SA Legal Malpractice: Constitutional Court Ruling on Prescription in Legal Professional Negligence

Introduction

The Constitutional Court of South Africa's 2024 ruling in Le Roux v Johannes G Coetzee & Seuns [2024 (4) SA 1 (CC)] marked a significant departure from established prescription law by creating an exception to Section 12(3) of the Prescription Act 68 of 1969. The Court held that in cases involving erroneous legal advice or failure to execute a mandate by a lawyer, prescription does not begin until the plaintiff becomes aware of the legal conclusion that the advice or execution was incorrect, effectively considering knowledge of this legal conclusion as a "fact" for prescription purposes. This decision bypasses previous case law and the Act's clear wording, which had stipulated that prescription starts when the creditor knows or should have known the facts giving rise to the debt.

Facts of the Case

Background

• Mr. Steenkamp granted Mr. and Ms. Le Roux an option to purchase his farm.
• The option could be exercised within two months of Mr. Steenkamp's death.
• Mr. Steenkamp passed away in September 2003

Initial Legal Proceedings

• After Mr. Steenkamp's death, the Le Roux’s consulted attorney Mr. Coetzee.
• They mandated Mr. Coetzee to provide legal advice and exercise the option on their behalf.
• Mr. Coetzee agreed and advised that no signatures were necessary.
• In late September 2003, Mr. Coetzee wrote to Mr. Steenkamp's executor to exercise the option

 Discovery of Prior Sale

• It was discovered that Mr. Steenkamp had already sold and transferred the property to a Mr. Nel before his death, breaching the option agreement.
• This led the Le Roux’s to initiate legal proceedings against Mr. Steenkamp's executor and Mr. Nel to enforce the option and claim transfer.

Revelation of Defective Option Exercise

• During the proceedings against the executor and Mr. Nel, in November 2007, the Le Roux’s learned that Mr. Coetzee's exercise of the option was defective and resulted in a nullity.
• The Northern Cape High Court dismissed the Le Roux’s action in early September 2009.

Legal Action Against Mr. Coetzee

• Later in September 2009, the Le Roux’s served summons on Mr. Coetzee for breach of mandate.
• Mr. Coetzee responded with a special plea of prescription, relying on Section 12 of the Prescription Act

Court Proceedings and Findings

Northern Cape High Court Decision

• The Northern Cape High Court agreed with the Le Roux’s and dismissed Coetzee's plea of prescription.
• The court granted Mr. Coetzee leave to appeal to the Supreme Court of Appeal (SCA)

Supreme Court of Appeal Ruling

• The SCA overturned the High Court's decision.
• It relied on precedents stating that a claimant only needs knowledge of facts, not legal conclusions, for prescription to commence.
• The SCA ruled that the Le Roux’s had the necessary knowledge when Coetzee wrote to the executor and when the option lapsed

Constitutional Court Appeal

The Le Roux’s sought leave to appeal to the Constitutional Court. The key issue was whether knowledge of the legal conclusion (breach of mandate or erroneous advice) should be considered a "fact" under Section 12(3) of the Prescription Act for prescription to begin

Constitutional Court's Findings

1. Inclusion of Legal Conclusions as Facts:
• The court ruled that knowledge of legal conclusions could be considered "facts" for prescription purposes in actions against legal practitioners
2. Equalizing Professional Standards:
• This ruling aligns the position of legal practitioners with that of auditors and medical practitioners in negligence actions
3. Consistency with "Knowledge" Requirement:
• The court found it inconsistent with the "knowledge" requirement for prescription to begin without awareness of erroneous advice or mis-exercise of mandate
4. Justice Considerations:
• The court deemed it unjust for prescription to run without knowledge of the legal practitioner's negligence

Conclusion

The Constitutional Court's decision in Le Roux v Johannes G Coetzee & Seuns marks a significant development in South African prescription law, particularly concerning actions against legal practitioners. By ruling that knowledge of legal conclusions can be considered "facts" for prescription purposes, the court has established a more equitable standard for clients seeking redress for professional negligence. This judgment aligns the treatment of legal practitioners with other professionals and ensures that prescription does not unfairly prejudice clients who may be unaware of the legal implications of their attorney's actions. The decision underscores the importance of balancing the rights of legal practitioners with the need for accountability and fairness in the legal profession.