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[2016] ZAGPPHC 505
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Investec Ltd v ERF 436 Elandspoort (Pty)Ltd (2517/2011) [2016] ZAGPPHC 505 (25 May 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH
AFRICA
(GAUTENG
DIVISION,
PRETORIA)
CASE
NO: 2517/2011
DATE:
25/O5/ 2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In
the matter between:
INVESTEC
BANK
LTD
…..................
Plaintiff
and
ERF
436 ELANDSPOORT (PTY)
LTD
….................
First
Defendant
CECILIA
JOUBERT
NO
…...............................
Second
Defendant
ERF
1081ARCADIA (PTY)
LTD
….................................
Third
Defendant
V
AND
J
PROPERTIES
{PTY)
LTD
…..................
Fourth
Defendant
REMAINING
EXTENT
764
BROOKLYN
(PTY)
LTD
….............................
Fifth
Defendant
ERF
22 HILLCREST (PTY)
LTD
….....................
Sixth
Defendant
JUDGMENT
MOLOPA-SETHOSA
J
[1]
The plaintiff in this matter instituted an action against the first
defendant for payment of an amount of R3 979 184. 50, based
on a loan
agreement which it concluded on 9 February
2000 with the first defendant; and against the second defendant as
the executrix in the
estate of the late
Mr
Pierre Joubert ("Joubert") who passed away on 16 September
2009,
and against
the third to sixth defendants as sureties, for various surety
ships signed by Joubert personally and for
and on behalf of the 3
rd
to 6
th
defendants on 4 February 2000. At the commencement of the
proceedings the plaintiff formally withdrew its action against the
4th defendant as
the
4th defendant was finally wound-up on 22 October 2002, prior to the
action being
instituted.
[2]
The defendants raised a special plea and specially pleaded that the
plaintiff 's claim has become prescribed and that a 3 year
prescription period applies.
[3]
For this proposition the defendants rely on the following facts, most
of which are set out in the defendant's amended special
plea, that:
[3.1]
On or about 16 March 1998 the South African Railway Commuter
Corporation Ltd ("SARCC") concluded a notarial lease
agreement ("the lease agreement") with the first defendant
in terms of which SARCC let to the first defendant portion
436 (a
portion of portion 212) of the farm Elandspoort for a period of 50
years, commencing on 1 November 1997. The notarial deed
of lease was
registered by the Registrar of Deeds on 9 April 1998 under number K l
970/98S.
[3.2]
The lease agreement made prov1s 10n for the fact that the first
defendant would be entitled to develop the property. On 9
February
2000 the plaintiff concluded a loan agreement with the first
defendant for an amount of about R6 116 420.00. One of the
conditions
of the loan agreement was the registration of a mortgage bond over
the notarial lease, in favour of the plaintiff.
[3.3]
On 14 June 2000 a notarial covering mortgage bond ("the mortgage
bond") was registered by the Registrar of Deeds,
Pretoria, over
the first defendant's right, title and interest in and to the lease
agreement, as security for the indebtedness
from time to time of the
first defendant to the plaintiff.
[3.4]
During or about January 2002 SARCC cancelled the lease agreement. The
cancellation was confirmed by an order of this court
dated 21 August
2002; and cancellation of the lease agreement extinguished the title
of the first defendant and the real right
of the plaintiff, as
mortgagee in terms of the bond, in the lease agreement. The plaintiff
admits that cancellation of the lease
agreement
extinguished the title of the first defendant and the real
right of the plaintiff, as mortgagee in terms of
the bond, in the
lease
agreement
[3.5]
On or about 10 September 2002 the plaintiff addressed a letter to
the first defendant in terms of which it stated
that the
cancellation
of the lease agreement by SARCC constituted a
breach of
contract
between the plaintiff and the first defendant. It
called upon the
first
defendant to pay the outstanding balance owed by
it (by virtue
of
the
loan agreement) within a period of 7 days of receipt of
the
demand,
failing which summons would be issued. The
plaintiff
essentially
relied on an acceleration clause in terms of the
loan
agreement.
[3.6]
The first defendant failed to comply with the demand, as a result
of
which summons
was issued on 18 November 2011 [about eleven
(11)
years from date demand for payment was made],
claiming payment of the debt, and served on
the first defendant and the
other
defendants on 21 January 2011.
[3.7]
The debt was not secured by mortgage bond, within the meaning of
sl l (a) (i) of the Prescription Act ("the
Act"), implying that
the
period
of prescription
of the debt was three years
in terms
of
s
11(d)
of
the Act.
[3.8]
That therefore, prescription in respect of the debt commenced
to
run on 10
September 2002 (the date of the letter of demand) or on
17
September 2002 (the expiration of the period of seven days from date
of demand), and that the debt was extinguished by prescription
three
years thereafter.
[3.9]
It is common cause between the parties that prescription commenced to
run on 18 September 2002.
[4]
In essence the
defendants
contend that the
debt
in
question
herein
was
not
secured by mortgage bond within the meaning of s 1l (a) (i) of the
Act, which implies that the period of prescription of the
debt was
three
years in
terms of s
11
(d)
of the
Act.
[5]
On the other hand the plaintiff contends that the debt was secured
by mortgage bond, which implies that the
period of prescription of the
debt
was thirty years in terms of s11
(a) of the
Act. In its replication to
the
defendants' special plea the plaintiff contends that in the event the
court were to find that the period of
prescription of the debt was three (3)
years then the first defendant acknowledged
liability on numerous occasions
in
writing and by conduct, and that the running of prescription was
accordingly interrupted as envisaged in s14 (1) of the Act.
[6]
During two (2) pre-trials held between the parties [on 14 August
2014 and 24 July 2015 respectively], it was
agreed between the parties that the special plea of prescription
ought to be decided
separately from
the
remaining issues in the matter in terms of the provisions of Rule
33(4)
of
the
uniform rules of court ("rule 33 (4)"), i.e. firstly, the
issue whether the period of prescription of the debt was
thirty (30)
years or three (3) years, and if found to be three (3) years, whether
the first defendant acknowledged liability on
numerous occasions in
writing and by conduct, thus interrupting the running of prescription
as envisaged in terms of s14
(1)
of the Act.
[7]
About a week prior to the trial, more specifically on 7 August 2015
[this date is not in dispute between the parties], the defendants
suggested to the plaintiff that the trial court should be requested,
in terms of rule 33 (4), to first decide the relevant question
of
law, i.e. whether prescription of the debt was thirty (30) years or
three (3) years, before any evidence is led in respect of
the special
plea. The plaintiff did not agree with the suggestion, hence, on the
day of the trial the defendants brought a substantive
application for
separation in terms whereof they sought an order as follows:-
1.
That the question of law whether the period
of prescription
of
the debt was thirty (30) years or three (3) years be
decided
before any evidence is led;
2.
that the plaintiff be ordered to pay the
costs of this application;
3.
Further and/or alternative relief.
[8]
Basically the defendants were of the view that this question of
whether the period of prescription of the debt was thirty
(30)
years or three (3)
years
should be decided
before
any
evidence
is led
as this
is a
question
of
law and no evidence has to be led in that
regard.
[9]
The plaintiff was opposed to this application, preferring to have
this
question of law, as well as the
question whether there was interruption of
prescription,
in the event the court were to find that prescription of the
debt was three (3) years, being both adjudicated
upon
simultaneously,
after evidence had been led, i.e. that the court
should first hear all
the
evidence on prescription, and at the end thereof
the court should only
then decide on the
issue of prescription raised by the defendant.
[1O]
After hearing argument on behalf of both parties I granted separation
as requested by the defendants, and reserved the costs
of the
application
in
terms of rule 33(4) for separation.
[11]
It is trite that the question whether the period of prescription of
the debt
was thirty (30) years or three (3)
years is a question of law; it does not
need
evidence to be led in that regard. Further, in my considered view it
was more
convenient
for all parties
involved,
as
well
as for the
court, that
this question of law whether
the period of prescription of the debt was
thirty
(30) years
or
three
(3) years
be
decided
first, before
any
evidence
is
led.
[12]
Rule 33(4) of the Uniform Rules of Court provides as follows:
"If,
in any pending action, it appears to the court mero motu that there
is a question of law or fact which may conveniently
be
decided either before any
evidence is led or separately from any other question, the court may
make an order directing the disposal
of such question in such manner
as it may deem fit and may order that all further proceedings be
stayed until such question has
been disposed of, and the court
shall
on the application of any
party make such
order
[my underlining]unless it appears that the question cannot
conveniently be decided separately".
[13]
From
the
reading
of the
rule
it is clear
that
on an
application
by
one of the
parties for separation of a specified
issue, the court must
[
s
hall]
grant such order, unless it would
not be convenient to do so. It was argued
on behalf of the plaintiff that plaintiff s
witnesses were at court and were ready to testify and that it would
not be convenient
for the plaintiff
to
have only the question of law being adjudicated upon as this might
result in delays and a problem for the
plaintiff to get its witnesses again in future. In
Lapperman
Diamond Cutting Works v MIB Group(N02)
1997
(4)
SA
921
(WLD)
Joffe
J,
with
whom
I
concur,
agreed
with
the
dictum
of King J in
Braaf
v Fedgen Insurance Ltd
1995(3) SA 938
(C) at 939G that
"the
rule as presently formulated,
'enjoins
the court to accede to the application and make
the necessary order "unless it appears
that the question cannot
conveniently
be decided separately". Thus it is incumbent on the
plaintiff to satisfy the court that the
application should not
be granted
"
[14]
It "is incumbent upon the plaintiff to show that the
disadvantages
of
further separation of the issues contended by the defendant
outweigh the advantages", see
Lapperman supra.
As already
mentioned, more than a week prior to the date of the trial,
defendants suggested to the plaintiff that the trial court
should be
requested to first decide the relevant question of law before any
evidence is led. The plaintiff could have timeously
stopped its
witnesses from coming to court had it acceded to the defendants'
suggestion. I could not find any disadvantages m the
submissions for
the plaintiff. In my considered view it was more convenient for all
parties involved, as well as for the court,
that this question of law
whether the period of prescription of the debt was thirty
(30)
years
or
three
(3) years
be
decided
first, before
any
evidence
is led.
[15]
Even if the defendants had not made this application as set out in
their application for separation, I'm of a view that I would
have
mero motu
raised
the issue, that the relevant question raised by the defendants be
dealt with prior to any evidence being led as this is purely
a
question of law, and in my considered view it would be more
convenient to decide the issue before any evidence is led. I thus
granted the order for separation as requested by the
defendants.
[16]
Pertaining
to
the
issue
of costs which
were
reserved,
I
am
of a considered
view that in the interests of justice the
costs should be costs in the cause of the whole argument on this
issue. The parties in
any event proceeded to address the court on the
issue of whether the period of prescription
of the debt in question herein was three
(3) years as contended by the defendants or thirty (30) years as
contended by the plaintiff.
[17]
Having ordered separation of the prescription issues the only issue
for determination before this court is whether the period
of
prescription of the debt in question herein is three (3) years as
contended by the defendants, or thirty (30) years as contended
by the
plaintiff.
[18]
The defendants contend that the debt was not secured by a mortgage
bond within meaning of s 11 (a) of the Act;
that based on facts set out in par [3(3.1 to 3.8)] here above,
therefore, the period
of prescription was 3 years
in terms
of
sl 1 (d) of the
Act,
and not thirty
(30)
years
as
contended by the
plaintiff.
[19]
The crisp question before this court is whether the debt claimed by
the plaintiff is secured by mortgage bond, if it is then
the
prescription
period
applicable would be thirty(30) years, sl 1 (a) of the Act would
apply; if not secured by mortgage bond then the period of
prescription would be
3
years, sl 1 (d) of the Act would apply.
[20]
The
defendant
contends
that
the
debt
which
the
plaintiff
claims
from
the
first defendant is the repayment of the
loan which became due at a
stage
when the real right of the plaintiff, as mortgagee in terms of the
bond,
had already
been extinguished (i.e. at a time when the bond had
effectively terminated. It was submitted on
behalf of the defendant that, based on
the
common facts between the parties, as at the time the debt was due,
when demand to pay was made and
prescription commenced to run, i.e.
18
September 2002, there was no mortgage any longer. That the mortgage
bond at that stage had effectively terminated, that therefore
the
period
of
prescription applicable was 3 years in terms of sl 1 (d) of the Act.
[21]
Where a right of mortgage is established with regard to a registered
long-term lease, the right of security does not affect
the land: it
is the limited interest of the mortgagor that is encumbered. For this
reason, and because the mortgagor cannot grant
a stronger right that
he himself has, the existence of the mortgage is dependent upon the
continuance of the mortgagor's interest
in the land. The extinction
of the mortgagor's title therefore involves the extinction of the
mortgagee's real right; see LAWSA
volume 17(2) para 332.
[22]
The following are the relevant provisions of the Act:
"10
Extinction of debts by prescription
(1)
Subject
to
the provisions
of
this
Chapter
and
of
Chapter
IV,
a debt shall be extinguished by
prescription after the lapse
of
the period which in terms of the relevant law applies in respect of
the prescription of such debt...
11
Periods of prescription of debts
The
periods of prescription of debts shall be the following:
(a)
thirty years in respect of-
(i)
any debt secured by mortgage
bond;...
(d)save
where an Act of Parliament provides otherwise, three years in
respect of any other debt.
12
When prescription begins to
run
(1)
Subject to the provisions of subsections (2), (3), and (4),
prescription shall commence to run as soon as the debt is due.
16
Application of this
Chapter
(1)
Subject to the provisions of
subsection (2) (b), the provisions
of this chapter shall, save in so
far as they are inconsistent
with
the provisions of any Act of Parliament which 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 the
institution of an action for the recovery of a debt, apply
to
any debt arising
after the
commencement
of this Act."
[23]
The
defendants
contend
that in
terms of
sl
1
(a)
extinctive prescription
applies to the
debt
and not to the mortgage bond, that
therefore prescription begins to run in
terms of s12 (1) of the Act when the debt is due, not when the bond
is registered. When
the debt became due before the bond to secure it
was registered the ordinary prescription period of three
years
was
applicable.
Meaning
that
the
time
that
has
elapsed
since
the debt became due will be taken into account and the remaining
balance of thirty
years
will
run
as
from
the
date
of registration
of the
bond.
It was further submitted that the converse
is also true, namely that where a
bond
was registered at the time when the debt became due (which implies
that the thirty years prescription period was applicable)
and the
bond
is
thereafter cancelled, the ordinary prescription period of three years
will
then become applicable. The operation of the thirty year
period of prescription falls away. See
Loubser MM Extinctive
Prescription
p38.
[24]
The parties are
ad idem
that extinctive prescription applies
to the
debt
and not to the mortgage bond itself. The Act does
not give a definition of 'debt' and/or the meaning of 'debt is due'.
In
Joint Liquidators of Glen Anil Development Corporation Ltd (in
liquidation) v Hill Samuel (SA)
Ltd
1982 (
1) SA
103
(A) at 11OA-C it was held that:
The
ordinary meaning of debt is
'that
which is owed or due; anything (as money, goods or services) which
one person is under obligation to pay or render to another'
...
[25]
In
The Master v I L Back and Co Ltd and Others
1983 (
1) SA
936
(A) at 1004 the following was said:
The
words 'debt is due' in ... s 12(1) must be given their
ordinary meaning. It seems clear that this
means that there must be a liquidated money obligation presently
claimable by the creditor
for
which an action could presently be brought against the debtor. Stated
another way, the debt must be one in respect of which
the debtor is under an obligation to pay
immediately.
[26]
For its contentions the defendants rely, mostly, amongst others, on
the
obiter dictum in Olief v Minnie
1953 (1) SA 1
(A) where
the debt in issue was secured by a second mortgage registered on 10
July 1930. The debt was payable on 1 September 1931.
During December
1933 the holder of
first mortgage bond caused the
mortgage property to be sold in execution. It did not realize enough
to reduce the indebtedness under
the second bond and the property was
transferred to the purchaser free of both
bonds. On September 1951 the holder of the
second bond applied for
the
provisional sentence of the bond. the question was whether a thirty
year prescription period applied in this case, as provided
for in
respect
of
mortgage bonds by Orange Free State legislation prior to the coming
into effect of the
Prescription
Act,
1943.
[27]
The court held that the point of time from which prescription ran was
1 September 1931, and that the prescription period applicable
to that
time was thirty years. That even if the mortgage bond in question
became valueless as security in the course of that period
of time,
because the mortgaged property was sold in execution free of mortgage
bonds, it did not cease to be a mortgage bond within
the meaning of
the applicable Orange Free State legislation on prescription and the
thirty year prescription period was therefore
still applicable when
the action on the mortgage bond was instituted in September 1951.
[28]
During the course of the judgement Van den Heever JA held asfollows:
"In
terms of the bond the right and action accrued, if no extension was
granted,
on the
1
st
September, 1931. Had the bond retained
character
and
functions,
the learned Judge [a quo] reasoned, the claim would not have been
prescribed. After the sale in execution of the mortgaged
property,
however, it ceased to be a mortgage bond and became merely an
acknowledgement of debt so that from that date the eight
years period
of prescription applicable to acknowledgements of debt began to run
against it afresh and the claim was infact prescribed
towards the end
of 1941 or January, 1942 (the date of the endorsement does on
appear).
I
have some difficulty in seeing why the date of the sale in
e
xecution
should be the commencement of the currency of a fresh period of
prescription.
The
section
makes
provision for only
one
point
of
time from
which prescription runs and that is
from the time of actio nata, i.e. the 1
st
September,
1931.
A
mortgage bond as we know is an acknowledgement of debt and at
the same time an instrument
hypothecating landed property or other
goods. But even
if
this bond ceased to be mortgage bond within the contemplation of the
section then the instrument could have had further existence
only as
an acknowledgement of debt and prescription should then have been
completed eight years after due date"
,
[my
underlining].
[29]
It was submitted on behalf of the defendants that the principle which
the
court in
Olief
supra
accepted, is valid for the
purpose of the act,
namely
that if a mortgage bond ceases to be such, then a
shorter prescription
period becomes
applicable to the debt in question and that this
period
must be
calculated from the due date of the debt. Which means, for
example, that cancellation of a mortgage bond ten
years after the debt
secured by the bond
becomes due will have the result that a shorter
prescription
period will become applicable (usually three years) and
the
debt will
become prescribed upon cancellation of the bond.
[30]
It was submitted on behalf of the defendants,
in
the alternative,
that the period of
prescription must be determined at the time when the debt becomes due
and prescription commences to run. That
if the debt in question is at
that stage not secured by mortgage bond, there
is no reason why a longer period of
prescription should be
applicable.
Further that although the act acknowledges the difference between the
concept of a debt arising (in s16(1) of the act)
and the concept of a
debt becoming due, the act is generally not
concerned with anything
that
occurs prior to the commencement of the running of prescription.
[31]
As already mentioned the plaintiff
inter alia
contends that
the period of prescription which applies to the debt in issue herein
is thirty (30) years. That therefore by the time
the summons was
issued and served on the defendants by it on 21 January 2011, first
defendant's debt had not prescribed.
[32]
It was submitted on behalf of the plaintiff that prescription does
not
depend on the nature or economic
content but entirely on
the
class of
debt
upon which an action is brought i.e. that once a
particular period
applies
to a debt that period
dictates the vicissitudes
of that
debt
once it is due.
The plaintiff relies for
this contention on
Sentrachem Ltd v
Prinsloo
1997
(2)
SA 1
(AD) at 15G-H, which case dealt with prescription raised on the
basis that the amended particulars of claim disclosed a new cause
of
action. The issue in this case was whether the debt as set out in the
amended process was recognisable from the original process.
The case
had to do more with the nature of the cause of action in the amended
process
vis-a-vis
the
original process, not whether the debt is or is not
a debt secured by mortgage bond for
purposes of
prescription.
[33]
The plaintiff contends that the Act does not expressly or impliedly
stipulate that in a situation where once a debt
can be said to no longer
have attributes of
a particular species or class of a particular genus
[because
e.g. the mortgage bond loses its value because the security
has
disappeared
or it has been cancelled]; it is bound to migrate from one
genus to another causing the prescriptive period
to change from
thirty
(30)
years to three (3) years.
[34]
It was submitted on behalf of the plaintiff that what is of
importance is
that when a debt arises is
the date on which one determines what category that debt resides.
That the debt occurred in 2000 [February
2000],
the mortgage bond was then registered [on
14 June 200], that therefore the debt is a debt within a debt secured
by a mortgage bond
and that it remains a debt secured by a mortgage
bond throughout, that therefore,
the
prescriptive period applicable is 30 years. That it has to be
determined from the day that the debt arises and that it retains
its
character.
[35]
The plaintiff contends that registration of a mortgage bond remains
operative
inter
partes
after cancellation. That if the
legislature
had
intended that migration between the periods
applicable to classes of
debts
should occur when for some reason or another such class or debt would
be relegated to a lesser period then that would specifically
have
been
provided for. That therefore
although the lease had been cancelled in January 2002, at the latest
August 2002, before the debt became
due on 18 September 2002, such
cancellation could not have affected the existence of the recorded
main obligation and the terms
of the debt.
[36]
It
was
further submitted that the registration of the bond as security for
an
existing debt would constitute
acknowledgement of liability within
the
meaning of s14 ( 1) of the Act thereby
interrupting the running of
the
three year period of prescription. That therefore
at all times and in
particular when the
summons was issued and served the debt was secured
by
a mortgage bond within the meaning/contemplation of s11 (a) (i) of
the Act, to which 30 years prescriptive period
applies. That therefore the
court should
find that the prescriptive period is in fact 30 years, and
that
therefore it
follows
that
action
was
timeously instituted.
[37]
It
was
submitted
on
behalf
of the
plaintiff
that
the
authors
Loubser
and
Saner are wrong in their contention,
stating that without referring
to
authority or giving reasons for their contention they state that
where
the bond is
cancelled before payment or performance of the debt the 30
year prescription period will no longer be
applicable. That they state that
if
more than the otherwise applicable shorter period of prescription
has elapsed since the due date of the debt
i.e. three years, the debt will
become prescribed upon
cancellation of the bond because operation of the 30 year period then
falls away.
[38]
On a proper reading of section 11(a) of the Act, the section does not
refer
to
a
debt
that was
initially
[my underlining] secured by a mortgage
bond;
and in my
considered view
it cannot have been the intention
of the
legislature
that s11 (a) (i) covers debts
initially
secured by mortgage
bonds.
[39]
Both parties
(it
is common
cause),
were
aware of the
cancellation
of
the
mortgage bond; this is exactly the
basis upon which the letter of
demand
was sent. It cannot be that one should look at
and/or have regard to
the
time that the debt actually originally originated.
This court was
not
referred to any authority in this regard; it
cannot have been the
intention
of the legislature if one looks at the meaning of
debt, and debt is due
in
the
Joint Liquidators
of Glen
and
The
Master v
I L Back
cases
referred to
above.
[40]
I agree with the defendants that the principle which was accepted in
the
Appellate
Division in
Olief supra
is
valid for the purpose of the
Act,
namely, that if a mortgage bond ceases to be such,
then a
shorter
prescription period becomes applicable to the debt
in question and that
this period must be
calculated from the due date of the debt, in this case
from
18 September 2002. Summons were issued on 18 January 2011,
and
served on the
defendants on 21 January 2011 [about nine (9) years
after
the debt
became due and/or prescription commenced to run]. It is
common
cause that prescription started to run on 18 September
2002.
[41]
This date ( 18 September 2002), in terms of s12 (1) of the Act is the
date when the debt became due. The
plaintiff acknowledges that the debt became due on 18 September 2002.
As at the time the debt
became due and prescription commenced to run
there was no mortgage any longer, the bond had effectively
terminated. As already
mentioned, it was submitted
on behalf
of
the plaintiff
that
the authors
Loubser
and
Saner
are wrong in their contention, and that they did not refer to
authority or did not give reasons for their contention set out
above.
Loubser and Saner rely on Olieff v Minnie
obiter
for their contention. It is trite that
the
obiter
remarks
by the Supreme Court of Appeal/ Appellate Division should not be
lightly
ignored.
[42]
Having regard to the totality of the facts before this court,
including the common cause facts, whatever may have happened
before
18
September
2002, when demand to pay was made and prescription started running,
at that at stage the bond had been cancelled. The
plaintiff admits in
its amended replication that cancellation
of the lease agreement in January 2002, or 21 August 2002,
extinguished the title of the
first defendant
and the real right of the plaintiff, as
mortgagee in terms of the bond, in the lease agreement. The legal
effect of the cancellation
of a notarial
lease agreement is that the bond is also
then automatically terminated because the mortgagor/the first
defendant does not have real
right in the property and therefore the
mortgagee/the plaintiff does not have a real right that
is also extended, see
LAWSA
volume 17(2) par
335.
[43]
The plaintiff cannot now seek to hold that the debt is still a 'debt
secured by mortgage bond' as envisaged in sl 1 (a) of
the act. In my
considered view, cancellation of the lease agreement therefore
automatically put an end/terminated the bond. The
right of mortgage
was established with regard to a long term lease; therefore the right
of security in this instance does not affect
the land, it is only the
first defendant/mortgagor's limited interest as lessee/mortgagor that
is encumbered. Surely the first
defendant cannot grant a stronger
right than it had. The existence of the mortgage is dependent upon
the continuance of the mortgagor's
interest in the land, and the
extinction of the lease agreement involves the extinction of the
plaintiff/mortgagee's real right.
I agree with the contention that as
soon as the lease agreement is cancelled then the bond is then
automatically terminated. The
debt in question herein therefore
cannot be said to be a debt secured by mortgage bond as envisaged in
sl 1 (a) (i).
[44]
The plaintiff s contention that the registration of the bond as
security for an existing debt would constitute acknowledgement
of
liability within the meaning of s14 ( 1) of the Act thereby
interrupting the running of
the
three year period of prescription cannot be correct. I do not think
that s14 ( 1) could have envisaged a situation where registration
of
a bond
per se
interrupts
prescription. This cannot accord with the wording of s11
(a) and s11 (d) read with s 14 ( 1) of the
Act. I am of a view that the plaintiff in bringing this submission is
in a way bringing
up the second leg of
the
prescription issue as raised in its amended replication. As at the
time the debt became due the bond had terminated, it was
no longer in
existence, and this the plaintiff has admitted. There was no longer
any security
for
the plaintiff s debt, which is what s11 (a) deals with, i.e. a debt
which
is secured
by a mortgage bond. On the Olief v Minnie principle it can at best be
an acknowledgement of debt and the period of
prescription applicable is three years in
this
case.
[45]
After considering all the facts before me, the legal principles, the
authorities and the arguments of both parties, I am satisfied
that on
the facts before me the prescription period applicable to the debt
claimed
by the
plaintiff herein is three (3) years and
not
thirty (30)
years.
In
the result I make the following order:
1.
It is declared that the period of
prescription of the debt which
is
claimed by the plaintiff was three
years.
2.
The plaintiff is ordered to pay the costs
pertaining to the hearing
of
the question of law, including the cost of the application
for separation.
3.
All other remaining issues are postponed
sine die
______________________
L
M MOLOPA-SETHOSA
JUDGE
OF THE HIGH COURT