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1990
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[1990] ZASCA 27
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Standard General Insurance Company Ltd. v Verdun Estates (Pty) Ltd. (524/88) [1990] ZASCA 27; 1990 (2) SA 693 (AD); (26 March 1990)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE
DIVISION
)
CASE NUMBER 524/88
LOWER COURT NUMBER 12272/86
In the matter between:
STANDARD GENERAL INSURANCE COMPANY
LIMITED
APPELLANT
and
VERDUN ESTATES (PROPRIETARY)
LIMITED
FIRST RESPONDENT
JAN SMIT
SECOND RESPONDENT
Coram
: HOEXTER, NESTADT et MILNE JJA, FRIEDMAN et GOLDSTONE AJJA.
Date heard: 13 March 1990
Date delivered: 26 March 1990
2
JUDGMENT
GOLDSTONE
AJA:
Conradie J in the Capé Provincial Division of the Supreme Court
dismissed with costs the claim of the appellant for payment
the sum of R6877,78.
The judgment of the Court
a quo
is reported in
1988 (4) SA 779
(C) as
Standard General Insurance Co. Ltd v Verdun Estates (Pty) Ltd and
Another
. With leave of the Court
a quo
the appellant now appeals to
this Court against the judgment and order.
The facts material to the appeal are not in dispute. On 10 September 1982,
the second respondent, an employee of the first respondent,
was driving a
tractor which was owned by his employer. He was doing so with the knowledge and
consent of his employer and within
the course and scope of his employment.
3
The tractor was insured by the appellant in terms of the provisions
of
the Compulsory Motor Vehicle Insurance Act, No. 56 of 1972 (the
Act).
At the comer of Voortrekker and Van Riebeeck Streets, Prinoe Alfred
Hamlet,
Cape, the tractor collided with a motor vehicle driven by one
Saayman.
The collision was partly attributable to the fault of the second
respondent
who, to the knowledge of the first respondent, did not have a
driver's
licence.
As a result of the collision, Saayman sustained bodily injuries. Pursuant to
the terms of the Act, Saayman claimed compensation from
the appellant. The claim
was settled on 21 November 1985, when the appellant paid to Saayman the amount
of R11462,97. In the Court
a quo
, the appellant claimed payment from the
respondents of the sum of R6877,78 representing 60% of the amount paid to
Saayman. It is
common cause that in respect cf the collision the second
respondent was 60% at fault.
All of the aforegoing appears from a written statement of facts submitted to
the court
a quo
in terms of rule 33(1) of the Uniform Rules of
Court.
4 The following further agreed facts are recorded therein:
"11.2 The MVA 13 form was lodged on behalf of Saayman on 9th August 1984,
before the expiration óf a period of two years from
the collision;
11.3 In terms of Sections 24(1) and 25(2) of the Act, Saayman's
summons
was to have been served after expiry of 90 days from 9th
August
1984 (ie. after 7th November 1984) but before 11th December
1984;
11.4
By letter dated 15th
October 1984... the Plaintiff undertook not to plead prescription in respect of
Saayman's claim until 31st March
1985;
11.5
The expiry date of the aforesaid undertaking was extended by letter
dated 22nd February 1985 to 30th June 1985 and again by letter
dated 30th May
1985 to 31st December 1985...;
5
11.6 On 21st November 1985 Saayman's claim was settled by the Plaintiff paying
compensation to him ih the sum of of R11462,97 without
summons ever having been
issued by Saayman;
11.7
The first and second defendants were not advised of nor
were
they parties to the undertaking or the extensions thereof mentioned in
paragraphs 11.4 and 11.5 above;
11.8 Were it not for the said undertakings, Saayman's claim against
the
Plaintiff would, under the provisions of sections 24(1)
and 25(2) of the Act,
have become prescribed on 11th December
1984 and insofar as that Act may be applicable, on 10th September
1985 in terms of section 11(d) of the Prescription Act, No. 68 of 1969 (as
amended);
11.9 Had it not been for the extension of prescription Saayman could
and
would have served a summons claiming compensation on the
6
Plaintiff before the period of prescription had run out."
In the statement of agreed facts the respective contentions of the parties
are set out as follows:
"12. The Plaintiff contends that in terms of section 28(2)(a)(ii) read with
section 28(1) of the Act, it has a right tó recover
the sum of R6877,78
(being a 60% portion of R11462,97) frcm the First Defendant and that it has a
similar right against the Second
Defendant in terms of section 28(1) and 28(3)
of the Act.
13. The Defendants contend that because of the provisions of section
24(1) read with section 25(2) Saayman's claim against the plaintiff became
prescribed on 11th December 1984 and that the Plaintiff's
payment to Saayman cn
21st November 1985 was therefore not made under section 21 of the Act. Insofar
as it rnay be necessary to establish
a basis for the payment, the Defendants
contend that it was made pursuant to an agreement of which the extended
7
undertaking not to plead prescription formed part.
14. Were this Hbnourable Court to uphold the Plaintiff's contentions, the
Defendants would be liable to pay the Plaintiff the sum
of R6877,78 plus costs.
Were the Defendant's ccntentions to be upheld,. the Plaintiff's claims should be
dismissed and judgment entered
in favour of the Defendants, with costs."
As emerges from the written statement of facts, the appellant's claim is
founded upon the statutory right of recourse created by the provisions
of section 28 of the Act. Insofar as it is now relevant, it is there
provided
that:
"28(1) When an authorized insurer has paid any ocmpensation under
section 21 or 26 it may recover frcm the owner of the insured
motor vehicle in question, or frcm any person whose negligence or other unlawful
act caused the loss or damage in guestion, so much
of the amount paid by way of
ccmpensation as the third
8
party could, but for the provisions of secticn 27, have recovered
from the owner or frcm the person whose negligence or other unlawful act caused
the loss or damage, as the case may be, if the authorized
insurer had not paid
any such compensation."
This right of recourse, in
the circumstances set out in section 28(2) and (3), only arises, therefore,
where the insurer has paid
compensation under section 21 or 26 of the Act.
Section 26 provides for payment to suppliers of certain goods and services and
is
not now relevant. Section 21(1), insofar as it is material, provides
that:
" An authorized insurer which has insured or is deemed to have insured
a motor vehicle in terms of section 12, 13 or 14 shall, subject to
the provisions of this Act, be obliged to compensate any person whatsoever
(in this Act called the third party) for any loss or damage
which the third
party has suffered..."
On behalf of the respondents it was submitted that the claim under
section
9
21, prior to payment by the appêllant (as the authorized insurer)
became
extinguished by reason of the provisions of section 10(1) of the Prescription
Act No. 68 of 1969 (the
Prescription Act) read
with
section 24(1
)(a) of the
Act. It is there provided that:
"10(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."
The relevant law, here the Act, provides in section 24(1)(a) that:
"24(1)(a) Notwithstanding the provisions of any other law relating to
prescription, but subject to the provisions of paragraph (b)
of this subsection,
the right to claim compensation under section 21 from an authorized insurer
shall become prescribed upon the
expiration of a pericd of two years frcm the
date upon which the claim arose: Provided that prescription shall be
suspended
10
during the period of ninety days referred to in section 25(2)."
There was some debate with oounsel as to whether the terms of the
Prescription Act are
applicable to the Act or whether section 24 is a
self-contained provision. The latter conclusion finds some support frcm the
following
dictum
of Friedman J in
Terblanche v SA Eagle Insurance Co.
Ltd.
1983 (2) SA 501
(N) at 504 F-H where the leamed Judge in considering
the 1978 amendments to section 24(1) of the Act said:
" It is a rule of statutory interpretation that the Legislature is presumed
to be acquainted with the state of the law (Steyn
Die Uitleg van Wette
5th ed at 132). When it passed the amending Act, the Legislature must be
presumed to have been aware that the common law relating
to,
inter alia
,
the suspension of prescriptian applied to , s 24(1) as it then was; yet despite
such awareness it passed s 24(1)(b) categorising
two classes of persons who, in
any event, enjoyed common law protection (ie minors and persons under
curatorship) and one class who
may or may not have (ie persons detained under
the Mental Health
11
Act). In my view, it did so for the reason, and could only have done so for
the reason, that it intended to bring about a change in
the law as the Courts
had interpreted it to be with reference to the old s 11(2) and to the new s
24(1) (prior to the amendment),
that is to say, to now exclude the common law
relating to all aspects of prescription from the prescriptive provisions of the
MVA
Act (see
Erasmus v Protea Assuransiemaatskappy Bpk
1982 (2) SA 64
(N)
at 69 F - H)."
In
Erasmus v Protea Assuransiemaatskappy Bpk
, Page J referred only to
the provisions of section 24(1)(b) in relatipn to the suspension of
prescription. He was nct referring to
the provisions of section 24(1) as a
whole.
In my judgment the statement of law by Friedman J is too widely cast.
In
terms of
section 16(1)
of the
Prescription Act the
provisions of Chapter
III thereof shall-
" save in so far as they are inconsistent with the provisions of any
12 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." i
(Section 10 is to be found in Chapter III of the
Prescription Act).
>It follows, in my opinion, that the provisions of the
Prescription Act which
are consistent with the provisions of section 24 of the Act are applicable in
relation to the interpretation and effect thereof:
see
President Insurance
Co. Ltd. v Yu Kwam
1963 (3) SA 766
(A) at 777 D-E;-
Santam
Versekeringsmaatskappy Bpk v Roux
1978 (2) SA 856
(A) at 863 G;
SA Mutual
Fire and General Insurance Co. Ltd. v Eyberg
1981 (4) SA 318
(A) at 326 F -
328 A.
In
Grey v Southern Insurance Association Ltd
1982 (3) SA 688
(E) at
691 H - 692 C Mullins AJ said the following::
13
" in my view Mr Kroon, who appeared for the respondeht, is correct when he
submitted that the date upon which a debt becomes prescribed,
once that date is
established, remains immutable, and that any relief from the normal consequences
of the expiry of such prescriptive
period which a claimant might be able to
obtain, eg by agreement, or by leave of the Court where competent, would not
affect that
date...
... I am satisfied that the waiver by a debtor pf the right to plead
prescription does not alter the date upon which the debt became
prescribed. In
fact,
ex hypothesi,
such a waiver assumes the expiry of the prescriptive
pericd."
I agree with that statement. See tco,
Rriel v President
Versekerings-maatskappy Bpk en h Ander
1981 (1) SA 103
(T). It is also
consistent with the following passage in the recent.iudgment of Vivier JA in
Abbass v Allianz Insurance Ltd
1990 (1) SA 86
(A) at 90 I-J:
14 "... s 24(2) is concemed cnly with one period of prescription, ie
the statutory period provided for by s 24(1), and... it does not provide
for any relief in respect of ány privately agreed prescriptive
period
which differs from the statutory period."
Appellant's counsel submitted that on a proper interpretation of the
Prescription Act, a
prescribed debt is not extingiushed, but it beoomes
"voidable" at the instance of the debtor. He relied upon the provisions of
section 17
of the
Prescription Act for
the proposition that extinctive
prescription does not operate
ipso iure
and has to be invoked and pleaded
by the debtor.
Section 17
provides as follows:
"17(1) A court shall not of its own motion take notice of prescription.
(2) A party to litigation who invokes prescription, shall do so in the relevant
document filed of record in the proceedings: Provided
that a court may allow
prescription to be raised at any stage of the
proceedings."
15 It is accordingly submitted on
behalf of the the appellant that the true
legal effect of an undertaking given before the expiry of the period
of
prescription not to plead it, is to prevent the debtor from
bringing
about the extinction of the debt by invoking prescription. It does
not
extend the pericd of prescription but rather prevents it frcm
being
brought into operation for as long as the debtor is precluded by
his
undertaking not to invoke it. It follows, so the submission
concludes,
that if an authorized insurer does not invoke prescription and
pays
ccmpensation to a third party after the period of prescription
has
expired, such payment is one under section 21 of the Act.
There are two kinds of statutes of limitations. In the one, the debt, action
or remedy is merely barred. This is generally known as
"weak" prescription. In
the other, the debt, action or remedy is extinguished. This is generally known
as "strong" prescription:
see De Wet and Yeats,
Kontraktereg en
Handelsreg
4th ed. at 256 - 258. An example of weak prescription is to be
found in the 1943 Prescription Act (No. 18 of 1943). In section 3(1)
"extinctive
prescription" is said to be "the rendering
16
unenforceable of a right by the lapse of time". And, in section 3(5),
it
is provided that a debt prescribed by extinctive prescription,
inter
alia
, may be set off against a debt which came into existence after the
lapse of the period of prescription and is sufficient to support
a contract of
suretyship. That section goes on to provide that after the lapse of thirty years
a debt shall cease to be capable of
being set off or of supporting a contract of
suretyship. It follows thát under the 1943
Prescription Act the
lapse
of the periods set forth in
section 3(2)
resulted
in "weak" prescription, whereas the lapse of thirty years resulted in
"strong"
prescription.
The
Prescription Act, if
one has regard to
section 10(1)
thereof, appears to
have introduced throughout the concept of "strong" prescription. It is expressly
stated that after the lapse
of the period which in terms of the relevant law
applies in regard to the prescription of a debt, such debt
"shall be
extinguished"
. And, as was pointed.out by Corbett JA (as he then was), in
Evins v Shield Insurance Co. Ltd
1980 (2) SA 814
(A) at 842 E - F, the
lapse of the period of prescription "extinguishes" the debt
17 and therefore also the right of action vested in the creditor.
Section 10(2)
and (3) of the
Prescription Act provides
as follows:
"(2) By the prescription of a principal debt a subsidiary debt which arose
from such principal debt shall also be extinguished by
prescription.
(3) Notwithstanding the provisions of subsections (1) and (2), payment by the
debtor of a debt after it has beccme extinguished by
prescription in terms of
either of the said subsections, shall be regarded as payment of a debt."
As was pointed out by O'Donovan J in
Kuhne and Nágel AG Zurich v
APA Distributors (Pty) Ltd
1981 (3) SA 536
(W) at 538 G - H,
section 10(3)
"is a deeming provision designed to protect the recipient of payment of a debt
which has been totally discharged by effluxion of
time". In the case of weak
prescription such a provision would not be necessary.
18
In my opinion, the provisions of
section 17
of the
Prescription Act do
not
detract from the effect brought about by
section 10
, ie. the extinguishing
of
the debt. A reason for providing that a court shall not of its own
motion
take notice of prescription and that it must be pleaded by the party
relying
on it may well have been introduced to cater for the eventuality
of some form
of interruption of prescription having occurred. A court
would usually be
ignorant thereof. Whatever the reason, I would agree
with Van Heerden J in
Lipschitz v Dechamps Textiles GmhH and Another
1978
(4) SA 427 (C) at 430 H, that
section 17
is a procedural and not a
substantive
provision. In any event, as was held by O'Donovan J in
Kuhne
and Nagél
AG Zurich v APA Distributors (Pty) Ltd
(
supra
) any inference arising from
the provisions of
section 17
must yield to the clear words of
section
10(1).
As Saayman duly made a claim upon the appellant in terms of section 25(1) of
the Act, in terms of the proviso to section 24(1), prescription
was suspended
during the period of ninety days referred to in section 25(2). I agree,
therefore, with the leamed Judge
a quo
that the effect of section
19
10(1) of the
Prescription Act is
that the liability of the appellant
under
section 21 of the Act became extinguished after the expiry of the period of
two years and ninety days after the date upon which the
cause of action
arose.
The question which now arises is whether a payment made in discharge of an
obligation to pay compensation under section 21 of the
Act which has become
extinguished by prescription is nevertheless a payment made
under section
21
. That, in terms, is what is reguired by the provisions cf section 28(1)
upon which the appellant relies for its right of recourse
against the
respondents.
Section 21 obliges an authorized insurer which has insured or is deemed to
have insured a motor vehicle under the provisions of the
Act -
" subject to the provisions of this Act... to compensate any person
whatsoever (in this Act called the third party) for any loss or damage
which the third party has suffered... "
20
It follows, in my opinion, that a payment is made in terms of the Act
only
where it is made with in the time periods provided for in section 24,
ie.
within the period of two years and ninety days referred to in section
24(1)
or within such longer period as a court may allow in terms of section
24(2).
Where a court allows such longer period it is true that the debt
has become
extinguished by prescription. Nevertheless, the payment when
made will have
been made pursuant to an order in terms of the provisions
of the Act. The
authorized insurer would then have been obliged to make
such payment in terms
of section 21(1) of the Act.
In the present case, however, the authorized insurer agreed to waive the
effect of prescription outside of the provisions of section
24 of the Act. It
did so subject to a condition, ie. the issue of summons prior to the dates
referred to respectively in each of
the letters being Annexures A, B and C to
the written statement of facts. The payment when made on 21 November 1985, was
made some
three years and two months after it arose, ie. after it had become
extinguished by prescription and in circumstances
21
where no order was made by a court in terms of section 24(2) of the
Act.
The payment was therefore not made under section 21 and cannot be
recovered under section 28: compare
Springbok Timber and Hardware Co. (Pty)
Ltd. v National Employers' Mutual General Insurance Co. Ltd
1970 (1) SA 346
(A) especially at 351 E - 352 F. The Court
a quo
was accordingly correct
in dismissing the appellant's claim with costs. In reaching this conclusion it
has not been found necessary
to oonsider the judgments dealing with the effect
of a waiver of prescription on claims made under section 2(6)(c) of the
Apportionment
of Damages Act, No. 34 of 1956. They are distinguishable and not
helpful in the resolution of the problems raised by the facts of
this case. I
refer in this regard to
Thwala v Santam Insurance Co. Ltd and Another
1977 (2) SA 100
(D),
Reis v AA Mutual Insurance Association Ltd
1981 (1)
SA 98
(T), and
Naidoo v Santam Insurance Ltd and Another
1986 (1) SA 296
(N).
The appeal is dismissed with costs.
22
GOLDSTONE AJA
HOEXTER JA )
NESKADT JA )
) CONCUR
MILNE JA )
FRIEDMAN AJA )