What is prescription and what is the purpose behind it?
Prescription is essentially the period of time that a creditor is afforded in order to claim a debt against a debtor. In Solomons v Multilateral Motor Vehicle Accident Fund [1999] 3 All SA 552 (C) the court essentially held that the intention behind the legal principle of prescription is to create fairness in relation to debts that are owed. The court elaborated that without prescription, creditors would be afforded preferential treatment as they would be in a position to claim debts due to them at any given time which would not be just to the debtors as they may no longer be in a position to defend the claim which has been brought against them due to the period of time that would have lapsed.
At what point does prescription commence?
Section 12 of the Prescription Act No. 68 of 1969 (“the Prescription Act”) deals with the commencing of prescription. Within this section it is stipulated that prescription starts running from the moment the debt is due. Should a debtor not be aware of a debt that is due and the creditor intentionally precludes the debtor from being aware of the debt then the debt will only become due at the moment which the debtor becomes aware of the debt.
Factors that delay prescription?
In accordance to section 13 of the Prescription Act, prescription is delayed on the following conditions:
- the creditor is a minor, insane or they are under curatorship;
- the debtor is not within the Republic of South Africa;
- the creditor and debtor are spouses;
- the creditor and the debtor are partners in a partnership where the debt arose;
- the creditor is a juristic person in which the debtor is a member of the governing body;
- the debt is the object of a dispute subjected to arbitration;
- either the debtor or the creditor is deceased and an executor has not been appointed.
How is Prescription interrupted?
Section 14 of the Prescription Act stipulates that prescription shall be interrupted through any form of acknowledgment of liability by the debtor. Acknowledgment of liability by the debtor will recommence the running of prescription meaning that the creditor will be afforded additional time to claim from the debtor. It is imperative to note that a debtor does not have to acknowledge the liability directly to the creditor. In J.H.V v Centlec (SOC) Ltd and Others (2205/2023) [2024] ZAFSHC 4, the applicant denied liability when approached by Centlec (SOC), however the applicant acknowledged their indebtedness to Centlec (SOC) in an agreement entered into with a third party. The Plaintiff contended that the acknowledgment of liability was not made directly to Centlec (SOC) therefore prescription was not interrupted. The court interpreted section 14 of the Prescription Act and found that it does not stipulate that the acknowledgment of liability should be made directly to the creditor in order for prescription to be interrupted. The court thus ruled that acknowledgment of the liability in the agreement with a third party interrupted prescription. Creditors may also interrupt prescription by means of instituting legal proceedings (summons) and having them served onto the debtor within the prescribed time period.
What happens if I do not interrupt prescription during the prescribed period?
Failure to interrupt prescription during the prescribed period will result in the debt being unenforceable in terms of the Prescription Act. A creditor whose debt has prescribed loses the right to legally enforce the claim they have against the debtor.
Conclusion
Understanding the laws of prescription is vital when assessing whether a claim is still legally enforceable. Creditors should always ensure that legal proceedings are instituted timeously to avoid having their claim become legally unenforceable.
Should you require any assistance with instituting of legal proceedings against a debtor, contact our offices on the details provided below.
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