The Importance of complete information at the consultation phase

One often overlooks the importance of complete and up-to-date information when clients and attorneys come together.

Clients focus directly on the problem at hand, while the attorney’s mind is immediately working to sift and sort the information received in such a way as to quickly give the client an idea of his or her chances of success, or of finding a solution to the said problem.

As a plaintiff client, it is imperative that correct and complete information is provided to the attorney at the consultation phase.  It has happened all too often that a client (usually with multiple companies) arrives at a consultation seeking to claim on behalf of their company, summons is issued, the court process runs its course and a few months (or years) down the line, a defendant raises a plea of non-joinder and/or prescription because the summons was erroneously issued in the name of one of the clients companies when it did not enter into the contract upon which the course of action is based.

This was specifically the case in the matter of Solenta Aviation (Pty) Ltd v Aviation @ Work (Pty) Ltd (754/2012) [2013] ZASCA 103; 2014 (2) SA 106 (SCA) (12 September 2013) where Solenta Aviation Workshops (Pty) Ltd issued summons against the defendant for damages resulting from breach of contract.

The contract, however, was concluded in the name of another company of the same client, namely Solenta Aviation (Pty) Ltd.  The client then sought an amendment of the name of plaintiff to the correct company.  The amendment was opposed and the court eventually found that the misdescription of the plaintiff was merely a misnomer and granted the amendment.

Good for the plaintiff? Not really.

Solenta may have dodged the proverbial bullet with the granting of the amendment, but Aviation @ Work was then free to make consequential amendments to its plea.  It did just that and raised a special plea of prescription against the claim, as the time taken with the amendments had now run past the prescription period of the claim.

The court, at the hearing of the matter, had to decide whether the original summons had communicated the intention of the plaintiff to the defendant.  Upon applying an objective test to the situation, the court found that the summons had not done so, the special plea was upheld and Solenta’s claim dismissed.   On appeal, the court found the same.

Another case is that of Imperial Bank Ltd v Hendrik Barnard N.O. and Others (349/12) [2013] ZASCA 42; 2013 (5) SA 612 (SCA) (28 March 2013)

In this matter, Pro Med Construction CC was under liquidation and the liquidators claimed payment from Imperial Bank in terms of a purchase and sale agreement on behalf of the close corporation.

The summons in this case was brought under the names of the liquidators in their representative capacities (nomine officio), where it should have been brought by the liquidators, and specifically on behalf of Pro Med.

Imperial Bank raised this misdescription in their plea and the liquidators, realising their error, sought an amendment to the claim, which amendment was opposed on the basis that it would amount to the introduction of a new party to the proceedings.

Imperial Bank also contended that the prescription period for the claim had also run its course, and an introduction of a new party would, in any event, render the claim prescribed.

Good for the defendant?  Not really.

The court, at the hearing of the matter, found that the amendment was merely to correct a misnomer and that the true plaintiff (the close corporation) had stayed the same throughout the proceedings, no new cause of action had been introduced and the claim did not, in turn, prescribe.

In these two examples the same question was decided by the same court in the same year with differing outcomes.

In the Pro Med case, the correct plaintiff had been incorrectly described, whilst in the Solenta case the incorrect plaintiff had been correctly described.

As one can see, there is a great risk in launching a claim without all the necessary facts.

An incomplete understanding of the business structure of a client can be detrimental to that client’s case, whilst the same can further be detrimental to the attorney who draws up and issues a claim on behalf of a client without all the necessary information.

Both situations open a client up to the possibility of losing their claim together with a substantial cost order against them.  The attorney is exposed to a multitude of professional negligence issues by that same situation.

What does this mean to you?

As clients, please make sure that all the necessary information is provided to your attorney.  If you have a complex business structure make sure that it is understood by your legal representative.  If you enter into agreements in the course of your business, make sure that the registration number of the entity entering into that agreement appears thereon.  Doing so will remove any possible doubt as to who the parties are and ensure that you do not end up with a situation down the line where a technical point has the real potential to ruin your chances at success?

by Dylan Lowe
dylanl@dyason.co.za