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[2020] ZASCA 104
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Investec Bank Limited v Erf 436 Elandspoort (Pty) Ltd and Others (410/2019) [2020] ZASCA 104; 2021 (1) SA 28 (SCA) (16 September 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 410/2019
In
the matter between:
INVESTEC
BANK LIMITED
Appellant
and
ERF
436 ELANDSPOORT (PTY) LTD
First Respondent
CECILIA
JOUBERT NO
Second Respondent
ERF
1081 ARCADIA (PTY) LTD
Third Respondent
REMAINING
EXTENT 764 BROOKLYN (PTY) LTD
Fourth Respondent
ERF
22 HILLCREST (PTY) LTD
Fifth Respondent
Neutral
citation:
Investec
Bank Limited v Erf 436 Elandspoort (Pty) Ltd and Others
(410/2019)
[2020] ZASCA 104
(16 September 2020)
Coram:
Petse DP, Saldulker,
Dambuza and Plasket JJA and Poyo-Dlwati AJA
Heard:
31 August 2020
Delivered:
This judgment was handed
down electronically by circulation to the parties’ legal
representatives by email, publication on
the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 16 September
2020.
Summary:
Prescription Act 68 of
1969
–
s 14
of the Act – whether series of payments in
terms of agreement between creditor and debtor were acknowledgements
of liability
that interrupted prescription.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Fabricius J sitting as court of
first instance):
1. The appeal succeeds
with costs, including the costs of two counsel where employed.
2. The order of the court
below is set aside and replaced with the following:
‘1. It
is declared that the debt owed by the defendants to the plaintiff, as
formulated in the particulars of claim, had not
prescribed when
summons was served on 21 January 2011.
2. The costs of the
hearing of 18 to 21 February 2019 are to be paid by the first,
second, third, fifth and sixth defendants jointly
and severally.
Those costs shall include the costs of two counsel.
3. The action is
postponed sine die in respect of the remainder of the issues in
dispute.’
JUDGMENT
Plasket
JA (Petse DP, Saldulker and Dambuza JJA and Poyo-Dlwati AJA
concurring)
[1]
The issue for decision in this appeal is whether a debtor
acknowledged its liability to a creditor and, in this way,
interrupted
the running of prescription. In a trial on this separated
issue, Fabricius J, in the Gauteng Division of the High Court,
Pretoria,
held that a claim by the appellant, Investec Bank Limited
(Investec), against the first respondent, Erf 436 Elandspoort (Pty)
Ltd
(Erf 436) as principal debtor, and the remaining respondents as
sureties, had prescribed. Flowing from this finding, he dismissed
Investec’s claim with costs, but granted it leave to appeal to
this court.
[2]
At the commencement of the appeal, Investec moved an application for
condonation for the late filing of the record and for the
re-instatement of the appeal which had lapsed. The application was
not opposed. Condonation was duly granted and the appeal was
re-instated. We then proceeded to hear the appeal.
Background
[3]
In February 2000, Investec advanced a loan to Erf 436. It was secured
by a notarial mortgage bond, the subject of which was
a notarial
lease for a period of 50 years in respect of a commercial property in
Pretoria concluded by Erf 436 as lessee and the
South African Rail
Commuter Corporation (the SARCC) as lessor. The loan agreement
contained a tripartite agreement between Investec,
Erf 436 and the
SARCC in terms of which an option was granted to Investec to replace
Erf 436 as lessee in the event of Erf 436
defaulting on its
obligations to the SARCC.
[4]
Erf 436 defaulted about two and a half years later. The lease was
cancelled by an order of court on 21 August 2002. This rendered
Investec’s security worthless. On 10 September 2002, Investec
demanded, as it was entitled to do following Erf 436’s
default,
payment by Erf 436 within seven days of the full outstanding balance
of the loan. It is not in dispute that prescription
in respect of
this debt began to run on 17 September 2002, the date on which
payment was due.
[5]
Investec then exercised its option and concluded a lease with the
SARCC. In terms of an agreement between Investec and Erf 436,
the
latter continued to manage the property and collect rental from
sub-tenants. These amounts were credited to Erf 436’s
loan
account with Investec. This arrangement remained in place until about
July 2003. The parties also agreed that they would make
efforts to
sell Investec’s rights in terms of the lease with a view to the
purchase price being used to settle Erf 436’s
loan obligation.
[6]
A second agreement between Investec and Erf 436 was concluded in
about June 2003. In terms of this agreement, Investec took
over the
function from Erf 436 of managing the property and collecting rental
from sub-tenants. The income collected by Investec
was similarly
allocated to the repayment of Erf 436’s loan. This arrangement
remained in place from 1 July 2003 until 1 July
2009 when Investec
sold its rights as lessee to an entity called Johnny Prop (Pty) Ltd
(Johnny Prop). After the sale, an amount
of R2 999 459.51
was credited to Erf 436’s loan account.
[7]
After this amount had been credited, Erf 436’s liability for
the outstanding balance of the loan was, according to Investec,
R3 979 184.50. It claimed this amount from Erf 436 and the
sureties in a summons served on 21 January 2011.
[8]
As the passage of time between the issue of summons and this appeal
will attest, the dispute between the parties has raged for
a number
of years. It has included a foray to this court on the issue of
whether the prescription period in respect of the disputed
debt was
30 years or three years. For present purposes, however, all that need
be said is that the summons was met once again with
a special plea of
prescription (as well as a plea over that is not relevant to this
appeal).
[9]
In its replication, Investec pleaded that, on the basis of the
payments made to reduce Erf 436’s loan and various statements
made in letters on behalf of Erf 436, it made a series of
acknowledgments of liability. The result was that ‘insofar as
prescription may have commenced during September 2002, it was
interrupted by express or tacit acknowledgments of liability on the
part of [Erf 436] on the dates that each of the payments . . . were
effected and on the dates when each of the letters . . . was
addressed’.
The
evidence
[10]
The factual background that I have sketched is largely not in
dispute. Indeed, Erf 436 and the sureties closed their case on
the
separated issue without adducing any evidence. The only evidence was
tendered by four witnesses called by Investec who testified
about the
agreements I have referred to, the payments made to reduce Erf 436’s
indebtedness to Investec and certain correspondence
between the two.
[11]
The evidence of Mr W M Oosthuizen, a banker employed by Investec at
the time, and Mr Carlos Sanchez, an in-house legal advisor
employed
by Investec, in particular, establishes the facts that I have set out
above. Their evidence confirms that after Investec
stepped into Erf
436’s shoes as a lessee, Erf 436 continued to collect rental
from sub-tenants until mid-2003, but Investec
collected the rental
itself thereafter. In both instances, however, in terms of the
agreements between Investec and Erf 436, these
amounts were allocated
to the repayment of Erf 436’s loan. So, for instance, during
the period from the cancellation of Erf
436’s lease until 30
September 2003, Erf 436 paid a total of R830 896.91 towards its
loan repayment from rental collected
from sub-tenants. At the same
time, both Investec and Erf 436 made efforts to find a purchaser for
Investec’s rights in the
property. The proceeds of the sale
were also to be allocated to the reduction of Erf 436’s loan.
[12]
The existence of the agreements between Investec and Erf 436 is
confirmed by a series of letters written by one of Erf 436’s
directors, Mr Pierre Joubert. It is evident that Joubert took an
active interest in the management of the property. He also
attempted to find sub-tenants for the property and a purchaser of
Investec’s rights. Even when Investec took over the management
of the property, Joubert continued to involve himself in the
day-to-day running of the property. His reason for doing so was to
protect Erf 436’s interests in respect of the agreement in
terms of which rental would be used to reduce Erf 436’s
loan,
and to ensure a good purchase price when Investec’s rights in
the property were sold.
[13]
So, for example, by letter dated 12 March 2003 addressed to Mr David
Hack, he offered to sell ‘the leasehold properties’
and
the duty-free filling station business that he and his fellow
director, Mr Louis Vivier, operated on the property. The purchase
price for both was, he said, R5.6 million, being ‘the
outstanding amount of the Investec Bank Bond’. A copy of this
letter was sent to Investec.
[14]
In a letter to Investec dated 7 May 2003, Joubert reported on the
fact that negotiations with Hack had come to naught but that
his
efforts to sell Investec’s rights continued and that the
building was ‘virtually fully let’. He also said
that Erf
436 ‘continued to manage and operate the premises as a whole
and has been honouring and paying the Investec Bank
bond every
month’. He proposed that Investec allow Erf 436 to continue
managing the property on Investec’s behalf for
the next nine
months and that he would ensure certain outcomes, including that ‘the
loan repayments to Investec Bank (account
221162) are paid’.
[15]
Despite this offer, Investec decided to continue with its plans to
take over the management of the property, to manage the
sub-leases,
pay its creditors and credit what was left to the repayment of Erf
436’s loan. It was agreed between Investec
and Erf 436 that
this would happen. Joubert appears to have been rather reluctant to
give up his control over the property and
he continued to look for
purchasers and sub-tenants and to involve himself generally in the
management of the property. He appears
to have dragged his heels in
respect of the hand-over of management to Investec.
[16]
Joubert’s reluctance appears clearly from a letter dated 30 May
2003, in which he asked Investec to allow Erf 436 to
continue with
its management of the property. He said that ‘[w]e would also
in any event like to be assured that the monthly
rentals collected
will be applied towards the monthly payment of our loan with
Investec’.
[17]
In a letter to Investec’s attorney dated 13 June 2003, Joubert
described Investec’s decision as ‘very unreasonable’.
One of the reasons he gave for wishing to continue to manage the
property was to ensure that rental collected was, indeed, applied
to
the repayment of Erf 436’s loan. He confirmed that Erf 436 was
‘diligently paying our loan commitment to Investec
Bank’.
[18]
In January 2004, a meeting was held by Oosthuizen and Joubert to
discuss the possible sale of Investec’s rights to a
property
developer. This sale did not eventuate, but on 3 February 2004
Joubert wrote a letter to Investec’s attorney in
which he
confirmed a proposal additional to two proposals discussed at the
meeting. This proposal involved a sale of Investec’s
rights
back to Erf 436, with transfer being delayed until after Erf 436 had
repaid its loan. He said:
[1]
‘
As far as the
repayment/discharge of [Erf 436’s] bond is concerned
(R5 300 000), we must naturally have one or other
agreement
in place between [Erf 436] (or its nominee) that basically stipulates
that all income from the property, whether rental
income or
expropriation money or [from] a purchase transaction are credited to
[Erf 436].’
[19]
Joubert had attached to the letter what appear to be notes made in
preparation for his meeting with Oosthuizen. Two other possible
proposals were contained in the notes. What stands out in respect of
all three proposals is that, for Erf 436, they all involved
mechanisms for the repayment of its loan, which Joubert admitted was
about R5.3 million at that stage.
[20]
In a letter dated 2 November 2005, written by Joubert to Investec in
respect of the sale of property belonging to another of
his entities,
Erf 225 Edenburg, (Pty) Ltd, he proposed that some of the proceeds be
allocated to the repayment of Erf 436’s
loan. Oosthuizen
testified that Investec gave its approval to the proposal, the
transaction proceeded and, on 29 March 2006, an
amount of R1 350 000
was credited to Erf 436’s loan.
[21]
Oosthuizen and Sanchez testified about the eventual sale of
Investec’s rights to Johnny Prop. Because of various
difficulties,
the sale was delayed and it was only in 2009 that
payments were made to reduce Erf 436’s loan. An amount of
R430 000
was paid on 30 June 2009 and R2 569 459.61
was paid on 1 July 2009. That left a balance owing on the latter
date, according
to Sanchez, of R3 523 036.
[22]
Oosthuizen’s evidence was that Investec and Erf 436 had a
difficult relationship at times but they had worked together
to find
a solution to their common problem of how Erf 436 was going to repay
its loan. While Investec could simply have issued
summons, taken
judgment and executed on it, he explained that Investec decided that
it would be in the best interests of both parties
to try to manage
the situation as they did. During the entire process, Joubert never
once denied Erf 436’s liability to Investec.
On the contrary,
he admitted that liability on a number of occasions.
[23]
Joubert died during the second half of 2009. Various meetings with
his wife, who had been appointed the executrix of his estate,
produced no agreement as to how Erf 436 would pay the outstanding
balance. As a result, summons was issued on 21 January 2011.
The
Prescription Act 68 of 1969
[24]
In terms of
s 10(1)
of the
Prescription Act, ‘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’.
Section 10(2)
provides that when a principal debt
is extinguished by prescription, so are any subsidiary debts, such as
suretyships.
Section 11
lists the periods of prescription –
ranging from 30 to three years – for a variety of types of
debts. The parties have
agreed that the period of prescription in
this case is three years, and not 30 years, that issue having been
decided by this court
in
Investec
Bank v Erf 436 Elandspoort (Pty) Ltd and Others
.
[2]
[25]
Subject to exceptions,
s 12(1)
provides that prescription begins to
run ‘as soon as the debt is due’.
Section 13
sets out a
number of circumstances – such as when a creditor is a minor or
a debtor is out of the country – that delay
the running of
prescription.
[26]
Section 14
of the
Prescription Act, which
is of application in this
case, allows for the interruption of prescription. It provides:
‘
(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.’
The
interruption of prescription against a principal debtor automatically
interrupts prescription against a surety.
[3]
[27]
The reason for rules relating to prescription was discussed by Marais
AJ in
Cape
Town Municipality v Allie NO
.
[4]
He said:
‘
Over the years the Courts and
the writers on the law have sought to provide a rationale for the
doctrine of prescription or the
limitation of actions. It is
unnecessary to burden this judgment with a discussion of the
plausibility of the explanations which
have been suggested. Whatever
the true rationale may be, it cannot be denied that society is
intolerant of stale claims. The consequence
is that a creditor is
required to be vigilant in enforcing his rights. If he fails to
enforce them timeously, he may not enforce
them at all. But that does
not mean that the law positively encourages precipitate and needless
law suits. It is quite plain that
both at common law, and in terms of
the Prescription Acts of 1943 and 1969, a creditor may safely
forebear to institute action
against his debtor if the debtor has
acknowledged liability for the debt.
Lubbers
and Canisius v Lazarus
1907
TS 901
;
De Beer v Gedye and
Gedye
1916 WLD 133.
And it
seems right that it should be so. Why should the law compel a
creditor to sue a debtor who does not dispute, but acknowledges,
his
liability?’
[28]
The policy underlying prescription in general, as well as the
exception that is created by
s 14
, were explained in
Murray
& Roberts Construction (Cape) (Pty) Ltd v Upington
Municipality
:
[5]
‘
Although many philosophical
explanations have been suggested for the principles of extinctive
prescription . . . its main practical
purpose is to promote certainty
in the ordinary affairs of people. Where a creditor lays claim to a
debt which has been due for
a long period, doubts may exist as to
whether a valid debt ever arose, or, if it did, whether it has been
discharged . . . The
alleged debtor may have come to assume that no
claim would be made, witnesses may have died, memories would have
faded, documents
or receipts may have been lost, etc. These sources
of uncertainty are reduced by imposing a time limit on the existence
of a debt,
and the relevant time limits reflect, to some extent, the
degree of uncertainty to which a particular type of debt is
ordinarily
subject
(s 11
of the Act).
The same considerations which provide
a justification for extinctive prescription also suggest that the
time limits should not be
immutable. Where the creditor takes
judicial steps to recover the debt, and thereby to remove all
uncertainty about its existence,
prescription should obviously not
continue running while the law takes its course
(s 15
of the Act).
Moreover,
s 14
of the Act provides that the running of prescription
is interrupted by an express or tacit acknowledgement of liability by
the
debtor. The reason is clear – if the debtor acknowledges
liability there is no uncertainty about the debt. No purpose would
accordingly be served by requiring the creditor to interrupt
prescription by instituting legal proceedings for the recovery of
the
debt.’
[29]
Cape
Town Municipality v Allie NO
[6]
concerned whether the Cape Town Municipality had acknowledged
liability and so had interrupted prescription in terms of
s 14
of the
Act in relation to Ms Allie’s claim. In dealing with
s 14(1)
of
the Act, Marais AJ identified what he described as a number of
self-evident aspects of the section. They were:
[7]
‘
Firstly, I do not think the
acknowledgment of liability need amount to a fresh undertaking to
discharge the debt. "I admit
I owe you R100" is manifestly
an acknowledgment of a liability to pay R100 but it is not a fresh or
new undertaking to pay
it . . .
Secondly, full weight must be given to
the Legislature's use of the word "tacit" in
s 14(1)
of the
Act. In other words, one must have regard not only to the debtor's
words, but also to his conduct, in one's quest for an
acknowledgment
of liability. That, in turn, opens the door to various possibilities.
One may have a case in which the act of the
debtor which is said to
be an acknowledgment of liability, is plain and unambiguous. His
prior conduct would then be academic.
On the other hand, one may have
a case where the particular act or conduct which is said to be an
acknowledgment of liability is
not as plain and unambiguous. In that
event, I see no reason why it should be regarded
in vacuo
and
without taking into account the conduct of the debtor which preceded
it. If the preceding conduct throws light upon the interpretation
which should be accorded to the later act or conduct which is said to
be an acknowledgment of liability, it would be wrong to insist
upon
the later act or conduct being viewed in isolation. In the end, of
course, one must also be able to say when the acknowledgment
of
liability was made, for otherwise it would not be possible to say
from what day prescription commenced to run afresh . . .
Thirdly, the test is objective. What
did the debtor's conduct convey outwardly? I think that this must be
so because the concept
of a tacit acknowledgment of liability is
irreconcilable with the debtor being permitted to negate or nullify
the impression which
his outward conduct conveyed, by claiming
ex
post facto
to have had a subjective intent which is at odds with
his outward conduct . . .
Fourthly, while silence or mere
passivity on the part of the debtor will not ordinarily amount to an
acknowledgment of liability,
this will not always be so. If the
circumstances create a duty to speak and the debtor remains silent, I
think that a tacit acknowledgment
of liability may rightly be said to
arise . . .
Fifthly, the acknowledgement must not
be of a liability which existed in the past, but of a liability which
still subsists.’
[30]
Pentz v
Government of the Republic of South Africa
[8]
concerned whether an admission made by a person to a policeman
constituted an acknowledgement of liability for purposes of
interrupting
prescription in respect of a claim by a government
department. The court found, in the first place, that the person had
not acknowledged
liability. Secondly, the court held that, in any
event, for an acknowledgement of liability to interrupt prescription,
it had to
have been given by a debtor to a creditor or the creditor’s
agent; and the policeman was not the agent of the government
department concerned.
[9]
[31]
Unsurprisingly, the converse also holds true. The acknowledgement of
liability, in order to effectively interrupt prescription,
can be
made by either the debtor or his or her agent. In
First
Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd and
Another
[10]
payments were made by a third party to the creditor to reduce what
was owed by the debtor concerned as well as other creditors
of the
third party. It had been assumed that the third party had acted as
the debtor’s agent but, as Goldstone J found, there
was no
evidence to establish that agency. Indeed, the only evidence was that
of the second defendant who said that he had had no
knowledge of the
payments and that no arrangement was in place to the effect that the
third party would pay on behalf of the debtor.
That being so, the
creditor had failed to discharge the onus to prove that the payments
constituted an acknowledgement of liability
by the debtor, with the
result that prescription had not been interrupted.
[11]
Has
Investec’s claim prescribed?
[32]
In determining whether Erf 436 acknowledged liability either
expressly or tacitly, and when, it is necessary to consider not
only
what Joubert said but also what he did. His words and conduct must be
viewed holistically and in their proper context. That,
it seems to
me, is particularly so in respect of the monthly payments of the
rental of sub-tenants towards the loan and the payment
of the
purchase price for Investec’s rights by Johnny Prop. Viewed in
isolation they tell one nothing but viewed in their
broader context,
with particular reference to the two agreements between Investec and
Erf 436, a picture emerges.
[33]
When Erf 436 was responsible for the collection of the sub-tenants’
rental, its payments of those amounts towards the
repayment of its
loan constituted a series of tacit acknowledgements of liability.
This period ended with a payment on 30 September
2003. Furthermore,
during this period, Joubert, on behalf of Erf 436, wrote two letters,
dated 7 May 2003 and 13 June 2003, in
which he expressly acknowledged
liability. The effect of the payments and the letters was that
prescription was interrupted on
the date of each payment and the date
of each letter and commenced running again from those dates. As the
last payment during this
first period was made on 30 September 2003,
the running of prescription was extended to 30 September 2006, with
the last day for
serving the summons being 29 September 2006.
[34]
It is clear from the evidence and from his letters that Joubert was
unhappy with Investec’s decision to take over the
management of
the property, but he agreed to it nonetheless. That agreement had two
important components that give context to everything
that followed.
First, it was agreed that Investec would collect rental from
sub-tenants and allocate those amounts to the repayment
of Erf 436’s
loan. Secondly, it was agreed that endeavours would be made to find a
purchaser for Investec’s rights
in the property and that the
purchase price would be credited to Erf 436’s loan.
[35]
During the period between Investec taking over the management of the
property and the final payment of the purchase price for
Investec’s
rights into Erf 436’s account, Joubert, in a series of letters,
consistently acknowledged Erf 436’s
liability to Investec. A
theme that runs through these letters is that irrespective of who
was, in his view, to manage the property,
the rental collected from
the sub-tenants and the purchase price in respect of the sale of
Investec’s rights in the property
would be allocated towards
the repayment of Erf 436’s loan.
[36]
One payment requires specific mention. On 29 March 2006, before the
claim had prescribed, an amount of R1 350 000
was credited
to Erf 436’s account. That payment was made by Erf 225 Edenburg
(Pty) Ltd, an entity of which Joubert was a
director. In a letter to
Investec dated 2 November 2005, he had informed Investec of a
transaction involving Erf 225 and said that
‘[w]e have analysed
and refined the transaction regarding the actual surplus available to
be deposited into the bond account
(number 221162) of [Erf 436] and
calculate that an amount of R1.35 million would be a more accurate
amount’. The evidence
of Oosthuizen was that Investec had
agreed with Joubert that Erf 225 would pay the surplus of a sale of
property towards Erf 436’s
indebtedness to Investec. As Joubert
was a director of both entities, knowledge of, and agreement to, the
payment must be imputed
to Erf 436. The inference that Erf 225 acted
as Erf 436’s agent is irresistible. That payment was a tacit
acknowledgement
of liability by Erf 436, with the effect that the
running of prescription was extended to 29 March 2009.
[37]
On 21 May 2007, another tacit acknowledgement of liability was made
by Erf 436 when Joubert queried the mechanics of the monthly
payments
into Erf 436’s account. This was a tacit acknowledgement of
liability because the very basis of the query was an
acceptance by
Erf 436 of a liability towards Investec (that it had never denied and
had acknowledged consistently); and it discloses
knowledge on the
part of Erf 436 that payments of rental collected from sub-tenants by
Investec had (since mid-2003) been paid
towards reducing Erf 436’s
loan liability. Far from protesting that Erf 436 was not liable to
Investec, Joubert sought details
of how the VAT component of the
rentals was dealt with. The effect of this letter was to extend the
life of Investec’s claim
for a further three years from the
date of the letter – until 21 May 2010.
[38]
The letter of 21 May 2007 also answers the question as to the effect
of Investec’s monthly payments to reduce Erf 436’s
indebtedness to it. It does so by confirming Erf 436’s
agreement to the arrangement made in 2003 in terms of which the
payments
were made. In fairness to Joubert, although he was unhappy
with the arrangement, he never once denied the agreement or Erf 436’s
liability to Investec. Erf 436’s agreement to the arrangement
and, to put it at its lowest, the complete absence of any words
or
conduct on its part that could be construed as a denial of liability
– its failure, in other words, to speak out if it
denied
liability – carry with it a tacit acknowledgement of liability
every month when its account was credited: it knew
and accepted that
these payments were made monthly in order to reduce its admitted and
current indebtedness to Investec in accordance
with a process to
which it had agreed.
[39]
The last monthly payment was made on 17 July 2008. Prescription was
interrupted on that day and immediately began to run again.
The
effect was that the life of Investec’s claim was extended, and
it was required to serve its summons by 16 July 2011 at
the latest.
As the various acknowledgements of liability that I have identified
kept the claim alive and summons was issued on
21 January 2011, well
before 16 July 2011, that appears to be the end of the matter. For
the sake of completeness, however, I shall
deal with the effect of
the sale of Investec’s rights in the property.
[40]
From the outset, it was agreed that Investec’s rights in the
property would be sold and the proceeds allocated towards
the payment
of Erf 436’s loan. From Oosthuizen’s evidence and from
Joubert’s letters, it is evident that Joubert
was particularly
active in trying to find a purchaser. That is nowhere clearer than in
his letter to Investec of 12 October 2006
when he expressed shock on
learning that Investec had ‘sold’ the property without
reference to him, and for a price
that he considered to be
unreasonably low. He spoke of Erf 436’s ‘vested interest’
in the purchase price because
‘it has a direct influence on our
bond account No. 221161’. He also referred to potential
purchasers who were prepared
to pay more.
[41]
What is clear from this letter – and this is consistent with
Joubert’s position throughout – is that he was
aware that
the purchase price would be used to reduce Erf 436’s
indebtedness to Investec, as agreed between them in 2003.
Viewed in
this context, his knowledge of that fact and his acceptance without
demur of the payments made on 29 June 2009 and 1
July 2009 were tacit
acknowledgements of liability on the part of Erf 436. Once again, his
failure to query them is telling and
is consistent with Erf 436’s
position throughout – its acceptance that it was liable to
Investec in respect of the
loan. The result of these tacit
acknowledgements of liability is that prescription was yet again
interrupted on the dates of payment.
Summons had to be served by 30
June 2012 at the latest but was served well within time on 21 January
2011.
[42]
It is necessary to say something of the finding of Fabricius J that
the payments of rental after September 2003 and of the
purchase price
of Investec’s rights in the property were not tacit
acknowledgements of liability. His reasoning was that
Erf 436 cannot
be said to have acknowledged liability because neither the
sub-tenants whose rental was credited to Erf 436’s
account or
Johnny Prop who bought Investec’s rights were Erf 436’s
agents. In my view, questions of agency do not arise,
save in the
case of Erf 225’s payment on behalf of Erf 436, referred to
above.
[43]
The difficulty I have with the reasoning is that it ignores the
context in which the payments were made. That context was an
agreement between Investec and Erf 436 that Investec would collect
rental from sub-tenants and credit Erf 436 with the nett amounts
so
collected every month; and that when Investec’s rights were
sold, the purchase price would likewise be credited to Erf
436’s
account. The basis for the acknowledgements of liability in respect
of each of these payments does not rest on agency,
but on the
agreement entered into by the parties as to how the loan would be
repaid. The
First
Consolidated Leasing Corporation
case
[12]
is thus not of
application.
[44]
There is no merit in an argument advanced on behalf of Erf 436 that
any acknowledgements by Erf 436 were not acknowledgements
of a
present liability but of a past or, perhaps, a conditional liability.
Reliance was placed on
Benson
and Another v Walters and Others
.
[13]
This argument fails on two counts.
[45]
First, the facts of
Benson
differ markedly from this matter. In
Benson
,
a person’s attorney had written to his ex-attorney to say that
the client had paid R5 000 in respect of the former
attorney’s
fees and disbursements and undertook ‘payment of whatever
shortfall you are able to establish on taxation’.
Van Heerden
JA held that the letter contained ‘a conditional undertaking to
pay’ but was not ‘an admission of
existing
liability’.
[14]
What the
writer intended to convey was the fact that ‘he did not know
whether an amount of more than R5 000 would be taxed
and therefore
did not know whether Benson was liable to make a payment to Walters,
but that, if a liability did exist, his firm
would pay the amount
thereof’.
[15]
This was
not an acknowledgement of liability that could interrupt
prescription. In the present matter, there has been no suggestion
that the amount owed to Investec by Erf 436 was anything but a
current debt and there was likewise no suggestion of any conditions
attaching to its payment or its quantification. At all times in his
correspondence, Joubert accepted that Erf 436 owed money to
Investec,
even quantifying the amount in some of his letters.
[46]
Secondly, it was argued that Joubert may have believed that the debt
had been discharged. That runs counter to the evidence.
There was
never any doubt that when the last tacit acknowledgement of liability
was made, Erf 436 was still indebted to Investec.
Joubert, the
inveterate letter-writer, never once in any of his many missives
suggested that the debt had been paid or was anything
but a current
debt.
[47]
The result is that Investec’s claim has not prescribed. The
appeal must consequently succeed.
The
order
[48]
I make the following order:
1. The appeal succeeds
with costs, including the costs of two counsel where employed.
2.
The order of the court below is set aside and replaced with the
following:
‘1. It is declared that the debt owed by the
defendants to the plaintiff, as formulated in the particulars of
claim, had not
prescribed when summons was served on 21 January 2011.
2.
The costs of the hearing of 18 to 21 February 2019 are to be paid by
the first, second, third, fifth and sixth defendants jointly
and
severally. Those costs shall include the costs of two counsel.
3.
The action is postponed sine die in respect of the remainder of the
issues in dispute.’
______________________
C
Plasket
Judge
of Appeal
APPEARANCES
For
the appellant: F J Erasmus SC
Instructed
by:
VDT
Attorneys, Pretoria
Peyper
Attorneys, Bloemfontein
For
the respondents: H F Oosthuizen SC
Instructed
by:
Nothling
Attorneys, Pretoria
De
Villiers Attorneys, Bloemfontein
[1]
My translation.
[2]
Investec Bank v
Erf 436 Elandspoort (Pty) Ltd and Others
[2017]
ZASCA 128.
See too
Botha
v Standard Bank of South Africa Ltd
[2019] ZASCA 108
;
2019 (6) SA 388
(SCA) paras 26-28.
[3]
Jans v Nedcor
Bank Ltd
[2003]
ZASCA 15
;
2003 (6) SA 646
(SCA) para 32.
[4]
Cape Town
Municipality v Allie NO
1981
(2) SA 1
(C) at 5G-H.
[5]
Murray &
Roberts Construction (Cape) (Pty) Ltd v Upington Municipality
1984 (1) SA 571
(A) at 578F-579B. See too
KLD
Residential CC v Empire Earth Investments 17 (Pty) Ltd
[2017] ZASCA 98
;
2017 (6) SA 55
(SCA) paras 13-17;
Bradford
& Bingley PLC v Rashid
[2006] UKHL 37
para 3.
[6]
Note 4.
[7]
At 7B-8G. See too
Agnew
v Union and South West Africa Insurance Company Ltd
1977 (1) SA 617
(A) at 622H-623C;
Petzer
v Radford (Pty) Ltd
1953 (4) SA 314
(N) at 317H-318B;
Benson
and Another v Walters and Others
1984 (1) SA73 (A) at 86H-87B;
Standard
Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd
1995 (4) SA 510
(C) at 556E-557D.
[8]
Pentz v
Government of the Republic of South Africa
1983
(3) SA 584 (A).
[9]
At 594A-E.
[10]
First
Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd and
Another
1981
(4) SA 380 (W).
[11]
At 383F-384E.
[12]
Note 10.
[13]
Note 7 at 86H-87B.
[14]
At
87C-D.
[15]
At 87F.