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[2011] ZAFSHC 81
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Iveco South Africa (Pty) Ltd v Botha (5972/2008) [2011] ZAFSHC 81 (2 June 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 5972/2008
In the matter between:-
IVECO SOUTH AFRICA
(PTY) LTD
….............................................
Plaintiff
and
DIRK SAMUEL BOTHA
…...........................................................
Defendant
_______________________________________________________
HEARD
ON:
11 MARCH 2011
_______________________________________________________
JUDGMENT
BY:
RAMPAI, J
_______________________________________________________
DELIVERED
ON:
2 JUNE 2011
_______________________________________________________
[1] This is an
application for leave to appeal. The order appealed against was given
by Moolla AJ and delivered on 28 October 2010.
The applicant was the
defendant and the respondent the plaintiff. I shall refer to the
parties as the defendant and the plaintiff.
The plaintiff opposes the
defendant’s application.
[2] The defendant
previously had shares and a loan account in a company called Duewest
Properties (Pty) Ltd. The defendant was the
sole shareholder in the
company. The sole asset of this company was an immovable property,
technically known as erf 23859, Pinetown
in KwaZulu Natal. On 21 May
2003 the plaintiff, the defendant and the company concluded a written
agreement. The plaintiff acquired
100% of the defendant’s
shares in the company as well as the defendant’s loan claims
against the company in terms of
the tripartite share sale agreement.
[3] During the
negotiations preceding the aforesaid agreement, the defendant
represented to the plaintiff that, apart from his loan
account, the
company was not indebted to any third party. The plaintiff accepted
that there were no outstanding third party liabilities
in Duewest
Properties (Pty) Ltd. Moreover, such state of affairs was also
warranted in the written agreement.
[4] The plaintiff’s
initial objective was to acquire title in the immovable property that
constituted the sole asset of the
company. Its election to purchase
the defendant’s share rather than the immovable property itself
was premised on the representation
made by the defendant that the
company had no liabilities to third parties. The effective date of
the agreement was 23 July 2003,
being the date on which certain
mortgage bonds over the property were cancelled.
[5] Subsequent to the
effective date it emerged that, contrary to the warranty, the company
was still indebted to the Inner West
Municipal Council at Pinetown in
the sum of R330 190,40 as on the effective date.
[6] The plaintiff became
aware of the claim by the aforesaid municipality on or about 2
January 2004. However, at that stage the
plaintiff and indeed the
defendant as well, were uncertain of the exact outstanding amount due
to the municipality by Duewest Properties
(Pty) Ltd. The defendant’s
immediate reaction was that the whole thing was a mistake and he
undertook to take the matter
up with the municipality to clear it up.
[7] The uncertainty
regarding the quantum of the municipality’s claim remained for
a long time. On 8 September 2004 the plaintiff
called upon the
defendant to see to it that the claim of the municipality was paid
within 14 days and warned that unless the defendant
complied, legal
steps would be taken against him. The defendant requested time to
resolve the matter with the municipality. The
plaintiff granted the
defendant extensions from time to time. The final extension the
plaintiff extended to the defendant was 15
December 2005.
Notwithstanding the extensions the defendant could not resolve the
matter with the municipality. The defendant disputed
the computation
and the component items of the claim of the municipality. There was a
great deal of correspondence exchanged between
the defendant and the
municipality, to no avail.
[8] After 15 December
2005 the plaintiff took it upon itself to do something about the
matter. Eventually and on 17 July 2007 the
plaintiff fully paid the
claim owed to the municipality by Duewest Properties (Pty) Ltd. On 26
March 2008 the plaintiff sent a
demand to the defendant for the
payment of the amount R1 507 147,95. The defendant did not comply
with the demand. Subsequently,
the plaintiff sued the defendant.
[9] The grounds of the
appeal were that Moolla AJ erred in finding that the plaintiff’s
claim had not prescribed in terms
of the applicable legislation; that
the plaintiff had proved, on a preponderance of probabilities, that
interruption of prescription
had taken place; that the running of
prescription was interrupted until 15 December 2005 by agreement;
that the contention of the
defendant to the effect that to interrupt
the prescription acknowledgement of liability and not merely
acknowledgement of indebtedness
was required, had no substance; that
there was an agreement to postpone the date on which the debt became
due and that the defendant
had admitted liability to the municipality
concerned. Moreover, the defendant relied on a negative misdirection.
He alleged that
the court erred by failing to determine a specific
date on which prescription was interrupted.
[10] The issue in this
matter is whether there was acknowledgement of liability by Duewest
Properties (Pty) Ltd or the defendant
on its behalf to interrupt the
running of prescription. The residual issue, which arises only if the
main issue is answered in
the affirmative, is precisely on which
specific date did the parties agree, if they ever did, to interrupt
the running of prescription.
As regards the onus the legal position
is as follows:
The defendant avers
prescription, therefore the defendant bears the onus of showing that
the debt became due on a date prior to
17 September 2008 in order to
succeed with the special plea. The plaintiff bears the onus of
showing that the running of prescription
was interrupted or
postponed.
[11] It will therefore be
readily appreciated that the issue revolves around the interpretation
of section 14,
Prescription Act, 68 of 1969
. Subsection 1 thereof
provides:
“
14
Interruption of prescription by acknowledgement of liability
(1) The running of prescription shall
be interrupted by an express or tacit acknowledgement of liability by
the debtor.”
Subsection 2 provides:
(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.”
[12] The main contention
advanced by the defendant was that
section 14(2)
does not operate
disjunctively. Its operation depends on that of
section 14(1).
Section 14(1)
activates
section 14
(2). The latter only comes into
play provided there has been interruption of prescription as
contemplated in the former. If no
finding has been made in terms of
subsection 1, subsection 2 does not come into play all on its own.
[13]
It was the finding of the court that the plaintiff became aware of
the quantum of the claim on 18 August 2004 when the municipality
furnished the plaintiff’s attorney with the clearance
certificate concerning the erf at Pinetown. Implicit in that finding
was the conclusion that if the debt became due on 18 August 2004 then
the defendant had discharged the general onus of showing
that the
debt became due sometime before 17 September 2008. Such onus includes
not only that the claim has prescribed in terms
of
section 14
, but
also that
section 12(3)
is not applicable. This means that the claim
had in any event prescribed because the creditor became aware of the
identity of the
debtor and all the facts of the underlying cause of
action before the lapse of the three year period. See
GERIC
KE
v SACK
1978 (1) SA 821
(AD) at 828
and 829.
[14] The residual issue
the court virtually had to determine, was whether the ordinary
running of the prescription was interrupted.
If the inception date of
the three year prescriptive process was 18 August 2004, as the court
found, then the expiry date thereof
was 17 August 2007.
[15] Although the court
found that prescription started to run from 18 August 2004, the
defendant’s contention was that, in
fact, prescription started
running from the date of the breach and not from the date on which
the debt was quantified.
AVANTE
FISHING ENTERPRISE v RAFAEL ONDERNEMINGS CC
cited
by Saner:
Prescription in South African
Law
, p. 3-48(2) to p. 3-40(3). See also
KOTZÉ v ONGESKIKTHEIDSFONDS VAN DIE UNIVERSITEIT
VAN STELLENBOSCH
1996 (3) SA 252
(C).
It
then became incumbent upon the plaintiff to discharge the particular
onus of showing that at a certain point in time, somewhere
between
the fixed date of inception and the fixed date of expiry, the
ordinary running of the prescriptive process was halted or
interrupted.
ABSA BANK BPK v DE VILLIERS
2001
(1) SA 481
(SCA) at 486 – 487.
[16] In his judgment
Moolla AJ also found that various correspondence the parties
exchanged over a stretch of time, constituted
interruption of the
prescription in terms of
section 14(1).
Those were the letters in
terms of which the plaintiff granted an extension of time to the
defendant to resolve this dispute with
the municipality about the
quantum of the claim. The last extension granted to the defendant for
that purpose, expired on 15 December
2005.
[17] On behalf of the
defendant, Mr. Zietsman contended that the court erred in making such
a finding. The crux of his argument
was that an interruption was not
a process but rather an event. The plaintiff had failed, he argued,
to prove at which specific
moment in time, between the aforesaid
fixed beginning and the fixed ending of the running of prescription,
the parties had agreed
to interrupt such running of prescription. In
the absence of such a proven specific date of an interruptive
agreement, the prescriptive
period could never have ceased to run
uninterruptedly.
[18]
The court found and declared that prescription commenced running
afresh on 15 December 2005 (
vide
par. 2 of the order). This finding was also under
attack. The essence of Mr. Zietsman’s contention was that the
court erred
in determining the specific date on which prescription
commenced to run afresh in terms of
section 14(2)
since the court had
not determined a specific date on which the running of extinctive
prescription was interrupted in terms of
section 14(1)
in the first
place. Counsel submitted that it had to be proven by the plaintiff
that the process was first stopped (subsection
1) before it was
resumed (subsection 2).
[19] The court also found
that the defendant had acknowledged the debt of the municipality
which forms the basis of the plaintiff’s
claim.
[20]
The defendant contended that the court erred in making such a
finding. In the first place it was argued that there was a genuine
dispute between the defendant and the municipality concerning the
quantum of the claim. The submission was then made that unless
and
until the defendant had admitted the quantum as well and the dispute
thereby resolved, there could have been no acknowledgement
of
liability in terms of
section 14(1).
The section expressly requires
acknowledgement of liability and not merely acknowledgement of
indebtedness.
ROAD ACCIDENT FUND v MOTHUPI
2000
(4) SA 38
(SCA) on 56 par. [37]. In contrast see
AUSSENKEHR
FARMS (PTY) LTD v TRIO TRANSPORT CC
2002 (4) SA 483
(SCA) on
491 par. [17].
[21] In developing that
argument further, Mr. Zietsman contended that even if the defendant
had acknowledged liability to the municipality,
which allegation the
defendant denies, it would still not have assisted the plaintiff’s
case anyway. There had to be direct
acknowledgement of liability by
the defendant to the plaintiff and not to a third party, in this case
the Inner West Municipality.
In the absence of such proven
acknowledgement of liability, counsel submitted, there could have
been no interruption of prescription
in terms of
section 14(1).
If
that was so, then it followed as a matter of logic, that the running
of prescriptive process which was never interrupted before,
could not
have commenced afresh in terms of
section 14(2)
as the court found.
[22] I have considered
the submissions made on behalf of the plaintiff as well, although I
did not spell them out in this judgment.
It was for the defendant and
not the plaintiff to persuade me that there were prospects of success
if the matter was allowed to
go on appeal. I have weighed both
submissions. It may well be that the court committed certain
appealable misdirections on two
or more grounds as relied upon by the
defendant. Therefore, I am persuaded that another court may come to
another conclusion, different
from the one reached by the court of
first instance. In the light of this I am inclined to grant leave to
appeal to the defendant.
[23]
In
BENSON AND ANOTHER v WALTERS AND OTHERS
1984
(1) SA 73
(A) the court was divided by four to one
on the question whether an acknowledgement of indebtedness could
effectively interrupt
prescription even before the debt itself has
been quantified. The minority answered the question in the
affirmative, whereas the
majority answered it in the negative. Mr.
Zietsman relied on the majority view. In
MOTHUPI’S
case,
supra
,
at 56 G – H par. [38] the court quoted the minority view. On
the strength of this Mr. Vetten submitted that the minority
view in
BENSON’S
case seemed to enjoy support in
MOTHUPI’S
case.
Mr. Zietsman conceded that that argument was plausible. Obviously I
refrain from expressing any view. Once again I refer to
the case of
AUSSENKEHR FARMS
,
supra
,
at p. 491 G where the court held that acknowledgement of indebtedness
coupled with a request for an extension of time interrupted
the
running of extinctive prescription. For those reasons both counsels
were agreed that should I be inclined to grant the defendant
leave to
appeal, the matter should be referred directly to the Supreme Court
of Appeal so that final clarity on the point of law
could be sought
and obtained.
[24] Accordingly I make
the following order:
24.1 The applicant’s
(defendant) application for leave to appeal succeeds.
24.2 The applicant is
granted leave to appeal directly to the SCA.
24.3 The costs of this
application shall be costs in the appeal.
______________
M.H. RAMPAI, J
On behalf of plaintiff:
Adv. P. Zietsman SC
Instructed by:
McIntyre & Van der
Post
BLOEMFONTEIN
On behalf of defendant:
Adv. S. Vetten
Instructed by:
Lovius Block Attorneys
BLOEMFONTEIN
/sp