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[2018] ZAGPPHC 35
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Standard Bank of South Africa Limited v Botha (54753/16) [2018] ZAGPPHC 35 (7 March 2018)
IN
THE HIGH COURT OFSOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 54753/16
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In the matter between:
STANDARD
BANK OF SOUTH AFRICA
LIMITED
Plaintiff
and
ANTOINETIE
BOTHA
Defendant
JUDGMENT
Tuchten
J
:
1 The plaintiff claims against the
defendant as surety for the shortfall of a claim arising from a loan
secured by a mortgage bond.
The plaintiffs claim against the
defendant became due when it proved its claim against the principal
debtor in the principal debtor's
insolvency.
2 The only defence in which the
defendant persists is that the plaintiff's claim against her has
prescribed. The defence of prescription
is before me for
determination pursuant to a statement of agreed facts submitted by
the parties under rule 33(1).
3 First, a brief outline of the facts.
Three bonds were registered against a property as security for the
plaintiffs claim against
the principal debtor; on 18 July 2003, 7
April 2006 and 12 December 2008 respectively. The home loan and the
suretyship were concluded
on 20 November 2008. The principal debtor
was sequestrated on 28 September 2011. The trustees in the principal
debtor's insolvency
sold the bonded property to Titantrade 225 CC on
30 March 2012. Titantrade sold the bonded property to Mr and Mrs van
Rooyen on
28 May 2012. The plaintiff proved its claim in the
principal debtor's insolvency on 27 September 2012.
4 On 8 November 2012, the property was
transferred first to Titantrade and then to Mr and Mrs van Rooyen. On
the same date, the
three bonds were cancelled.
5 On 22 November 2012, the trustees
made a provisional payment of R1 million to the plaintiff. On 9 June
2014, the trustees paid
a final dividend of R74 374,43 to the
plaintiff.
6 On 26 January 2015, the trustees'
first and final liquidation, distribution and contribution account in
the insolvency of the
principal debtor was accepted by the Master.
7 On 26 July 2016, the plaintiff
served its summons in the present action on the defendant.
8 The periods of prescription of debts
are set out in
s 11
of the
Prescription Act, 68 of 1969
. The period
of prescription of "any debt secured by mortgage bond" is
30 years. Counsel for the defendant contend that
the 30 year period
is not any longer applicable to the debt owed by the defendant to the
plaintiff. That is so, counsel say
,
because the bonds were
cancelled and the debt therefore ceased to be one secured by mortgage
bond. If that is correct, then the
prescriptive period is three
years. The plaintiff's summons was served after the lapse of the
three year period and therefore (thus
the argument) the claim has
prescribed.
9 Counsel for the plaintiff argue that
the prescriptive period applicable to a specific debt is fixed when
the debt in question
becomes due and does not change. Therefore
(reason counsel for the plaintiff) irrespective of the fate of the
bonds, the debt due
under the home loan remained, for purposes of the
Prescription Act, one
secured by mortgage bond.
10 Alternatively, say counsel for the
plaintiff, if the prescriptive period transmuted to three years,
prescription was interrupted
by the payments made by the trustees.
This is because, they say,
s 14(1)
of the
Prescription Act provides
that the running of prescription shall be interrupted by an express
or a tacit acknowledgement of liability by a debtor. Both sides
accept the triteness of the propositions that a payment on account is
such an acknowledgement of liability and that such an acknowledgement
of liability by the principal debtor will interrupt prescription
against the surety. Under
s 14(2)
, prescription "shall commence
to run afresh from the day on which the interruption takes place".
11 But, say counsel for the defendant,
the principal debtor did not acknowledge liability: the trustees in
his insolvent estate
did so. The trustees are not the agents of the
insolvent and the
Prescription Act contemplat
es only the
acknowledgement of the debtor or, possibly, his agent. In this
regard, counsel for the defendant pray in aid the decision
in
Consolidated
Textile Mills Ltd v
Weiniger.
[1]
12 To resolve this issue, one must
interpret the statute. As was so trenchantly observed in
Potgieter
v
Olivier
and
Another,
[2]
the Supreme Court of Appeal provided in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[3]
an exposition of the principles of interpretation. It is a unitary
exercise that requires the consideration of text, context and
purpose.
13 In
0liffv
Minnie,
[4]
a bonded property was sold in execution but did not realise enough to
discharge the indebtedness of the debtor. The property was
then sold
free of the bonds. The bonds therefore became valueless as security.
The creditor then sued the debtor on the debt underlying
the
erstwhile bonds. That debt had become due on 1 September 1931, many
years before the plaintiff served his summons on the defendant.
The
defendant raised a defence of prescription under the applicable
provisions of the statute governing prescription in the situation
considered by the court,
[5]
contending that the debt had changed its character as from the date
of the sale in execution because the bond had "ceased
to be a
mortgage bond and became merely an acknowledgment of debt".
[6]
14 The Appellate Division explained
that the purposes of prescription were twofold and had been so since
antiquity: to punish the
supinity of a plaintiff who does not enforce
his rights and to mitigate the difficulty felt by defendants who have
to repel ancient
claims.
[7]
15 The court in
Oliff
held that the critical date
for the purposes of identifying the prescriptive period was the date
upon which the debt became due:
[8]
For the purposes of this inquiry it
seems to me significant that these classes of actions are determined
in
sec. 2
not according to the nature or economic content of an
action but entirely according to the class of written instrument upon
which
an action is brought. So, for example, a judgment is a judgment
whether it orders the payment of money, the delivery of property
or
one or other in the alternative. I cannot see any indication in the
section or any reason in legal theory why its classification
for the
purposes of the section should alter in mid-currency if by chance or
otherwise, say if the substance matter which is
in obligatione
perishes or is destroyed, specific performance becomes impossible
leaving the person entitled only with that which is
in solutione.
Nor can I see why a mortgage bond which has become valueless as
security should cease to be a mortgage bond within the meaning of
the
section; that section is not concerned with security. For reasons
best known to the Legislature it laid down different periods
of
prescription in terms of the written instruments upon which actions
are based. Since the present action was brought on a mortgage
bond it
is not affected by the eight years period of prescription and
according to the Common Law (whether the Theodosian prescription
of
30 years or the third of a century is applicable) it is not
prescribed.
16 Counsel for the defendant relied on
Investec Bank Ltd v Erf
Elandspoort (pty) Limited and Others.
[9]
In that case, the debt had become due on 18 September 2002.
[10]
But by then, a notarial bond which had been registered as security
for the debt owed by the defendant under a lease had been
cancelled.
[11]
So when the debt became due, the debt was no longer one secured by a
mortgage bond.
17 The court in
Investec
referred to academic
criticism of
Oliff,
[12]
observing that the weight of academic authority supported the view
that once the security ceased to exist, "the debt is no
longer
secured and the prescriptive period then becomes three years as it is
with any other debt … .”
[13]
18 But the court in
Investec
did
not overrule
Oliff,
by which I therefore remain bound. In my
view the conclusion in
Investec
is consistent with
Oliff.
When the debt under scrutiny in
Investec
fell due, it was
not a debt secured by a mortgage bond; in
Oliff
it was.
19 In the present case, when the debt
fell due it was secured by mortgage bonds and, on the authority of
Oliff,
what thereafter befell the bonds is of no legal
relevance. I therefore hold that the prescriptive period applicable
was thirty years
and that the defence of prescription must therefore
fail.
20 I turn to the question whether the
payments on account of the claim submitted by the plaintiff in the
insolvency of the principal
debtor interrupted prescription.
21 The starting point is
s 14
of the
Prescription Act:
(1
)
The running of prescription shall be interrupted by an express
or tacit acknowledgement of liability by the debtor.
(2)
If the running of prescription is interrupted as contemplated
in subsection (1), prescription shall commence to run afresh from the
day on which the interruption takes place or if at the time of the
interruption or at any time thereafter the parties postpone
the due
date of the debt from the date upon which the debt again becomes due.
22
Consolidated
Textile Mills,
to which I
referred earlier, is authority for the proposition that "debtor"
in
s 14
means only the debtor himself or possibly his agent appointed
by him and excludes the debtor's trustee in insolvency. The factual
situation considered in
Consolidated
Textile Mills
concerned a
company in liquidation. The court held
[14]
that "[o]nce a company has been placed in liquidation, it can no
longer be sued for a debt owing by it" and that an action
to
enforce a claim proved against a company in liquidation would lie not
against the company but against the liquidator himself.
[15]
That is not the law today. The position of an insolvent and his
trustee in this context did not arise for consideration in
Consolidated
Textile Mills
and
the observation
[16]
that the equivalent provision in the predecessor to the Prescription
Act, 18 of 1943, did not contemplate the position of an insolvent
debtor was therefore
obiter.
23 I have referred to the purposes of
the institution of prescription. Section 13(1)(g) read together with
s 13(1)(i) deal with
the position of a claim against a debtor whose
estate has been sequestrated. These provisions read:
(1) If-
(g) 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 Act, 1966;
... and
(i) the relevant period of
prescription would, but for the provisions of this subsection, be
completed before or on, or within one
year after, the day on which
the relevant impediment referred to in paragraph ... (g)... has
ceased to exist,
the period of prescription shall not
be completed before a year has elapsed after the day referred to in
paragraph (i).
24 Counsel for the plaintiff submitted
that the restrictive interpretation of
debtor
in s 14 would
subvert the purposes of the institution of prescription. Counsel
referred to the trite propositions that the property
belonging to an
insolvent generally vests in his trustee and the trustee on his
appointment as such is vested with the power to
administer the
insolvent estate and to conduct litigation on its behalf. If the
acknowledgments of the trustee could not interrupt
prescription under
s 14, the creditor would be deprived of a right for no good reason.
It would be absurd, argued counsel, if neither
the insolvent nor his
trustee could make such an acknowledgment.
25 Counsel for the defendant submitted
that there was no need for the wide interpretation. Section 13(g)
protected the creditor's
rights in this regard.
26 While I agree that s 13(g) affords
partial protection for a creditor, the provision does not cover the
situation of a creditor
who for one reason or another has not filed a
claim; nor does the provision cover the situation of a creditor other
than one whose
claim in respect of which the period of prescription
would be completed as described in s 13(i), ie be completed before or
on,
or within one year after, the day on which the impediment
referred to in s 13(g) has ceased to exist,
27 There seems to me, moreover, no
reason why a trustee should not be empowered to achieve the benefit
in the context of prescription
of an agreement to postpone the due
date of the debt, a power conferred on debtors by the provisions of s
14(2).
28 I therefore respectfully decline to
follow
Consolidated
Textile
Mills
and hold that
the payments by the trustees in the insolvent estate of the principal
debtor interrupted prescription against the
principal debtor. Counsel
were agreed that the interruption of prescription against the
principal debtor operates as an interruption
against the surety.
29 The defendant's only defence has
accordingly failed. The plaintiff must therefore succeed in its
claim. Counsel were agreed that
the case warrants the costs of two
counsel.
30 I make the following order: The
defendant is ordered to pay the plaintiff:
1 the sum of R1 265 871,81;
2
interest
on the sum of R1 265 871,81 at the rate of 10,5% per annum from 10
June 2016 to date of payment;
3
costs
of suit, including the costs consequent upon the employment of both
senior and junior counsel.
_______________
NB
Tuchten
Judge
of the High Court
7
March 2018
For
the plaintiff:
Adv
N Konstantinides SC and Adv R Raubenheimer Instructed by:
Vesi
& De Beer Attorneys Pretoria
For
the defendant:
Adv
R Goslett and Adv J Scallan
Instructed
by:
AC
Nothnagel Attorneys Pretoria
StdBankBotha54753.16
[1]
1961 3 SA
335
O
[2]
2016 6 SA 272
GP para 30
[3]
2012 4 SA 593
SCA
[4]
1953 1 SA 1
A
[5]
Section 2 of Chapter 23 of the Wetboek of the Oranje Vrij Staat (the
Law Book of the Orange Free State)
[6]
Page 3
[7]
Page 4
[8]
Referred to as the
actio
nata
, ie the birth of the
action (p3).
[9]
[2017]
ZASCA 128
[10]
Para 12
[11]
Para 4
[12]
Paras 12-17
[13]
Para 17
[14]
Page 340H
[15]
Page 341A
[16]
Page 341C