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06 Jul 2021
BY Aslam Moosajee AND Shenaaz Munga

When does a debt prescribe?

Does prescription run from the date that the debt is due, or when the creditor has adequate facts regarding the claim? The case of Van Heerden and Brummer Inc v Bath, the Supreme Court of Appeal (“SCA”) provides some clarity, and highlights the importance of acting promptly before your claim is rendered extinguished by prescription.

Generally, prescription begins to run as soon as a debt is due. There are, however, two main exceptions according to the Prescription Act, 1969:

  1. Prescription does not commence until the creditor becomes aware of the existence of a debt where the debtor willfully prevents the creditor from coming to know of the existence of the debt; and
  2. A debt is not deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises, provided that a creditor will be deemed to have such knowledge if they could have acquired it by exercising reasonable care.

In this case, Mr Bath sued a firm of attorneys for damages in respect of a breach of mandate and professional negligence arising after an antenuptial contract the attorneys prepared was found to be invalid. The facts of the case were:

  • An agreement between Mr Bath and his then attorneys was concluded around 21 October 2005, in terms of which the attorneys drafted, and subsequently notarised, an antenuptial contract.
  • In February 2010, Mr Bath instituted proceedings against his now ex-wife. During these proceedings, on 3 September 2012, their antenuptial contract was declared void due to vagueness and consequently, the marriage between the parties was held to be in community of property.
  • Between 6 August 2012 and 25 September 2012, the firm of attorneys held a number of consultations with Mr Bath during which the implications of the antenuptial contract being declared void was discussed. On 26 September 2012, the firm of attorneys sent an email to Mr Bath dealing with prescription.
  • The SCA dismissed Mr Bath’s appeal of the court’s finding that the antenuptial contract was invalid on 24 March 2014 and on 13 October 2015, a decree of divorce was granted.
  • On 24 January 2017, Mr Bath instituted proceedings against the firm of attorneys in terms of which he claimed damages because he became liable to pay his ex-wife substantially more money than would have been payable had the antenuptial contract been valid.
  • The defendant firm of attorneys argued that Mr Bath had all the facts necessary to institute his claim, by latest, 26 September 2012.
  • Mr Bath argued that prescription started to run on 24 March 2014, being the date that Mr Bath’s patrimonial loss eventuated. Mr Bath also contended that the institution of a damages claim before the final determination of the appeal would have been premature.

The SCA, in arriving at its decision, referred to a number of judgments where it was held that a claimant cannot wait for final judicial pronouncements before the debt becomes due. The SCA reaffirmed the principle that the period of prescription begins to run when the creditor has the minimum facts that are necessary to institute an action and highlighted that the does not require knowledge of the legal consequences.

The SCA ultimately held that Mr Bath’s debt arose on 3 September 2012, being the date that the court declared the antenuptial contract void. Consequently, Mr Bath’s claim had prescribed by the time summons was served on the firm of attorneys.

 

Aslam Moosajee

Executive | Dispute Resolution

amoosajee@ENSafrica.com

+27 82 461 5917

 

Shenaaz Munga

Senior Associate | Dispute Resolution

smunga@ENSafrica.com

+27 67 180 4706