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[2006] ZASCA 160
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Nedcor Bank Ltd. v Rundle (455/05) [2006] ZASCA 160; 2008 (1) SA 415 (SCA) ; [2007] 4 All SA 1120 (SCA) (26 September 2006)
Links to summary
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
Case no: 455/05
In the
matter between:
NEDCOR
BANK LIMITED APPELLANT
and
R A
RUNDLE RESPONDENT
_______________________________________________________________
Coram: HARMS,
PONNAN, JJA, COMBRINCK, MALAN
et
CACHALIA
AJJA
Date of hearing: 31 AUGUST 2006
Date of delivery: 26 SEPTEMBER 2006
Summary:
Prescription – interruption of running of extinctive
prescription – when does impediment in section 13(1)(g)
cease
to exist.
Neutral citation: This judgment may be referred to as
Nedcor Bank v Rundle [2006] SCA 112 RSA
JUDGMENT
________________________________________________________________
COMBRINCK AJA/…
COMBRINCK AJA
:
[1] A money debt normally prescribes three years after it becomes due
(section 10 read with
section 11(d)
of the
Prescription Act 68 of
1969
). The running of prescription is however interrupted if one of
the events described in
section 13(1)
occurs. Prescription in this
matter was interrupted by the happening of the event described in
section 13(1)(g)
namely the filing of a claim against a company in
liquidation. The issue in the appeal is on what date did prescription
recommence,
in other words when did the impediment created by the
sub-section cease to exist?
[2] The appellant (‘the Bank’) sued the defendant (the
present respondent) as surety and co-principal debtor for payment
of
three claims totalling R204 214,70 alleged to be owing by the
principal debtor, Scientific Medical Systems (Pty) Ltd (‘SMS’).
The defendant filed a special plea of prescription alleging:
(i) that SMS was finally liquidated on 12 December 1997;
(ii) by virtue of the agreements between the Bank and SMS the amounts
claimed became due on that date and prescription commenced
running;
(iii) in terms of
section 13(1)(g)
prescription was interrupted by
the Bank lodging claims in the liquidated estate of SMS and the
impediment contemplated in the sub-section
commenced;
(iv) the debts sought to be recovered ceased to be an object of a
claim in SMS’s insolvent estate from 8 August 2000;
(v) the debts became prescribed at the latest on 7 August 2001 before
issue of summons.
[3] The defendant then pleaded over on the merits, in essence
placing the
recoverability of the debts in issue. The Bank replicated by:
(i) admitting that the debts became due on 12 December 1997;
(ii) alleging that the impediment referred to in
section 13
arose on
the date it filed its claims against SMS (in liquidation)
viz
1 June 1998 and 22 July 1998, and ceased to exist on the date of
confirmation by the Master of the final Liquidation and Distribution
account in the estate of SMS
viz
19
November 2002;
and
(iii) stating that summons was served on the defendant on 23 October
2001 being a date prior to the period of prescription being
completed in terms of
section 13
of the Act.
[4] The trial proceeded before Schreuder AJ in the Orange
Free State
Provincial Division. The Bank called one witness and then closed
its case. The
defendant, on the basis that the claim had prescribed, applied for
absolution from
the instance with costs, which was granted. The Bank with
leave of this court
appeals against the order.
[5] The following facts were recorded by the trial court as being
common
cause:
(i) the Bank’s claims were valid and enforceable against SMS;
(ii) the final order of liquidation of SMS was granted on 12 December
1997;
(iii) the Bank lodged its claims in SMS’s estate on 1 June
1998;
(iv) the first Liquidation and Distribution account was confirmed by
the Master on 8 August 2000;
(v) the liquidator paid out dividends totalling R76 251.91 to the
Bank on 18 August 2000;
(vi) the Bank’s summons was served on the defendant on 23
October 2001;
(vii) the Master confirmed the second and final Liquidation and
Distribution account on 19 November 2002.
[6] The matter in the end turned on a very narrow issue, namely on
what date did the impediment cease to exist. Was it on
the
date of confirmation of the first Liquidation and
Distribution account, 8 August 2000 as contended for by
the
defendant, or was it on the date of confirmation by the Master of
the final account as submitted by the Bank?
[7] The judge
a quo
held that the important question to be
answered was whether, after confirmation of the first account, there
was any realistic prospect
of the appellant receiving any further
dividend out of the estate of SMS.
[8] After referring to the decisions in
Leipsig v Bankorp Ltd
[1993] ZASCA 198
;
1994 (2) SA 128
(A),
Nedcor Bank Ltd v Sutherland
1998 (4) SA
32
(N),
Kilroe-Daley v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA
609
(A),
Jans v Nedcor Bank Ltd
2003 (6) SA 646
(SCA) and in
particular
Absa Bank Beperk v De Villiers
2001 (1) SA 481
(SCA), the learned judge expressed the view that according to these
cases it was not only the confirmation of the final Liquidation
and
Distribution account that would cause the impediment to cease. It is
clear from these decisions, so he said, that this event
was but one
of the events which could result in the requisite measure of
finality, and that once there was no further realistic prospect
of a
dividend the impediment ceased to exist. On the figures contained in
the first Liquidation and Distribution account it was apparent,
so
the judgment went, that it was highly improbable that any further
dividend would be payable to the Bank. Indeed, the sole witness
called by the Bank, conceded as much. Accordingly, the Bank had
failed to prove that as of the date of confirmation of the first
Liquidation and Distribution account the debts owed formed the object
of a claim in the insolvent estate. It followed that the impediment
ceased to exist on 8 August 2001. The principal debt consequently
became prescribed a year later – before the issue of summons.
[9] In my view the fundamental flaw in this reasoning is that it
purports to read words into the section which are not there.
Section
13(1)
reads:
‘
If –
(a) - (f) . . .
(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 (Act 28 of 1966);
(h) . . .
(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 para
(a), (b), (c), (d), (e),
(f), (g)
or
(h)
has
ceased to exist,
the period of prescription shall not be completed before
a year has elapsed after the day referred to in para
(i)
.’
[10] The question is simple. On a proper interpretation of the
section, when does a debt cease to be ‘the object of a claim
filed against the estate of a debtor’? In
Jans v Nedcor Bank
Ltd
supra
at 650D Scott JA said:
‘
It was accepted by this Court in
Kilroe-Daley
v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA 609
(A) at 621I that the impediment contemplated in s 13(1)(
g
)
commences when the creditor’s claim is filed. It ceases to
exist once the Master confirms the final liquidation and distribution
account (
Leipsig v Bankorp Ltd
[1993] ZASCA 198
;
1994 (2) SA 128
(A) at 135I).’
In none of the decisions referred to by the judge
a quo
do I
find support for the proposition that other events may be considered
if they bring about a measure of finality. Neither can
words to this
effect be read into the section. (Cf
Bank of Lisbon International
Ltd v Neves
1992 (3) SA 349
(W).) Indeed, it would lead to a
measure of subjectivity and legal uncertainty if the reason for the
cessation of the impediment
was to be the lack of a prospect of a
further dividend. Counsel for the defendant could not explain how
this measure would operate
in practice.
[11] The judge
a quo
relied on the judgment in
Absa Bank
Beperk v De Villiers
(
supra
) as support for his
conclusion. He referred in particular to the following passage (at
487G):
‘
Boonop het appellant nie bewys dat daar te enige
stadium realistiese vooruitsigte was dat ‘n gewysigde of
heropende likwidasierekening
enige dividend ten opsigte van die
hoofskuld sou meebring nie.’
If one analyses the facts of that case, however, it becomes clear
that the court did not depart from the principle laid down earlier
that it is only on confirmation of the final account that the
impediment ceases to exist. The facts were these. The principal
debtor’s
estate was finally sequestrated on 4 June 1992. The
Master confirmed what was referred to as the ‘first final
Liquidation and
Distribution account’ on 13 September 1993. An
amended ‘second and final Liquidation and Distribution account’
was confirmed by the Master on 4 February 1997. The court (at 487F)
emphasized that the first account was intended to be a final
account
and not an interim account. Three years later, for reasons not
disclosed in the judgment, the liquidator filed a further
amended
final account. The court held that this later account could not have
postponed the ceasing of the impediment nor could it
revive the debt.
The passage quoted above was merely a further consideration advanced
to support the main finding and in no way purported
to constitute a
new method of determining when the impediment ceases.
[12] In the instant case the court was dealing with an interim
account even though the appellation ‘First and Final account’
appears on the account. This much is clear from letters written by
the liquidator at the time wherein it stated that a further second
account is being drawn. Confirmation of the first account on the
authorities quoted could not bring an end to the impediment.
[13] Much of the confusion arises from the indiscriminate use of the
words ‘first and final’ to describe an account.
It is a
contradiction in terms as the use of the word ‘first’
presupposes a further account – the first is therefore
not
final. It would bring clarity to liquidation if an interim account
was referred to as ‘a section 403 account’ and
a final
account as a ‘section 408 account’.
[14] In the event
(a) the appeal succeeds with costs;
(b) the order of the court
a quo
is set aside and is
substituted with the following:
‘The special plea of prescription is dismissed with costs.’
(c) the matter is referred back to proceed on the merits.
P C COMBRINCK
ACTING JUDGE OF APPEAL
CONCUR:
HARMS JA
PONNAN JA
MALAN AJA
CACHALIA AJA