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[2017] ZASCA 16
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Sentrachem Limited v Terreblanche (237/2016) [2017] ZASCA 16 (22 March 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 237/2016
In
the matter between:
SENTRACHEM
LIMITED
APPELLANT
and
A
L
TERREBLANCHE
RESPONDENT
Neutral
Citation:
Sentrachem
v Terreblanche
(237/2016)
[2017] ZASCA 16
(22 March 2017)
Coram:
Leach,
Majiedt, Mathopo and Mocumie JJA and Schippers AJA
Heard:
2
March 2017
Delivered:
22
March 2017
Summary:
Prescription
– pension funds – erroneous double payment –
substitution of a party after
litis
contestatio
as a result of a cession of the debt does not give rise to a valid
plea of prescription – cessionary attains all the rights
of
cedent – has full locus standi – impoverishment proved on
the facts.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Engelbrecht AJ sitting as court
of first instance):
1
The appeal is upheld with costs.
2
The order of the court a quo is set aside and substituted with the
following:
‘
(a)
The defendant’s special plea of prescription is dismissed with
costs.
(b)
The defendant is ordered to pay the plaintiff the sum of R453 972.31.
(c)
The defendant is ordered to pay the plaintiff interest on the sum of
R453 972.31 at the rate of 15.5 per cent per annum
calculated
from 11 July 2011 to date of payment in full.
(d)
The defendant must pay the costs of the action including all reserved
costs.’
JUDGMENT
Majiedt JA (Leach,
Mathopo and Mocumie JJA and Schippers AJA concurring)
[1]
The main issue in this appeal is whether the substitution of a party
after
litis contestatio
as a result of the cession of a debt
gives rise to a valid plea of prescription. In addition, the alleged
impoverishment of the
cessionary in a claim based on the
condictio
indebiti
has also been placed in issue. The Gauteng Division of
the High Court, Pretoria (Engelbrecht AJ sitting as court of first
instance),
upheld a special plea of prescription in respect of an
undue enrichment claim brought by the appellant, Sentrachem Limited
(Sentrachem),
against the respondent, Mr A L Terreblanche. That
decision was dispositive of the case and consequently the other
issues (locus
standi and impoverishment) were not decided. This
appeal is with the leave of the court a quo.
[2]
The facts are largely common cause or not seriously disputed and are
briefly as follows. Mr Terreblanche was a member of the
Sentrachem
Group Pension Fund (the pension fund). During 2010 the pension fund
received approval of a surplus apportionment scheme
in terms of the
Pension Funds Act 24 of 1956
. In the course of implementing the
scheme, the pension fund made a payment of the sum of R94 614.99
to Mr Terreblanche on
6 October 2010. On behalf of Mr Terreblanche
the correctness of the computation of this amount was challenged,
although the parties
were
ad
idem
that
an amount was due to him. As I will demonstrate below, the issue
regarding computation of the first amount does not affect
the
resolution of the main issues outlined above.
[3]
On the same day (6 October 2010), the pension fund made a second
payment to Mr Terreblanche in the sum of R453 872.31.
It is this
payment which is in issue in this appeal. The pension fund’s
case was that this payment was made in error to Mr
Terreblanche in
the bona fide and reasonable, but mistaken belief that the amount was
due to him as his share of the surplus apportionment
scheme. Its
claim is based on the
condictio
indebiti.
The
pension fund issued summons in the amount of R453 872.31, the
amount with which Mr Terreblanche allegedly had been enriched.
The
summons was served on Mr Terreblanche on 22 August 2011.
[4]
On 13 December 2011 the Registrar of Pension Funds approved the
voluntary dissolution of the pension fund and the liquidator,
Mr
Jeremy Peter Andrew, was substituted as plaintiff in terms of Uniform
rule 15(2)
on 27 February 2012. Thereafter, on 27 September 2013, Mr
Andrew entered into a cession and assignment agreement with
Sentrachem,
in which the claim against Mr Terreblanche was ceded to
Sentrachem. Pursuant to the cession, Sentrachem was substituted in
place
of Mr Andrew as plaintiff in terms of a court order dated 22
November 2013. Mr Terreblanche did not object to the first
substitution,
nor to the substitution of Sentrachem as plaintiff,
which occurred on 3 December 2013. Mr Terreblanche also did not amend
his plea
as a result of both the substitutions of the plaintiff
mentioned above. The second substitution thus occurred on a date
after the
end of the prescription period.
[5]
In an amended plea, delivered on 31 March 2015, Mr Terreblanche
raised a special plea of prescription. The plea states that
the
defendant received R453 972.31 on 6 October 2010; that
prescription began to run from 7 October 2010; and that the
plaintiff’s
claim has prescribed, because more than three years
have passed since the debt became due as contemplated in terms of
s
11(d)
of the
Prescription Act 68 of 1969
. The crux of the submissions
was that the substitution of Sentrachem as plaintiff amounted to the
institution of new proceedings
that had to be completed within the
statutory period of three years. This contention found favour with
the court a quo and it upheld
the special plea of prescription. In
doing so, the court a quo relied on
Standard
General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd (FBC Holding
(Pty) Ltd as Third Party).
[1]
[6]
The dates relevant to the issue of prescription are the following:
(a)
On 27 October 2010, Mr Andrew, tasked with the investigations into
double payments, discovered the erroneous payment made to
Mr
Terreblanche.
(b)
On 22 November 2013, Kollapen J granted leave for Sentrachem to be
substituted as plaintiff in place of Mr Andrew, pursuant
to the
cession agreement. This application was not opposed.
(c)
The formal substitution occurred on 3 December 2013.
It
bears mention that the cession agreement provided that the cession
would only become effective upon the date of substitution
of
Sentrachem as the plaintiff. It was contended on behalf of Mr
Terreblanche that both the dates in (b) and(c) above fall outside
the
prescription period, which ended on 26 October 2013 (an earlier
assertion on behalf of Mr Terreblanche that prescription started
running on the date of the payment, ie 6 October 2010, appears to
have been abandoned in this court, correctly so - the period
of
prescription plainly commenced running on 27 October 2010, when the
mistake was discovered).
[7]
In essence therefore, what falls to be determined is the effect of
the substitution of Sentrachem as plaintiff and whether the
substitution introduced a new creditor which sought to enforce the
claim in its own name after the three year period laid down
in
s
11(d)
of the Act, had lapsed ie after the claim had prescribed. A
further, related enquiry is the effect, if any, of the cession having
occurred after
litis
contestatio
.
[8]
As stated, in terms of
s 11(d)
of the Act a debt of the present type
prescribes after three years from the time the debt is due
(s 12(1)).
Section 15
is the key provision in the present enquiry. In relevant
part it reads as follows:
‘
Judicial
interruption of prescription
(1)
The running of
prescription shall, subject to the provisions of subsection (2), be
interrupted by the service on the debtor of any
process whereby the
creditor claims payment of the debt.
(2)
Unless the debtor
acknowledges liability, the interruption of prescription in terms of
subsection (1) shall lapse, and the running
of prescription shall not
be deemed to have been interrupted, if the creditor does not
successfully prosecute this claim under
the process in question to
final judgment or if he does so prosecute his claim but abandons the
judgment or the judgment is set
aside.
(3)
If the running of the
prescription is interrupted as contemplated in subsection (1) and the
debtor acknowledges liability, and the
creditor does not prosecute
his claim to final judgment, prescription shall commence to run
afresh from the day on which the debtor
acknowledges liability or, if
at the time when the debtor acknowledges liability or at any time
thereafter the parties postpone
the due date of the debt, from the
day upon which the debt again becomes due.
(4)
If the running of
prescription is interrupted as contemplated in subsection (1) and the
creditor successfully prosecutes his claim
under the process in
question to final judgment and the interruption does not lapse in
terms of subsection (2), prescription shall
commence to run afresh on
the day on which the judgment of the court becomes executable.
(5)
…
(6)
For the purposes of this
section, “process” includes a petition, a notice of
motion, a rule
nisi
,
a pleading in reconvention, a third party notice referred to in any
rule of court, and any document whereby legal proceedings
are
commenced.’
[9]
It was contended on behalf of Mr Terreblanche that the original
creditor (the pension fund) had not successfully prosecuted
its c
laim
under the summons to final judgment as contemplated in
s 15(4)
above.
The new creditor (Sentrachem), so it was contended, had stepped into
the pension fund’s shoes and the prosecution
of the claim by
Sentrachem only commenced after the period of prescription had ended.
These submissions were countered on behalf
of Sentrachem with
Van
Rensburg v Condoprops 42 (Pty) Ltd
[2]
and
Fisher
v Natal Rubber Compounders (Pty) Ltd.
[3]
[10]
In
Van
Rensburg
a
similar defence was raised as one of two main defences to a claim for
estate agent’s commission. The defendant raised a
special plea
that the plaintiff’s claim was based on a cession of the
original plaintiff’s claim concluded after
litis
contestatio
and more than three years prior to the notice to amend and
substitute, and that the claim had accordingly prescribed. Unlike the
present instance, however, the court had not been approached to
sanction the substitution – the original plaintiff had merely
given notice in terms of Uniform
rule 28
of her intention to amend
the claim in a manner which effected the substitution. The defendant
failed to object to the substitution,
as is the case here.
[11]
In dismissing the special plea of prescription, Leach J took the view
that the defendant’s argument failed to draw a
distinction
between a cause of action, on the one hand, and a ‘debt’
as envisaged by the Act, on the other (in this
regard the learned
Judge relied on two decisions of this court).
[4]
The learned Judge stated:
‘
The
Prescription Act prescribes
periods of prescription in respect of
“debts”, not periods of prescription relating to causes
of action. Thus, even
accepting that the substitution of a plaintiff
amounts to the introduction of a new cause of action, the debt
remains the same,
viz the amount the defendant became obliged to pay
as commission due to Nissen having performed her mandate. That was
the debt
Nissen sought to enforce by way of the summons in the
present proceedings. That summons interrupted the running of
prescription
in respect of such debt. When
litis
contestatio
was
reached, the rights of the defendant and Nissen in regard to such
debt were frozen, and the subsequent cession of Nissen’s
right,
title and interest in the debt did not divest her of her right to
prosecute that claim until such time as Van Rensburg was
substituted
as plaintiff. At all times, between the cession in 2004 and the
substitution in May 2007, Nissen was entitled to proceed
to prosecute
her claim against the defendant. When substitution took place Van
Rensburg’s rights under the cession were perfected
and he
stepped into Nissen’s shoes in that regard. In these
circumstances there can be no question of the debt owed by the
defendant having prescribed.’
[5]
Later
on, Leach J held:
‘
.
. . In any event, if prescription was a valid defence to a
substitution . . . it should have been raised in opposition to the
substitution.’
[6]
Van
Rensburg
was
referred to with approval in
Fisher.
[12]
In
Fisher
this court was concerned with the cession to another company, NRC, of
the creditor’s claim for goods sold and delivered.
Pursuant to
the cession, the creditor amended its summons by substituting NRC as
plaintiff. The defendant, in raising a special
plea of prescription,
advanced a similar argument as Mr Terreblanche did in the present
instance, namely that the substitution
of NRC as the plaintiff
amounted to the institution of fresh proceedings. The original
creditor had failed to prosecute its claim
to final judgment and the
interruption of prescription through the service of summons had
fallen away in terms of
s 15(2)
and (6) of the Act. Since, at the
time of substitution, more than three years had elapsed since the
claim had arisen, the claim
had become prescribed.
[13]
In giving short shrift to these contentions, this court, in
Fisher,
held that:
‘
Upon
substitution the cessionary acquired by way of cession, all rights
and obligations vested in the cedent at the time of the
substitution.
What was bestowed on NRC by cession was a claim in respect of which
the running of prescription had been interrupted
by the service of
the summons. In my view the original interruption of prescription by
the timeous service of the summons was not
affected in any way by the
cession or subsequent amendment. The amendment was a mere procedural
step followed to effect the substitution.’
[7]
The
court continued as follows:
‘
It
seems to me clear that the process under which the debt was being
pursued remained the same throughout. To suggest that the summons
operated to interrupt the running of prescription when it was
initially served but ceased to fulfil that function when there was
a
notice of amendment or substitution is clearly not consistent with
the Act. Any judgment that is granted in favour of NRC in
this case
will be granted in terms of the original summons and particulars of
claim, not in terms of the application for substitution.
In the
result the original process that interrupted prescription will be
prosecuted successfully. That is what is required by
s 15(2)
of the
Act. There is no doubt that it is only the identity of the party
(NRC) now pursuing the debt that changes. The debt remains
the same
and unaffected by prescription.’
[8]
[14]
This case is on all fours with
Fisher
and
Van
Rensburg.
The
effect of the substitution of Sentrachem as plaintiff did not result
in new proceedings having been instituted. The debt (an
erroneous
double payment) has remained unaltered throughout – only the
identity of the party which pursued the debt has changed:
first from
the pension fund to Mr Andrew and then to Sentrachem. And Mr
Terreblanche’s failure to object to the substitution
amounts to
a consent to such substitution. The special plea of prescription is
therefore without merit and ought to have been dismissed.
[15]
Standard General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd
is
distinguishable on the facts. In that case the creditor of the debt,
Stangen, did not originally claim payment of the debt
– the
original summons was issued by two other entities. An amendment to
the particulars of claim substituted Stangen as
plaintiff in the
place of the other two entities, on the basis that they had ceded
their claim to Stangen. But, importantly, it
was common cause that
the notice of the application for amendment to substitute Stangen as
plaintiff had been given more than three
years after the debt became
due. It is in this context and against this backdrop that Streicher J
held that:
‘
By
ceding the debt [the two entities] transferred all their rights in
respect of their claims against the defendant to Stangen.
As from the
time that the debt was ceded they were no longer creditors of the
defendant. Stangen became the creditor and only Stangen
could sue
upon the debt.’
[9]
Later
the learned Judge held as follows:
‘
As
I have already indicated prescription can only be interrupted by
process whereby the creditor claims payment of the debt. Before
the
amendment the creditor of the debt had not claimed payment of the
debt and by the time that the amendment was applied for the
debt had
already become prescribed.’
[10]
The
reliance on this decision by the court a quo was therefore misplaced.
[16]
As stated, the court a quo did not deem it necessary to consider the
issue of locus standi, given its conclusion with regard
to the
special plea of prescription. The challenge to Sentrachem’s
legal standing to sue is closely related to the contention
that
Sentrachem had not been impoverished. I will therefore discuss these
two aspects together. It is well settled that once an
order for
thesubstitution of Mr Andrew by Sentrachem as plaintiff had been
made, Sentrachem as cessionary became vested with locus
standi to
pursue the claim in its own name.
[11]
And, as stated, Mr Terreblanche’s lack of objection to the
substitution amounted to a consent to Sentrachem substituting
Mr
Andrew as plaintiff. It was contended that Sentrachem itself had not
been impoverished – only the pension fund had suffered
impoverishment. This contention is untenable. The claim was based on
the
condictio
indebiti
.
It was alleged that Mr Terreblanche had been paid (for the second
time) in the bona fide, reasonable but mistaken belief that
the
payment was due. It can hardly be disputed that the pension fund had
experienced a diminution in the value of its assets as
soon as the
erroneous payment had been made. Mr Andrew stepped into the the shoes
of the pension fund, which had been impoverished.
Mr
Andrew, in turn, ceded the claim to Sentrachem. It is trite that upon
a valid cession, the underlying obligation
and the personal right
flowing from it remain unchanged. The transfer of the personal right
occurs with all the sureties, real
securities, advantages and
disadvantages attached to it.
[12]
The personal right to claim was therefore properly ceded to
Sentrachem – it simply stepped into the impoverished cedent’s
shoes. What finally puts paid to this contention is the relevant
provision in the cession agreement itself. The cessionary had
agreed
to bear the expenses incurred in prosecuting the claim and the
damages sustained as a result of the irrecoverability of
the claim.
Clause 3.4 of the cession reads as follows:
‘
The
cedent does not warrant the validity of the claim and is not to be
liable to the cessionary for any fees, costs or charges that
may be
incurred in prosecuting the claim, or for any damages that may be
sustained by the cessionary if the claim proves irrecoverable
for any
reason whatsoever.’
There
is therefore no merit in the argument advanced regarding
impoverishment.
[17]
Once a substitution as plaintiff occurs, there can be no dispute
concerning the legal standing to sue. A substitution sanctioned
by
the court is a legal procedural step to formalise the transfer of the
claim to the cessionary in terms of the cession. After
substitution
the cedent is entitled, and is in fact in law obliged, to continue
the suit in its own name.
[13]
[18]
The appeal must therefore succeed and costs should follow the
outcome.
In
the premises I issue the following order:
1
The appeal is upheld with costs.
2
The order of the court a quo is set aside and substituted with the
following:
‘
(a)
The defendant’s special plea of prescription is dismissed with
costs.
(b)
The defendant is ordered to pay the plaintiff the sum of R453 972.31.
(c)
The defendant is ordered to pay the plaintiff interest on the sum of
R453 972.31 at the rate of 15.5 per cent per annum
calculated
from 11 July 2011 to date of payment in full.
(d)
The defendant must pay the costs of the action including all reserved
costs.’
_______________________
S
A Majiedt
Judge of Appeal
APPEARANCES
For
the Appellant:
D P de Villiers (with him L Grobler)
Instructed
by:
Fasken Martineau (Incorporated in South Africa as Bell Dewar Inc.),
Sandton
Webbers, Bloemfontein
For
the Respondent:
M Snyman
Instructed
by:
Cremer & Strydom Attorneys, Pretoria
Honey Attorneys Inc.,
Bloemfontein
[1]
Standard General Insurance Co Ltd v Eli Lilly
(SA) (Pty)
Ltd (FBC Holdings (Pty) Ltd, Third Party)
1996 (1) SA 382 (W).
[2]
Van Rensburg v Condoprops 42 (Pty) Ltd
2009
(6) SA 539 (E).
[3]
Fisher v Natal Rubber Compounders (Pty) Ltd
[2016] ZASCA 33;
2016 (5) SA 477 (SCA).
[4]
Standard Bank of South Africa Ltd v Oneanate Investments (Pty)
Ltd (in Liquidation)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) at 826J – 827A;
CGU Insurance Ltd v Rumdel Construction (Pty) Ltd
2004 (2) SA
622
(SCA) para 6.
[5]
Paragraph 12.
[6]
Paragraph 13.
[7]
Paragraph 15. See also:
Waikiwi
Shipping Co Ltd v Thomas Barlow and Sons (Natal) Ltd & another
1978 (1) SA 671
(A) at 678E-G.
[8]
Paragraph 17.
[9]
At 385F-G.
[10]
At 387H-I.
[11]
Fisher
fn 3 para
12;
Brummer v Gorfil Brothers
Investments (Pty) Ltd en andere
1999
(3) SA 389
(SCA) at 410F;
Van Rensburg
fn 2 para 12.
[12]
S
Scott,
The law of
cession
2 ed (1991) at 128.
[13]
Ibid
133-4;
Brummer
fn
11 at 410F;
Fisher
fn
3 para 11.