Affairs and Tourism, the defendant was to transfer to the plaintiff the fishing right presently held by the former in respect of the vessel “Andejach” in terms of the provisions of Act No 18 of 1998. A costs order was also made against the defendant. The judgment and order was upheld by the Full Bench of the Eastern Cape Division of the High Court in 2002. The Supreme Court of Appeal refused the defendant leave to appeal against the judgment. The defendant’s failure to comply with the order made in September 2001, resulted in a further order made against the defendant, being a mandamus which on 29 July 2004 ordered it “to complete, as transferor and sign, an application” in order to give effect the transfer by it, to the plaintiff of the fishing rights in dispute, and to take all further step as may be necessary to effect the transfer or if it failed, the Sheriff was given the power to do so in its stead. Costs on a scale as between attorney and client were also ordered. This order was granted pursuant to a counter-application by the plaintiff when in 2004 the defendant brought an application for a clarification of the order made in 2004. Kroon J dismissed the application on the basis that it was spurious.

[9] The aforesaid judgment also included a finding that certain squid fishing rights held by the defendant in July 2004, constituted a pro tanto renewal of the rights provisionally leased by the defendant from the plaintiff in terms of the agreement concluded between them, and that those rights were subject to the terms of the agreement and subject to the approval of the relevant state department, to transfer those rights to the plaintiff.

[10] The plaintiff obtained the approval of the relevant state department and the transfer of the rights in question only in October 2004. The defendant lodged an objection with the Department against its approval of the transfer, which was rejected. The defendant lodged an appeal which was refused in February 2005. The defendant did however not pursue the review proceedings it had threatened to launch. Consequently, the summons were issued in July of that same year (2005).

[11] The plaintiff’s case is that its claim did not become prescribed, since the debt upon which the claim for damages is based, only became due upon retransfer of the relevant permits to the plaintiff in November 2004, after the relevant approval was obtained the month before.

[12] The defendant’s case is that the debt for damages became due upon the alleged breach of the agreement by the defendant in November 1998, when it failed to sell squid to the plaintiff. A period of more than three years had lapsed since the breach of the agreement by the defendant. The plaintiff’s contention that it suffered damages as it could not use the fishing rights on other vessels available to it, as a result of the breach of contract, the defendant contend, is an alternative formulation of the same debt for damages, which arises out of the same cause of action, being the same breach of contract.

[13] The plaintiff’s case is firstly, that prescription did not commence running against it when the breach of contract arose in 1998, when the defendant first refuse to sell squid to it, nor did it commence a year later when it demanded the retransfer of the fishing permits. According the plaintiff, the debt only became due when it acquired a complete cause of action for the recovery of the loss suffered, when everything had happened which would entitle a creditor to institute action and pursue its claim. The plaintiff submits that prescription should not run against it, as it was not possible to compute its loss sooner than it did.

[14] It was argued that to issue summons immediately after the breach of contract in 1998, would have been premature, since the plaintiff’s cause of action had always been dependant on the approval by the Department of Environmental Affairs and Tourism for the retransfer of the relevant permits, the argument continued, until such approval had been granted the rights held by the plaintiff could not be perfected.

[15] Section 12 of the Prescription Act, Act 68 of 1969, provides that prescription shall commence to run as soon as the debt is due. The plaintiff submits that one of the interpretations of the phrase is that it means that there has to be a debt immediately claimable by the debtor, or there has to be a debt in respect of which the debtor in under an obligation to perform immediately. As authority for this point, the plaintiff referred me to the case of Deloitte Haskins and Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991(1) SA 525 A and submitted also that each essential element of the cause of action must be complete before the debt becomes due, as was held in Rogers v Erasmus 1975 (2) SA 59 (T) at 71.

[16] In support of its case, the plaintiff relied on the judgment of Kroon J in his first judgment in this ongoing saga (September 2001) at paragraph [6], with regard to the transfer of fishing permits, or portions thereof, and the transfer of rights noted in pursuance thereof. The learned judge noted that it was a “common practice sanctioned by the Department which would then issue the relevant permits to the acquirer thereof. (The sanction of the Department and the transfer by it of such permits to the acquirer thereof perfected the ius in personam that the acquirer had against the alienor to require the latter to do all that was in his power to transfer the right – c.f. Squid Packers (Pty) Ltd v Ollemans, 10 November 2000 Eastern Cape Division case no 109/98, unreported)”.

[17] The Ollemans case has since then been reported in [2003] 1 All SA 98 (SCA). It was held there (at p 100 paragraph [5] i-j and p 101 at paragraph [6] a-b) that while fishing permits are not legally capable of being sold, what can be sold, are the rights entitling the purchaser to apply for the issue of permits to it as a permit-holder in place of the seller who relinquishes them. The issue of the permit to the purchaser is then at the discretion of the relevant authority. “A contract of sale and transfer of a licence imposes no more on the seller than the obligation to do all in its power to have the licence issued to the buyer. To enforce that obligation, the buyer has a personal right against the seller to compel performance” (Ollemans at 99, Editor’s Summary).

[18] In my view, the remarks by Kroon J in his September 2001 judgment and Howie JA (as he then was) in Ollemans, do not mean that the Department’s approval perfects a claim for a loss or damages arising from the failure to transfer. The approval merely perfects the personal right for specific performance, and has no bearing on the question of when the breach of contract occurred. The failure of the defendant to retransfer the rights constituted the breach in question, and the Department’s approval (a common practice) per se does not determine when the loss occurred or influence its computation or quantification.

[19] The plaintiff also referred me to the works of two authors who have written on the subject. The first Advocate John Saner, who wrote Prescription in South African Law (Butterworths 1996). This author also wrote on the same topic in LAWSA Volume 21 1^st Re-issue. The second author relied is Professor MM Loubser and his book, Extinctive Prescription, (Juta and Co, 1996). Both authors support the view that a debt is only due when the debtor acquires a complete cause of action for the recovery of the debt, which point is arrived at when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place, or in other words, when everything has happened which would entitle the creditor to institute action and pursue his or her claim. Saner sums it up as follows at 3-42:

“It has been held that a debt is only due when the creditor’s cause of action is complete. This notion involves two things, namely that the creditor is in a position to claim payment forthwith, and that the defendant does not have a defence to the immediate payment”.

(Emphasis added)

[20] The plaintiff also quoted the following passage by Professor Loubser in his work at page 78 of where the following is said:

“Where the act constituting the breach creates the potential of loss, but it is not yet possible to determine the extent of the loss, or for that matter, whether the loss will occur at all, the debt should be considered due for purposes of prescription. The debt for damages should be considered due as soon as the loss manifested itself to a degree that it is sufficient to enable the aggrieved party to quantify its loss.”

[21] The aforesaid views, applied to the facts of this case, do not assist the plaintiff. The plaintiff was always in a position to institute a claim for damages since the breach of contract had occurred. It also threatened to do so in its letter of demand in 1999. The plaintiff cannot argue that the defendant had a defence, namely the absence of Departmental approval. If the breach of contract, the defendant’s own wilful conduct, was the cause of the impossibility to obtain that approval, that defence was never open to it.

[22] The plaintiff also relied on the proposition that prescription cannot begin to run against a creditor before his cause of action is fully accrued, or before he is able to pursue his claim. (See: Van Vuuren v Boshoff 1964 (1) SA 395 (T) at 401; The Master v IL Back and Co Ltd and Others 1983 (1) SA 986 A at 1004; Benson v Walters and Others 1984 (1) SA 73A at 82; Deloitte Haskins and Sells v Bowthorpe Hellerman Deutsch [1990] ZASCA 136; 1991 (1) SA 525 at 532 G-I).

[23] When exactly a cause of action becomes “accrued”, will be dependant on the facts of each case. The plaintiff argues that it was only able to pursue its claim once there was departmental approval for the retransfer of the fishing rights, and only then was it possible to quantify the damages accrued over this long passage of time (November 1998 to October 2004).

[24] In Harker v Fussell and Another 2002 (1) SA 170 several authorities were discussed before determining the same question as the one before me, albeit on somewhat different facts. In that matter the plaintiff sued for damages arising out of a breach of contract, alternatively, a delictual action arising out of a breach of the duty to take care. The plaintiff sued its financial advisor for damages sustained as a result of the latter’s advice to him to make, what turned out to be, a very poor investment in an insolvent company. When prescription was raised against his claim, the plaintiff contended that prescription could not run against him because he was only able to determine his loss more than three years after the defendants say it had become due, because at the time of the breach (delictual or contractual) future losses were uncertain. Basson J held at 173 J-174 b of Harker that the authorities were clear that, even if the breach:

“Had not resulted in loss up until today, the special plea of prescription must still succeed. In other words, even if the loss occurs on a later date, prescription starts to run as from the date of the breach (the wrongful act). The reasoning being that the occurrence of the loss (resulting from the breach) does not create a new debt with a new prescriptive period. The correct view appears to be that such breach or wrongful act (which in casu occurred at the latest on 12 August 1991 – supra) gives rise to a single cause of action and that the period of prescription begins to run from the date of the breach, whether or not the damages have become apparent.”

[25] In arriving at the aforesaid conclusions the following cases were relied upon: Hawken v Olympic Pools (Pty) Ltd 1979 (3) SA 224 (T); Electricity Supply Commission v Stewarts and Lloyds of SA (Pty) Ltd 1979 (4) SA 905 (W) and Burger v Gouws and Gouws (Pty) Ltd 1980 (4) SA 583 (W). He also relied on two of the leading cases regarding these principles which are Oslo Land Co Ltd v The Union Government 1938 AD 584 and Evins v Shield Insurance Co Ltd 1980 (2) AD 814. In Evins, Corbett JA (as he then was) said the following about prescription of claims for damages in delict (the same will also apply to damages for breach of contract) at 836 A-E:

“If a cause of action for such damages accrued, and the prescriptive period has run, the claimant’s right of action is prescribed and he is precluded by prescription from suing for damages arising from the same cause of action even though the loss giving rise to the claim for damages occurs or becomes manifest after the prescriptive period has run (cf Oslo Land Co Ltd v Union Government (supra). It is different if the claim for damages flows from a distinct cause of action (which is not prescribed) or if the wrong is a continuing one which in effect gives rise to a series of rights of action arising from moment to moment (see: Oslo Land Co case supra at 589; Slomowitz v Vereeniging Town Council (supra). Another aspect of the concept of a single cause of action in the realm of prescription relates to the amended plaintiff’s claim as originally pleaded by him. Where the plaintiff seeks by way of amendment to augment his claim for damages, he will be precluded from doing so by prescription if the new claim is based on a new cause of action and the relevant prescriptive period has run, but not if it was part and parcel of the original cause of action and merely represents a fresh quantification of the original claim or the addition of a further item of damages (see: Wigham v British Traders Insurance Co Ltd 1963 (3) SA 151 (W); Schnellen v Rondalia Assurance Corporation of S A Ltd 1969 (1) SA 517 (W); Lampert-Zakiewitz v Marine and Trade Insurance Co Ltd 1975 (4) SA 597 (C) at 601-2).

[26] The judgment in Evins is also the leading authority for the proposition that upon the concurrence of all the facta probanda (or ingredients of the cause of action) the cause of action arises (at 838 H-839 A).

[27] With regard to problems to be expected in determining and quantifying a future uncertain loss, Basson referred to RH Christie in The Law of Contract 4^th ed (2001) at 556. The learned author suggests there that the problem of computing a future occurrence of a loss or the existing loss which will increase in future, can be overcome by seeking a declaration of rights sufficient under section 15 of the Prescription Act, to interrupt prescription of his claim for damages, as was held in Municipality v Allianz Insurance Co Ltd 1990 (1) SA 311 (C) and noted that: “This is worth remembering when the other party had committed a breach but no damages have become apparent, and the end of the three year period is fast approaching.”

[28] Basson J further held at 177 A-B in Harker that as soon as the debt correlative to a right of action for a declaration of rights or nominal damages becomes due, immediately on the breach, the debt correlative to a right of action for damages also becomes due, even before such loss occurs. He further pointed out that section 12 (1) of the Prescription Act was promulgated to protect the interests of debtors faced with claims for damages for many years to come. In the process of weighing off the conflicting interests of debtors and creditors, he noted that principles such as the ‘once and for all’ rule and ‘single cause of action’ requirements were introduced by the courts.

[29] According to the plaintiff, even as at 13 November 2003, when the Supreme Court of Appeal refused further leave, an action for damages would have been premature. This proposition is incorrect. When the defendant, in 1998 and 1999 indicated that it would not discharge its obligations in terms of the agreement, the plaintiff knew it would have to resort to litigation to obtain a retransfer of the fishing permits and that it had suffered losses. These losses were caused by the defendant’s failure to sell squid caught on “Andejach” to it, and because the lack of permits prevented it from utilizing other fishing vessels. The plaintiff referred to these losses as “damages” in its letter of demand to the defendant in 1999. Such damages were as easy, or as difficult to compute then (at that stage a period of one year in which the plaintiff was unable to fish squid) as it was in 2005, when the plaintiff in a schedule attached to its particulars of claim, demonstrated how damages were computed for the different periods:

November 1998 – October 1999 (R521 076.50)

November 1999 – October 2000 (R800 902.00)

November 2000 – October 2001 (R887 744.00)

November 2001 – October 2002 (R2 063 324.25)

November 2003 – October 2004 (R1 079 976.75)

[30] From year to year, the losses grew, and each year the same computation method determined the damages for that year. No new different causes of action arose. No new debt arose. It is merely the precise quantification of the future increase in damages that could not be fixed with exactitude as would be the case in a claim for future loss of earnings. From year to year, one thing remained certain: The plaintiff’s damages increased with each year: The method of computation remained the same every year, albeit that certain contingencies had to be taken into account.

[31] The plaintiff, at the time of the breach of contract, was in a position similar to that of a plaintiff suing for delictual damages pursuant to injuries sustained. Damages in the future, such as future loss of earnings, are computed in accordance with certain principles. In essence what the plaintiff is suing for is its loss of earnings. These losses were incurred irrespective of the relevant State Department’s stance on approval of the permits, which in any event were granted by the Department as common practice. The reason for it not being obtained had nothing to do with the Department’s exercise of its discretion, but was directly attributable and inextricably linked to the defendant’s refusal to abide by the terms of the contract, thereby committing breach of contract with a concomitant loss of income for the plaintiff, which existed for the duration of the defendant’s refusal to transfer the fishing permits.

[32] It is apt to quote the following passage from Boberg The Law of Delict Volume 1 (1984) at 477-8 (also referred to by Basson in Harker at 175 H-J – 176 (A):

“When does a cause of action arise? The usual answer is that it arises (and prescription therefore begins to run) when all the facta probanda to sustain it have occurred (see also Oslo Land Co Ltd v Union Government 1938 AD 584). This happens at the latest (subject to the plaintiff’s awareness) when a wrongful and culpable act causes actual damage. But since the concept of dammun includes prospective damage, does it not follow that a cause of action arises as soon as a prospect of damage exists, even before any actual damage has occurred? Though this proposition has been doubted, it is submitted that an action does indeed lie for the prospective damage alone. The element of patrimonial loss, like other elements of Aquilian liability must be proved by the plaintiff on a balance of probabilities. The requirement relates to the fact of damage; its quantum, particularly where it is prospective, may depend on many imponderables, some of which have a less than 50% chance of materialising. They are not ignored on that account, but are properly represented by a contingency allowance of the same percentage as the chance of the events occurring (see Burger v Union National South British insurance Company 1975 (4) SA 72 (W)). Moreover, a plaintiff who has laid the best available evidence before the court should not find himself non-suited merely because his loss is difficult to quantify: the court must do the best it can with the materials at hand”.

[33] The difficulty of computing damages is therefore no bar to prescription when there is but one cause of action. In the present case, the single act that constituted the breach of contract and caused the subsequent damages, was the defendants’ obstinate refusal to retransfer the plaintiff’s fishing rights and sell the squid caught with them to the plaintiff. No new debt arose after several years simply because the plaintiff finally obtained the necessary state approval for the rights transferred to it. There was thus a concurrence of all the facta probanda in the year preceeding November 1999.

[34] In view of the above considerations, the plaintiff was unable to persuade me that prescription only commenced running against it in February 2005, when it finally obtained the fishing permits and the relevant fishing rights. In terms of the authorities referred to above, it commenced as soon as the damages as a result of the breach of contract became evident, and that was in the period November 1998 to November 1999.

[35] It is regrettable that the plaintiff in this matter did not repel prescription by seeking the relevant declarator in its notice of motion, when it first approached the court in 2001, or issued summons then. The history of this matter, and the manner in which the defendant sought to frustrate the plaintiff’s efforts to regain its fishing rights at every turn in this matter, tempted me to find for the plaintiff, but the law and facts dictate otherwise, unfortunately.

[36] I must therefore find that the plaintiff’s entire claim had become prescribed and that the defendant’s special plea must be upheld. Costs must follow the result in a case such as this. In the circumstances, the plaintiff’s claim is dismissed with costs.

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E REVELAS

Judge of the High Court

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