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[2016] ZASCA 135
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Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd (1040/2015) [2016] ZASCA 135 (29 September 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1040/2015
In
the matter between:
TRINITY
ASSET MANAGEMENT (PTY)
LTD APPELLANT
and
GRINDSTONE
INVESTMENTS 132 (PTY)
LTD
RESPONDENT
Neutral
citation:
Trinity
Asset Management (Pty) Ltd v Grindstone Investments (Pty) Ltd
(1040/15)
[2016] ZASCA 135
(29 September 2016)
Coram:
Bosielo,
Theron, Willis and Swain JJA and Dlodlo AJA
Heard:
8 September 2016
Delivered:
29
September 2016
Summary:
Prescription
: the date upon which a debt becomes due must not be conflated
with that when repayment thereof is demanded :
a debt which is
repayable on demand becomes due the moment the money is lent to the
debtor : claim prescribed : appeal dismissed
with costs.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Yekiso J sitting as the
court of first instance).
The
appeal is dismissed with costs.
JUDGMENT
Willis
JA (Theron and Swain JJA concurring):
[1]
The appellant, Trinity Asset Management (Pty) Ltd, which was the
applicant in the court a quo, sought a provisional order of
liquidation of the respondent, Grindstone Investments 132 (Pty) Ltd.
The court a quo (Yekiso J) dismissed the application with
costs. The
court a quo granted leave to appeal to this court. The parties have
agreed that the central issue in the appeal
is whether the debt
in question had prescribed.
[2]
In terms of a written agreement concluded between the parties in Cape
Town on 1 September 2007, the respondent borrowed the
sum of
R3 050 000 (the loan capital) from the appellant. The
relevant clause, upon which the outcome of this case
depends, is
clause 2.3 thereof. It reads as follows:
‘
The
Loan Capital shall be due and payable to the Lender within 30 days
from the date of delivery of the Lender’s written demand
.’
For
reasons that I hope will become clear later in this judgment, the
loan capital was immediately claimable from the respondent,
but it
was a term of this clause that it would only become payable once the
respondent had received the written demand for which
provision is
made, and the notice period had expired.
[3]
Interest would accrue from the date of payment of the loan amount to
the respondent. The agreement also provided that the respondent
would
take steps to have a second mortgage bond registered over certain
immovable property, which it owned in Paarl, as security.
This bond
was never registered. The loan capital was
paid by the appellant into accounts designated by
the respondent, in
three separate instalments: R1,5 million on 13 February 2008, R1
million on 15 February 2008 and R500 000
on 21 February 2008,
respectively.
[4]
On 19 September 2013, Mr Quinton George, the chief executive officer
(CEO) of the appellant sent an email to Mr Nicholas
Cunningham-Moorat,
a director of the respondent, in which Mr George
enquired as follows:
‘
Nick,
could you confirm that you are happy to settle the outstanding amount
on the property fund and give an indication as to when
it will be
done? Steve, could you confirm with Nick the amount currently
outstanding?
Regards,
Quinton
George
CEO
Trinity Asset Management (Pty) Ltd
’
[5]
On 25 September 2013, Mr Cunningham-Moorat replied as follows:
‘
Quinton,
this note serves to confirm that Trinity has called the property
fund. The current outstanding balance is R4,55 [million].
We have
executed on an associated asset sale to support this call. All things
being equal we expect these funds to release within
60-90 days.
Thanks.
Nick
Cunningham-Moorat
Chairman
and Chief Executive Officer
’
[6]
The appellant received no payment from the respondent. On 9 December
2013, the appellant, by service of the sheriff, delivered
a letter of
demand upon the respondent in terms of s 345(1)(
a)
(i)
of the Companies Act 61 of 1973 (the old Companies Act). The amount
claimed was R4,6 million. Some two weeks later, the respondent,
via
its attorneys, gave the appellant a written acknowledgement of
receipt of the letter but denied liability. I shall deal first
with
the question of whether the appellant’s demand complied with
the requirements of clause 2.3. As will become more
fully
apparent later that is, however, a different issue from the ‘central’
one of prescription.
[7]
Relying on the deeming provision in s 345 of the old Companies Act,
that a company served with such a letter of demand and which
does not
discharge the alleged debt within three weeks is, in fact, unable to
pay its debts, the appellant brought the application
for a
provisional order winding-up the respondent.
[8]
Mr Duminy SC, counsel for the appellant, argued that clause 2.3
established the making of a demand as a condition precedent
or a
suspensive condition for the obligation of the respondent to pay to
come into being. A difficulty that presents itself is
that the s 345
demand is one in which the debtor is given three weeks (ie 21
calendar days) in which to pay. This is less than
the 30 days
provided for in clause 2.3 of the applicable agreement between the
parties. If, on the argument of Mr Duminy, the debt
became due and
payable only once the demand provided for in clause 2.3 had been
delivered to the respondent, then the s 345 demand
failed to fulfil
this purpose. This would remain the case even if more than thirty
days after its service, the amount allegedly
owing had not been
paid. It is trite that conditions in a contract are strictly
interpreted and that fulfilment should ordinarily
be
in
forma specifica
(in
the terms as specified).
[1]
Even a benevolent interpretation
per
aequipollens
(by
way of an equivalent that was contemplated by the parties)
[2]
is not permissible for the reason that there is a presumption in
favour of the general requirement that the condition must be
fulfilled
in
forma specifica.
[3]
[9]
Accordingly, if for purposes of this issue, (ie whether the correct
demand had been made, rather than the issue of prescription),
clause
2.3 is assumed, in favour of the appellant, to establish a condition
precedent or a suspensive condition for the obligation
of the
respondent to pay to come into being, its absence of fulfilment at
the time that the provisional order for liquidation of
the respondent
was sought, would justify the dismissal of that application: the
amount claimed was not owing, never mind unpaid.
[10]
In the alternative, Mr Duminy submitted that the appellant’s
email of 19 September 2013, referred to above, constituted
a
‘demand’. Not even the most vivid imagination can justify
such a conclusion. If the case is decided without reference
to
prescription, it will be decided without reference to the ‘central
issue’ agreed upon between the parties or the
basis upon which
the court a quo disposed of the matter and indeed granted leave to
appeal to this court. For these reasons, I
turn to the question of
prescription.
[11]
In terms of s 11
(d)
of the Prescription Act 68 of 1969 (the 1969
Prescription Act),
prescription
of this debt will have been completed three years after
it had become ‘due’ unless, of course, prescription had
been
interrupted by, for example, an acknowledgement of debt in terms
of s 14 of the 1969
Prescription Act or
‘judicial interruption’
in terms of
s 15
thereof. Interruption of prescription, by
acknowledging liability is one thing, attempting to revive an
extinguished debt by acknowledgement
is another. It is now trite that
the 1969
Prescription Act, unlike
its 1943 predecessor, created
‘strong’ prescription. In
Oertel
v Direkteur van Plaaslike Bestuur,
[4]
it was said that:
‘
Die
1969 Wet maak egter vir slegs sterk verjaring voorsiening. Na
verstryking van die voorgeskrewe termyn gaan die skuld as sulks
tot
niet.’
[5]
Once
there has been the necessary effluxion of time, the debt is
extinguished. Accordingly, even if one accepts, in the appellant’s
favour, that Mr Cunningham-Moorat’s email of 25 September 2013,
constituted an acknowledgement of liability, it would serve
to
interrupt prescription only if the three–year period had not
completed its run before that date. Otherwise, the debt remains
extinguished.
[12]
The appellant argued that because the debt was repayable on demand,
prescription commenced only once payment of the debt had
been
demanded (ie on 9 December 2013). One must be careful not to conflate
the date when a debt becomes ‘due’ and that
upon which
repayment thereof is demanded. A debt which is repayable on demand
becomes due the moment the money is lent to the debtor
– or, to
use banking terminology, ‘the advance is made’.
[6]
The fact that a debtor may be given 30 days within which to repay
that which has been demanded does not, in my opinion, alter the
principle that the debt became due the moment it was lent and
therefore, in terms of s 11
(d)
of the 1969
Prescription Act, prescription
begins to run from that
date.
[13]
In
Deloitte
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
,
[7]
this court said (at 532G-I) that for a debt to be ‘due’:
‘
.
. . there has to be a debt immediately claimable by the creditor or,
stated in another way, that there has to be a debt in respect
of
which the debtor is under an obligation to perform immediately.’
It
is easy for confusion to arise. A debt can be immediately claimable
even though a demand may be necessary for it to be payable.
The
distinction between ‘claimability’ and ‘payability’
was one of which this court was keenly aware in
Union
Share Agency & Investment Ltd v Spain
[8]
where it said:
‘
The
distinction between the indebtedness being subject to the happening
of an event and the payment being so subject is a vital
one and
should not be overlooked.’
[9]
[14]
In any event, clause 2.3 refers to the loan being ‘due and
payable’. The very phrase ‘due and payable’,
ie
both ‘claimable’ and ‘payable’ as at a point
in time, indicates that ‘due’ and ‘payable’
are not coextensive with one another. Ever since
Attorney-General
Transvaal v Additional Magistrate for Johannesburg
[10]
it has been trite that, when it comes to the interpretation of
statutes, they ‘should be construed that, if it can be
prevented,
no clause, sentence or word shall be superfluous, void or
insignificant’.
[11]
Since
Crispette
and Candy Co Ltd v Oscar Michaelis NO and Leopold Alexander Michaelis
NO
[12]
it has been clear that, in general, the same principles apply to all
written instruments, including wills and contracts.
[13]
[15]
Moreover, there is clear authority in this court that a creditor
cannot, by its own conduct (or lack thereof), postpone the
commencement of prescription.
[14]
Profesor Max Loubser in his
Extinctive
Prescription
[15]
contends, without referring to any authority directly, that:
‘
On
account of the policy consideration that a creditor should not be
able to rely on his own failure to demand performance from
the debtor
in order to delay the running of prescription the courts will require
a clear indication that the parties intended demand
to be a condition
precedent for the debt to become due, in which case prescription will
only begin to run from the date of demand
.’
[16]
[16]
A similar view was expressed by Rogers J in
De
Bruyn v Du Toit
.
[17]
Mr Kaplan, who appeared for the respondent, accepted this as a
correct statement of law. For reasons that follow, it is not
necessary
for this court to express itself finally on the correctness
of this proposition by Loubser. The tension between the principle of
freedom of contract and the policy considerations of our strict,
indeed rigorous, law of prescription is both manifest and palpable.
The legal community, including the courts, will benefit from yet
further scholarly contributions on the issue. It is far from clear
that, in the present case, the parties intended ‘demand to be a
condition precedent’ for the debt to become due. This
presents
the appellant with an insuperable obstacle. In this regard, it is
helpful to bear in mind the salutary distinction between
a condition,
properly so called, and a term of a contract canvassed in
Tamarillo
(Pty) Ltd v BN Aitken (Pty) Ltd
.
[18]
In my opinion, it is obvious that the requirement of demand being
given on 30 days’ notice was merely a procedural term of
the
agreement: in other words, the loan was to be repaid 30 days after
written demand was made.
[17]
Mr Duminy placed reliance on the following passage by Selikowitz J In
Standard
Bank of SA Ltd v Oneanate Investments (Pty) Ltd
:
[19]
‘
A
loan without agreement as to time for repayment is at common law
repayable on demand. Although by no means linguistically clear,
the
phrase “payable on demand” is used in this context in our
law to mean that no specific demand for repayment is
necessary and
the debt is repayable as soon as it is incurred. When suing for
repayment, there is no need to allege a demand and
such a demand is
not part of the plaintiff’s cause of action
.’
This
passage was referred to with approval in
De
Bruyn v Du Toit
.
[20]
This passage does not assist the appellant at all. On the contrary,
it provides a further pointer to the fact that a provision
in a
contract requiring notice of demand is ordinarily a mere procedural
term and not a necessary condition for the acquisition
of a completed
cause of action. It is correct, as Selikowitz J said, that a loan
without agreement as to time for repayment is,
at common law,
repayable on demand.
[18]
Mr Duminy also relied on a recent decision of this court in
Standard
Bank of SA Ltd v Miracle Mile Investments 67 (Pty) Ltd
[21]
to contend that it was the delivery of the demand that triggered the
running of prescription, rather than the lending of the money
itself.
Miracle
Mile
dealt with a bank’s right to enforce an acceleration clause in
a lending agreement. It also dealt with a long-term loan that
had
been secured by mortgage bonds registered over immovable property.
Very different considerations apply in such a situation:
as the
judgment points out, prescription runs against arrear instalments, as
from dates when payment thereof was due, which differs
from future
instalments, which become due as a result of the requisite election
by the creditor to accelerate payment of these
future instalments, by
reason of the debtor’s breach.
[22]
[19]
In this case, the monies were advanced to the respondent in February
2008. There was no interruption of prescription. The debt
therefore
prescribed and was extinguished in February 2011 – well before
any demand was made. The appeal cannot succeed.
[20]
I have had the benefit of reading the minority judgment prepared by
Dlodlo AJA. My fundamental difficulty is that clause 2.3
is a
standard notice clause appearing in innumerable loan agreements
throughout the land. The interpretation placed on this clause
by
Dlodlo AJA could have far-reaching implications for the running of
prescription in all such everyday instances.
[21]
There is an inherent contradiction in the minority judgment. Dlodlo
AJA describes the demand referred to in clause 2.3 as ‘an
essential requirement for the appellant’s cause of action.’
As I have already pointed out, if this is indeed the case,
there must
be strict compliance therewith: precise fulfilment of such a
requirement is imperative. I have also indicated
that there was
no such fulfilment
in
forma specifica
.
The appellant’s failure strictly to comply with the terms of
this clause has not been addressed in the minority judgment.
[22] The following order is made:
The
appeal is dismissed with costs.
______________________
N
P WILLIS
Judge
of Appeal
Dlodlo
AJA dissenting (with Bosielo JA concurring)
[23]
I am grateful to have had an opportunity to read my brother’s
(Willis JA) judgment in this matter. However, I am unable
to agree
therewith and am thus compelled to write separately. I differ with my
learned colleague in my approach and the conclusion
I reach, for
which reason it will be necessary to recast the facts only in so far
as is necessary to facilitate my reasoning.
[24]
The appellant lent and advanced monies to the respondent pursuant to
a written loan agreement. Clause 2.3 of the agreement
(quoted in para
2 above) provides that the loan is due and
repayable
within 30 days from the date of delivery of the appellant’s
‘written demand’
.
The respondent contends, on the one hand that prescription commenced
running on the earliest date on which the appellant could
have made
such written demand. On the other hand, the appellant contends that
given all the circumstances, what the respondent
contends was clearly
not the intention of the parties.
[25]
On 1 September 2007, the parties entered into the written loan
agreement in terms of which the respondent borrowed a capital
amount
of R3 050 000 (the loan capital) from the appellant. The
material terms of the loan agreement were thus, in summary,
the
following:
(a)
The respondent borrowed a capital amount of R3 050 000
representing the loan capital from the appellant;
(b)
The loan capital was deemed to be lent and advanced on 1 September
2007 notwithstanding the subsequent date of signature of
the
agreement;
(c)
The loan capital was due and repayable to the appellant within 30
days from the date of delivery of the lender’s written
demand
(clause 2.3);
(d)
Interest accrued on the loan capital at the market rate from the date
of payment to date of repayment (clause 2.4);
(e)
The respondent was to procure that a second mortgage bond be
registered over the property as security for the amounts due in
terms
of the agreement, (clause 3.1).
[26]
On 13 February 2008 the appellant paid an amount of R1,5 million into
the bank account identified by one Deane, the then sole
director of
the respondent. The balance of the loan capital was paid by the
appellant to the respondent in tranches of R1 million
and R500 000
on 15 February 2008 and 21 February 2008 respectively. The loan
capital lent and advanced to the respondent would,
as already
mentioned, be due and repayable to the appellant within 30 days from
the date of delivery of the appellant’s written
demand.
[27]
On 2 June 2009, one Mr Cunningham-Moorat (Moorat) became a director
of the respondent. On 6 April 2011 it was resolved by the
respondent
that it enters into a covering mortgage bond in favour of the
appellant. On the same day, a Power of Attorney was signed
on behalf
of the respondent by Moorat in favour of one T M Gunston and various
others, to register a covering mortgage bond in
favour of the
appellant.
[28]
On 19 September 2013, one Mr Quinton George (George), a director of
the appellant, sent an e-mail to Moorat reading inter alia
as
follows:
‘
Nick,
could you confirm that you are happy to settle the outstanding amount
on the property fund and give an indication as to when
it will be
done?’
In
response, Moorat responded as follows on 25 September 2013:
‘
Quinton,
this note serves to confirm that Trinity has called the property
fund. The current outstanding balance is R4,55 million.
We have
executed on an associated asset sale to support this call. All things
being equal, we expect these funds to release within
60 – 90
days.’
It
should be clear from this response that the respondent does not deny
the indebtedness. In fact it confirms that the outstanding
balance is
R4.55 Million.
[29]
On 9 December 2013, Gunstons Attorneys, acting on behalf of the
appellant, caused a letter in terms of s 345(1)
(a)
(i)
of the Companies Act 61 of 1973 (the letter of demand claiming R4,6
million) to be served by the sheriff at the respondent’s
registered address. On 23 December 2013 a letter from M J Hood &
Associates, on behalf of the respondent, was received by the
appellant. This letter made reference to the letter of demand and
denied the respondent’s indebtedness.
[30]
On 18 July 2014, the appellant caused to be issued an application for
the provisional liquidation of the respondent on the
basis of the
respondent’s failure to pay its debts within the stipulated
time in terms of s 345 of the Companies Act. On
28 August 2014, in an
answering affidavit filed in those proceedings, deposed to by Moorat,
the defence of prescription was raised
in
limine
.
[31]
The court a quo held that there was no significant dispute of fact in
the matter. It found the defence of prescription to be
valid. The
court held that it was not required to determine the merits of the
defence or whether it (the defence) was likely to
succeed at trial,
but that it was merely required to determine whether the debt sought
to be recovered was disputed on reasonable
grounds. In the meanwhile
the respondent, however, failed to register the covering bond.
[32]
It bears mentioning that in response to the letter of demand, the
respondent claimed that clause 3 of the agreement (providing
for the
registration of the covering Mortgage bond) constituted a condition
precedent which had not been complied with. Accordingly,
it was
contended that the demand was premature. The respondent’s
attorney, in the letter referred to above (para 27), had
also
referred to clause 2.3 of the agreement stating that the appellant
had not yet made a proper demand to the respondent. In
its answering
affidavit, the respondent admitted the conclusion of the loan
agreement; the signature of the resolution and power
of attorney; the
exchange of e-mails; and the receipt of and its response to the s 345
letter. However, the respondent contends
that its debt was
extinguished by prescription in terms of
s 11
(d)
of the
Prescription Act 68 of 1969
. The respondent contends further
that the appellant was not entitled to postpone the commencement of
prescription by delaying the
making of the written demand referred to
in clause 2.3 of the loan agreement (which would have rendered the
debt due and repayable.)
The respondent pleaded that it was incumbent
upon the appellant to have issued the written demand on 1 September
2007. The latter
date is the deemed date for the advancing of the
loan stipulated in clause 2.7 of the loan agreement. In the
alternative, in the
heads of argument, the respondent contends that
it was incumbent upon the appellant to have issued the written demand
30 days from
the date on which each tranche of the loan was advanced.
This alternative contention was not argued in court though.
[33]
I agree with the contention advanced on behalf of the appellant that
the respondent failed to plead and prove the date of inception
of the
running of prescription. The respondent’s allegation that the
running of prescription commenced on 1 September 2007
is, to my mind,
difficult to accept. On 1 September 2007 the appellant had not yet
advanced any monies to the respondent. I similarly
have extreme
difficulty to accept the contention advanced in the alternative to
the effect that demand should have been made within
30 days of each
tranche advance. If the parties intended that to be the case, then
they would have most certainly said so in the
loan agreement. The
reading of the loan agreement makes it clear that the parties did not
contemplate demand having to be made
within 30 days of the advance
being made. Nor does the loan agreement oblige the appellant to make
demand at or within such time
or before any particular date at all.
[34]
In my view, calling up the loan by way of demand as contemplated in
clause 2.3 of the agreement, was an essential requirement
for the
appellant’s cause of action. Accordingly, the running of
prescription did not commence until 30 days after the making
of a
written demand. This view is reinforced by the fact that it was the
intention of the parties that the debt arising from the
loan
agreement was to be secured by way of a second mortgage bond.
Additionally, the resolution adopted by the director of the
respondent on 6 April 2011, that the respondent register a covering
mortgage bond in favour of the appellant and the signing of
a power
of attorney by the respondent’s director on the same day,
evidences this intention.
[35]
It is abundantly clear on the above articulated facts that it could
never have been the intention of the parties that the tranches
of
loan capital could become due and repayable within 30 days of the
dates on which such amounts were advanced. This too, although
contained in the respondent’s heads of argument, was not argued
in court. In
Sassoon Confirming and Acceptance Co (Pty) Ltd v
Barclays National Bank Ltd
1974 (1) SA 641
(A), this court held
as follows (at 646B):
‘
The
first step in construing a contract is to determine the ordinary
grammatical meaning of the words used by the parties (
Jones
v Anglo-African Shipping Co (1936) Ltd
1972 (2) SA 827
(AD) at 834E). Very few words, however, bear a single
meaning, and the “ordinary” meaning of words appearing in
a contract
will necessarily depend upon the context in which they are
used, their interrelation, and the nature of the transaction as it
appears
from the entire contract.’
Similarly,
in
Privest Employee Solutions (Pty) Ltd v Vital Distribution
Solutions (Pty) Ltd
[2005] ZASCA 52
;
2005 (5) SA 276
(SCA) this
court held as follows (para 21):
‘
The
language used in the agreement is the first port of call in
ascertaining the common intention of the parties. In this regard
the
language must be given its ordinary and grammatical meaning unless
this results in absurdity, repugnancy or inconsistency with
the rest
of the agreement:
Sassoon
Confirming and Acceptance Co (Pty) Ltd v Barclays National Bank Ltd
1974 (1) SA 641
(A) at 646B and
Coopers
& Lybrand and others v Bryant
[1995] ZASCA 64
;
1995
(3) SA 761
(A) at 767 E-F.’
(See
also
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.)
[36]
In
Stockdale & another v Stockdale
2004 (1) SA 68
(C), the
court held that in order to decide the issue of prescription which
had been raised, the court had to have regard, inter
alia, to the
background circumstances and the wording of the two acknowledgments
of debt. This was an appeal against a magistrate’s
judgment.
The question for determination was whether, in the light of the
specific terms of the acknowledgments of debt, and the
relevant
background circumstances, prescription began running on the debts
immediately (ie with effect from 1 February 1991 –
date of
signature on the acknowledgments of debt) or not. The court held,
inter alia, that
s 12(1)
of the
Prescription Act expressly
required
that a debt be ‘due’ before prescription could begin to
run. The question of when a debt becomes due (the
court held) has to
be determined by the intention of the parties and in the light of the
policy consideration underlying the Act
that a creditor should not be
allowed to rely on its own inaction in order to delay the running of
prescription against him. The
court in
Stockdale
thus reasoned
as follows (para 13):
‘
It
is clear that in determining when a debt arises and when it becomes
due (opeisbaar) different concepts are concerned. A distinction
needs
to be made between “the coming into existence of the debt on
the one hand and recoverability thereof on the other”
(
List
v Fungers
1979 (3) SA 106
(A) at 121C-D). The stage when a debt become
recoverable, and therefore due in the sense in which the Act speaks
of it, has been
described as follows in
Deloitte
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at 532H:
“
(T)here
has to be a debt immediately claimable by the creditor or stated in
another way, that there has to be a debt in respect
of which the
debtor is under an obligation to perform immediately.”
Clearly
then it is essential to determine the intention of the parties as
regards the “immediate” payment of the debt.’
[37]
I have, for instance, no quarrel with the fact that as a general rule
of law in all obligations in which a time for payment
was not agreed,
the debt is due forthwith. (See
Lancelot Stellenbosch Mountain
Retreat v Gore NO
[2015] ZASCA 37
para 12, and the authorities
cited in fn 7.) This, of course, clearly might be qualified in the
light of the particular circumstances
of the case. Voet (12.1.19)
says that in the case of a loan for consumption where no time for
repayment has been fixed the money
must be repaid ‘not
forthwith, but after the passage of a moderate time, so that in the
meantime the borrower will have been
able to enjoy at least some
advantage out of the loan and the use of the money.’ (See Sir
Percival Gane’s translation
The selective Voet being
commentary on the Pandects Paris edition of 1829
(1955) vol 2 at
772.) In the words of Mohamed CJ in
Uitenhage Municipality v
Molloy
[1997] ZASCA 112
;
1998 (2) SA 735
(SCA) at 742H-743A:
‘
If
creditors are allowed by their deliberate or negligent acts to delay
the pursuit of their claims without incurring the consequences
of
prescription, that purpose would be subverted.’
Mahomed
CJ expanded at 742G as follows:
‘
The
rationale in the cases which have held that a creditor cannot “by
his own conduct postpone the commencement of prescription”
by
refraining from satisfying the condition which would render a debt
due and payable, apply equally where the creditor has failed
to take
or initiate the steps which fall within his or her power to make it
possible for such a condition to be satisfied.’
[38]
The court a quo in support of its findings quoted a passage from J C
de Wet and A H Van Wyk
Die Suid-Afrikaanse Kontraktereg en
Handelsreg
5 ed (1992) at 292. It is apposite to set out this
quotation hereunder:
‘
Uit
die aard van die saak kan verjaring eers begin loop op die dag waarop
die skuldenaar moet voldoen, dit wil sê, op die
dag waarop die
skuld opeisbaar word. Hierdie benadering word, soos mens kan verwag,
in die ou wet en in die nuwe wet aangetref.
Soos hierbo al aangetoon,
is ‘n skuld, wat uit ooreenkoms ontstaan onmiddelik na sluiting
van die ooreenkoms opeisbaar,
tensy
anders ooreengekom
.’
(My emphasis.)
I
emphasise the portion of the authors’ quotation which I think
needed serious consideration by the court a quo. The words
‘tensy
anders ooreengekom’ (ie unless otherwise agreed) has serious
significance. I say so because in the present case
the parties in the
loan agreement indeed expressly agreed otherwise. This is pertinently
set out in what I regard as the clear
terms in clause 2.3 of the loan
agreement. Therefore the ‘tensy anders ooreengekom’ in
the authors’ quotation
brought about an exception to the
general rule spoken of by the authors.
[39]
Nicholl v Nicholl
1916 WLD 10
, a judgment relied on by the
court a quo, contains the following observation made by Mason J (at
12):
‘
Mr
Greenberg argued for the applicant that as the claim came within
these sections no right of action arose until demand was made,
and no
demand was made until January of this year. But even if this were a
claim payable on demand, the right of action existed
as soon as the
advances were made; the rule that demand should be made so as to
entitle the plaintiff to costs has never been construed
to mean that
demand is a condition precedent to the right of action.’
One
must bear in mind that beside the fact that
Nicholl
dealt with the position under the Transvaal pre-Union Prescription
Act 26 of 1908, it also dealt with demand as a pre-requisite
for
mora.
[40]
I do agree with the judgment by Rogers J in
De Bruin v Du Toit
WCC case number 1162/2015 (27 February 2015) para 6 where he made the
following observation:
‘
Stockdale
and earlier cases dealing with amounts payable “on demand”
do not lay down a rule that such a debt becomes due for
purposes of
prescription only after demand has been made. On the contrary, and in
keeping with the principle that a creditor cannot
delay the
commencement of prescription by failing to take a step within his
power, it has been held on a number of occasions that
loan repayable
on demand is immediately due for purposes of prescription.
It
is only where the giving of notice is a condition precedent for a
claim, and thus a necessary ingredient of the creditor’s
cause
of action, that the running of prescription is deferred until the
giving of notice
’
(My emphasis.)
[41]
The present case addresses itself to the emphasised portions of the
judgment by Rogers J. There was extensive reference to
the work of
Professor Loubser (
Extinctive Prescription
(1996)) in
submissions before us. Noticeably, Loubser contends that prescription
serves to protect the debtor from liability in
a case where he is
justified in assuming that the creditor no longer intends to enforce
his right. (See M M Loubser
Extinctive Prescription
(1996) at
62.) But in the present case this is of course not the situation. In
this case the agreement clearly and unequivocally,
in my view,
provides in clause 2.3 that performance is due on demand. I accept in
the circumstances that this was intended to mean
one thing and one
thing only, namely that demand was a condition precedent for the debt
to become payable. That being the case,
undoubtedly prescription
would only begin to run from the date of the demand. (See, also in
this regard, Loubser op cit 63.) After
reviewing the authorities on
the subject-matter (op cit 53-56) Loubser concluded his discussion as
follows (at 63):
‘
On
account of the policy consideration that a creditor should not be
able to rely on his own failure to demand performance from
the debtor
in order to delay the running of the prescription the courts will
require
clear
indication that the parties intended demand to be a condition
precedent for the debt to become due
,
in which case prescription will only begin to run from the date of
demand.’ (My emphasis.)
In
my view, the ‘clear indication that the parties intended demand
to be a condition precedent for the debt to become due’
is
contained in clause 2.3 of the loan agreement and the agreed
registration of a further mortgage bond covering the loan capital
stipulated in the loan agreement.
[42]
In the specific circumstances of the present case, to suggest
differently would be difficult for me to accept. We must always
bear
in mind that this was a financial transaction entered into by two
commercial entities. One must accept that seasoned business
persons
must have been involved in this loan agreement acting in the best
interests of their respective business entities. Regard
being had to
the respondent’s version, it was necessary for it to ‘execute
on an associated asset sale’ in order
to support the
appellant’s call on the property fund. The funds would then be
released within 60 to 90 days to pay the appellant’s
debt. At
the risk of repeating a point already made, the fact that the debt
was to be secured by a mortgage bond evidences the
parties’
intention and that active steps were taken by the respondent in
passing a resolution and signing a power of attorney
in order to give
effect to this intention. The respondent’s response to the s
345 letter was but a denial that the debt was
due. The respondent
alleged that there had not been proper demand. It did not then say
the debt had prescribed.
[43]
Regard being had to the aforegoing I would uphold the appeal with
costs including costs of two counsel.
________________________
D
Dlodlo
Acting
Judge of Appeal
APPEARANCES:
For
Appellant:
W R E Duminy SC (with him F S G Sievers)
Instructed by:
Korbers Inc, Cape Town
Webbers, Bloemfontein
For
Respondent:
J L Kaplan
Instructed by:
MJ Hood & Associates, Sandton
Lovius Block,
Bloemfontein
[1]
See for example
Borstlap
v Spangenberg en andere
1974 (3) SA 695
(A) at 705H. See also
AA
Alloy Foundry (Pty) Ltd v Titaco Projects (Pty) Ltd
[1999]
ZASCA 82
;
2000 (1) SA 639
(SCA) para 6.
[2]
See
Van
Diggelen v De Bruin & another
1954 (1) SA 188
(SWA) at 192H-193G. See also
Borstlap
v Spangenberg & Andere
(
supra
)
at 705H.
[3]
See
Van
Diggelen v De Bruin & another
(
supra
)
at 193B.
[4]
Oertel
en
andere
v
Direkteur van Pla
a
slike
Bestuur en andere
1983
(1) SA 354 (A).
[5]
At 366G-H. This
may be translated as: ‘The 1969 Act however makes provision
only for strong prescription. After the lapse
[effluxion] of the
prescribed period of time, the debt as such is destroyed.’
(The translation is mine.) See also
Protea
International (Pty) Ltd v Peak Marwick Mitchell & Co
[1990]
ZASCA 16
;
1990 (2) SA 566
(A) at 568I-569A.
[6]
See
Nicholl
v Nicholl
1916 WLD 10
at 12.
Van
Vuuren v Boshoff
1964 (1) SA 395
(T) at 400D. See also
Sentrachem
Ltd v Prinsloo
1997 (2) SA 1
(A) at 15I.
[7]
Deloitte Haskins & Sells
Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A)
.
[8]
Union Share Agency &
Investment Ltd v Spain
1928 AD 74
.
[9]
A
t
80-81
.
This passage was referred to with approval in
List
v Jungers
1979
(3) SA 106
(A). That case, in turn, was approved in
The
Master v I L Back & Co Ltd & others
1983 (1) SA 986
(A) and
Benson
& another v Walters & others
1981 (4) SA 42
(C). And both
I
L Back and Benson
were followed in
Deloitte
.
See also the title on ‘Prescription’ in 21
Lawsa
2
ed by J S Saner, especially para 125.
[10]
Attorney-General Transvaal v
Additional Magistrate for Johannesburg
1924
AD 421 AD.
[11]
At 436.
[12]
Crispette and Candy Co Ltd v Oscar
Michaelis NO
and
Leopold Alexander Michaelis NO
1947 (4) SA 521
(A) at 541.
[13]
At 541. See, more
recently,
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18.
[14]
See
Uitenhage
Municipality v Molloy
[1997] ZASCA 112
;
1998 (2) SA 735
(SCA) at 742G-743C. See also
The
Master v I L Back & Co Ltd & others
1983 (1) SA 986
(A) at 1004A-1005H;
Kotzé
v Ongeskiktheidsfonds van die Unversiteit van Stellenbosch
1996 (3) SA 252
(C) at 261H;
Benson
& another v Walters & others
1981 (4) SA 42
(C) at 49G-H;
Johan
De Bruyn v Derick Du Toit
[2015] ZAWCHC 20
para 6.
[15]
M M Loubser
Extinctive
Prescription
(1996).
[16]
At 63.
[17]
De Bruyn v Du Toit
[2015] ZAWCHC 20.
[18]
Tamarillo (Pty) Ltd v BN Aitken
(Pty) Ltd
1982
(1) SA 398
(A) at 432C-H
.
[19]
Standard Bank of SA Ltd v Oneanate
Investments (Pty) Ltd
1995
(4) SA 510 (C).
[20]
Para 8.
[21]
Standard Bank of SA Ltd v Miracle
Mile Investments 67 (Pty) Ltd & another
[2016]
ZASCA 91.
[22]
Para 15.