C&A Friedlander Attorneys

Once you realise that you have legal claim, it is important to know that it is not enforceable indefinitely. After a specified period, which is dependent on the nature of the legal claim, the legal claim prescribes and as a result the legal claim will no longer be valid and enforceable. It is as if the claim never existed.

It is therefore extremely important to be aware of your legal rights and the specified time periods, to ensure that you interrupt prescription timeously to keep your claim alive and ensure that you do not lose your right to an otherwise valid claim. For the purposes of this article, I will deal specifically with the prescription of debts. It is, however, important to be aware that prescription applies in a variety of circumstances, and it is wise to consult timeously with an attorney in respect of any claim you may have.

The Prescription Act 68 of 1969 (“the Act”) is the piece of legislation which is dedicated to the principles of prescription. The general rule regarding debts is that a debt prescribes after 3 (three) years of the debt being due. To interrupt prescription, i.e., to stop the three-year period from running, a person who avers that he has a legal claim, must institute legal proceedings within those 3 (three) years. It is not enough to simply demand payment of the debt in a legal letter of demand, rather a summons needs to be issued out of the court with jurisdiction to hear the matter and it must be served on the debtor by the sheriff of the court.

A common pitfall that many creditors fall into is waiting too long to consult with an attorney, which leads to their claim prescribing. It takes time to consult with an attorney, draft the necessary legal papers and to ensure that they are issued and timeously served. It is therefore imperative that you consult an attorney as soon as you believe that you have an enforceable claim.

Although the general rule for prescription is 3 (three) years, a mortgage bond, a judgment debt, any debt in relation to any taxation, and any debt owed to the State in respect of the share of profits, royalties, or any similar consideration payable in respect of mine minerals and other substances, prescribes after thirty (30) years. Any debt owed to the State arising out of an advance or loan of money or lease of land prescribes after 15 (fifteen) years and where the debt relates to a bill of exchange or negotiable instrument, the prescription period is 6 (six) years.

As set out above, prescription begins to run as soon as the debt becomes due. This can however leave the date upon which prescription begins to run up for debate, and is a matter often litigated in our courts. One such example is a judgment which was handed down by the Constitutional Court Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd 2018 1 SA 94 (CC) in which it was ordered that the debt in respect of the loan agreement, which included a term that the loan would be due 30 days after demand for payment was made, would begin to run once the loan was advanced and not after demand was made (my emphasis). The court held that including a clause in an agreement that allows a creditor to demand payment does not affect the date upon which the debt becomes due (i.e., when the loan was advanced). It is imperative that the agreement is carefully drafted to ensure that it unambiguously reflects the intention of the parties to that agreement.

The Act further provides that if a debtor wilfully prevents the creditor from knowing of the debt, then the debt only begins to run once the debtor becomes aware of the debt.  Further, a debt is not due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises.

In addition to the institution of court proceedings interrupting prescription, there are various other circumstances in which the running of prescription will be interrupted, including the acknowledgement by a debtor of their liability to the creditor. The prescription period will begin to run afresh from the date of the acknowledgment of the liability by the debtor.

All is not lost, however, if you determine that your debt has already prescribed. In terms of the Act, should a debtor pay the debt, even if it has prescribed, then it is a regarded as a payment of the debt. A debtor cannot rely on prescription, after payment has been made.

In addition, the onus is on the debtor to raise a special plea of prescription during the legal process. This means that if the debtor does not raise prescription as a defence, there is no obligation on either you or the court to raise the defence for them.

You may contact me, Rebecca Davis, per email (rebeccad@caf.co.za) or per telephone (021 785 3100) for assistance.