Long, long ago, in fact in 1969, I had a special Springbok, his name was “Prescription” and he could go without water for 3 years - but then he died; reason being that I did not give him water in that 3 year period. If I had given him water, not just any old water: special water (tacit and expressed and enough to keep him going), I could have extended his life by another 3 years.

Before we move into the debate about: “I is - I was - I have been a Springbok” we need to be reminded ourselves about a pacta sunt servanda. For those who don’t have Latin as home language it means “the sanctity (freedom) of contracts” and it is a doctrine we find in law. In short is every person has the right to freely enter into contracts.

This principle has four aspects:

1: freedom from interference by the state to negotiate the terms of a contract, and the corrective freedom from having them imposed on one;
2: freedom to select the person with whom one contracts;
3: freedom not to contract; and
4: freedom from having a contract one has made being interfered with.

One should always bear in mind that we all have an obligation to honour the contracts we enter into, most important the moral obligation to settle the debt that we agreed on. Lawmakers have an obligation to protect the consumer but the opposite is also true hence the principle. Once we have an imbalance between the weighting of the protection of the consumer (prescription) versus the protection of the credit grantor (“sanctity of contract” - creditor/economy) then there is no “equity” and than cannot be sound reasoning.

So many times the issue of Prescription has been raised and the question is easy but the answer apparently not: “Once prescription has run the full period, without being interrupted, can the Creditor still pursue the debt?” I acknowledge many authors on the topic and trust that they will forgive me for using some of their writings and combining that with mine - all in an effort to clear some the confusion.

The 1969 Prescription Act It is true that when you appear in court for non-payment of a debt, you may raise the defence of prescription at any time during the proceedings. What does the defence entail: a set period of time has passed and by law, you are no longer legally obliged to pay the debt or a subsidiary debt that arose from the debt - [chapter iv sec 17(2)]. Nowhere in the Act does it stipulate that the defence can only be raised in a court of law.

What about all the provisions of the other chapters in the Act? Do we ignore them and if not; how are they applied? The general rule (3 years) applies to all debts covered by South African law unless the general rule is inconsistent with the provisions of any Act of Parliament that: prescribes a specified period within which a claim is to be made or an action is to be instituted in respect of a debt; or imposes conditions on initiating an action for the recovery of a debt. The general rule does not apply where another law applies to the prescription of a debt which arose or arises out of an advance or loan of money by an insurer to any person in respect of an insurance policy issued by such insurer before 1 January 1974. The Act is rarely worth considering when dealing with debts that only prescribe after 30 years.

The 30-year period applies to any debt: secured by mortgage bond; that is a judgment debt; relating to taxation by any law; levied by or under any law; owed to the government for any share of the profits, royalties or similar consideration payable for the right to mine minerals or other substances. Similarly the Act will seldom be applied to other debts owed to the government due to: an advance or loan of money; or a sale or lease of land by the State. In such instances 15 years must pass before prescription can be considered. With regard to a debt not mentioned above and arising from a negotiable instrument (such as a cheque or a bill of exchange) or from the less-commonly used notarial contract the prescription period is 6 years. Any debt not mentioned in the paragraphs above the prescription period is 3 years, unless a national act provides otherwise.

Prescription starts to run as soon as the debt is due not to be confused with the date of default. Here we are referred to the wording of the contract between the parties unless: the debtor wilfully prevented the creditor from coming to know of the existence of the debt - prescription then starts once the creditor becomes aware of the existence of the debt; or the creditor did not have knowledge of the identity of the debtor and of the facts from which the debt arises - prescription then starts from the time the creditor is deemed to have such knowledge based on the fact that he, she or it could have gained such knowledge by exercising reasonable care.   Payment made by a debtor after prescription - a payment by a debtor that could have relied on prescription, or in fact relied on prescription, will be accepted in law as payment of a debt - [chapter iii sec 10 (3)].

Prescription can be delayed - Anyone wishing to rely on prescription as a defence, or anyone wishing to avoid such a defence, should study section 13 of the Act. This section raises the possibility that prescription is postponed where certain facts impede the creditor’s ability to institute action in a court such as the fact that the creditor was/is: a minor; declared mentally unfit by court order; a person under curatorship; prevented by superior force including any law or any order of court from judicial interruption of prescription; dealing with a debtor that was/is outside South Africa; married to the debtor; in a partnership with the debtor and the debt arose out of the partnership relationship; or a juristic person (close corporation, company, co-operative) and the debtor is a member of the governing body of the juristic person.

Postponement of prescription must also be considered where - the debt is the object of a dispute subjected to arbitration; the debt is the object of a claim filed against the estate of a debtor who is deceased or against the insolvent estate of the debtor or against a company in liquidation or against an applicant under the Agricultural Credit; or the creditor or the debtor is deceased and an executor of the estate in question has not yet been appointed; where the reciprocal debt in a contract has not prescribed yet.

Interruption of prescription - an acknowledgement of liability and a payment interrupts prescription. Prescription is interrupted by any express or tacit acknowledgement or payment of liability by the debtor. In such a situation prescription starts afresh from the day: on which the interruption takes place; or upon which the debt again becomes due, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt. We also see that we can have a judicial interruption of prescription i.e. the service on the debtor of any process whereby the creditor claims payment of the debt. Unless the debtor acknowledges liability, such interruption of prescription lapses, and the running of prescription will not be deemed to have been interrupted, if the creditor: does not successfully prosecute the claim under the process in question to final judgment; or  prosecutes the claim but abandons the judgment or the judgment is set aside.

If the debtor acknowledges liability, and the creditor does not prosecute the claim to final judgment, prescription shall commence to run afresh from the day: on which the debtor acknowledges liability; or upon which the debt again becomes due if at the time when the debtor acknowledges liability or at any time thereafter the parties postpone the due date of the debt. If the running of prescription is interrupted and the creditor successfully prosecutes the claim to final judgment without abandoning it or having it set aside, prescription starts afresh on the day on which the judgment of the court becomes executable. If any person is joined as a defendant on own application, the process whereby the creditor claims payment of the debt shall be deemed to have been served on such person on the date of such joining.

So what is the fuss ???? - easy !!!! The Prescription Act has NO penalty for overstepping the provisions of the Act - so who cared if the Springbok died. We just ignored the fact that he is dead - we still went on to trace and chase him for his biltong - it was/is not a punishable offence or prohibited conduct to trace, chase, collect or sell his biltong. This is still the position for all other debt except debt falling inside the ambit of the National Credit Act once the National Credit Amendment Act is implemented. Then it will be prohibited conduct to chase a dead NCA Springbok (one that prescribed and now forms part of extinguished fauna) for the biltong or value of his carcass and an administrative fine of R 1,000,000 or 10% of yearly turnover could be imposed by the Tribunal.

In conclusion I leave you with the dictionaries definition of “Extinguished”:   Part of Speech: adjective. Meaning: of a conditioned response; caused to die out because of the absence or withdrawal of reinforcement. Similar: destroyed (spoiled or ruined or demolished). Main Entry: extinguish. Part of Speech: verb. Definition: kill; quash. Synonyms: abate, abolish, annihilate, blot out, check, crush, destroy, eliminate, end, eradicate, erase, expunge, exterminate, extirpate, obliterate, obscure, put down, put the lid on, quell, remove, squash, stamp out, suppress, wipe out. Antonyms:  bear, create. Origin: Latin exstinguere (from ex- + stinguere to extinguish) + English -ish (as in abolish); akin to Latin instigare to incite.

Well I guess one must have a point of view. As stated in the beginning, this article is a combination of opinions that I could find and added to it my own views. Least of all is it not a legal opinion, but it should give the novice on “Prescription” a pretty good start in studying this topic, which is as old as debt itself.

Trust that you will now know if my Springbok has been extinguished by prescription, or if in fact he has been given tacit, expressed and enough water, to indicate that we want to keep him alive, during the 3 year period.

JH Eugenè Joubert Chairman Corporate Rebels

http://www.creditintel.co.za/