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[2003] ZASCA 97
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Lutzkie NO and Another v Zenith Concessions Ltd (386/2002) [2003] ZASCA 97; 2003 (6) SA 643 (SCA) (26 September 2003)
THE
SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO
: 386/2002
In the matter between :
F W A LUTZKIE NO
First
Appellant
S C LUTZKIE NO
Second
Appellant
and
ZENITH CONCESSIONS
LIMITED
Respondent
_________________________________________________________________________
Before: MPATI, NUGENT JJA & VAN HEERDEN AJA
Heard: 16 SEPTEMBER 2003
Delivered:
26 SEPTEMBER
2003
Summary: Cheque â period of prescription
_________________________________________________________________________
J U D G M E N T
_________________________________________________________________________
NUGENT JA
NUGENT JA:
[1] Section 11(c)
of the Prescription Act 68 of 1969 (âthe Actâ) provides that the
period of prescription in respect of a
'debt arising from a bill of
exchange' (except in certain cases that are not relevant to this
appeal) is six years. In this case
an action founded upon a cheque,
commenced within that period, was dismissed by the High Court at
Pretoria on the grounds that the
debt had prescribed when the
underlying debt prescribed (the prescription period of the underlying
debt was three years in terms
of s 11(d) of the Act). The
unsuccessful plaintiff now appeals against that order with leave
granted by this Court.
[2] The cheque was drawn by the respondent in favour of
the appellant in payment of part of the purchase price of the shares
in a
company that were sold by the appellant to the respondent on 25
September 1997. The purchase price of R7 450 000 was payable in
tranches. The first tranche of R4 029 666.49 was payable upon
signature of the agreement and the remaining tranches (in varying
amounts) were payable upon the occurrence of certain future events.
[3] The
respondent paid the sum of R1 029 666.49 to the appellant
on 21 October 1997. On 26 November 1997 the cheque that
is now in
issue, for R2 million, was issued by the respondent in reduction
of the balance of the first tranche that was then
outstanding. The
cheque was presented for payment, and dishonoured, two days later.
[4] The appellant sued the respondent for provisional
sentence on the cheque. The summons was served on the respondent on
20 March
2001 (more than three years after the underlying debt became
due). The respondent raised various defences to the claim. It
alleged
that the cheque was handed over on condition that it would
not be banked until the respondent had given âthe go-aheadâ to do
so, that the person who purported to act for the respondent in
concluding the agreement of sale had not been authorised to do so,
that the agreement was void from the outset for failure of an
underlying assumption or for mistake, and that the respondent was
induced
to conclude the agreement by various misrepresentations. It
also alleged that because the underlying debt had prescribed so too
had the debt arising from the cheque.
[5] The court
a quo
was asked by the
parties to deal with the defence of prescription at the outset
because it was potentially decisive of the claim.
On that issue the
learned judge reasoned that, because the underlying debt (the debt
that arose from the agreement of sale) had
prescribed, the debt
arising from the cheque had also prescribed. To hold otherwise, said
the learned judge â
ââ¦
druis in teen die erkende beginsel van
onderliggende skuldoorsaak soos neergelê in
Froman v
Robertson
en die tjek is nie die rede waarom die eiser hof toe
kom om die geld te vorder nie. Die eiser kom hof toe om die verdere
of die gedeeltelike
betaling van die koopprys te vorder â¦â
[6] A cheque that has been properly drawn
and issued constitutes a contract in writing (with the special
characteristic of negotiability)
and as such it must be founded upon
justa causa debendi,
or reasonable cause, in order to be valid
and enforceable (
Froman v Robertson
1971 (1) SA 115
(A) at
120F-G). Conversely a claim by the payee for enforcement of that
contract will be defeated if it is shown that the requisite
justa
causa
was lacking or has failed (
Froman v Robertson, supra,
at
121G-122C), for example, where the underlying contract was voidable,
or illegal, or there has been a failure to perform (
Malan on Bills
of Exchange, Cheques and Promissory Notes in South African Law
4
th
ed para 65).
[3] To that extent the obligation that
arises on a cheque is dependent upon the validity of the underlying
obligation but it does
not follow that they are extinguished
simultaneously by the operation of prescription. Debts are
extinguished by prescription through
the operation of the Act and the
terms of the Act will determine the extent to which it has had that
effect. Clearly the legislature
intended that a debt arising from a
cheque would not prescribe when the underlying debt prescribed for it
provided expressly for
a different period of prescription to apply in
relation to that debt (cf
Malan, supra,
paras 14 and 185). In
the case of the underlying debt in this case the prescription period
was three years, but in the case of a
âdebt arising from a bill of
exchangeâ (by which is meant a debt which has its source or origin
in a bill of exchange:
Pentz v Government of the Republic of South
Africa
1983 (3) SA 584
(A) at 593B) which is what was sued upon
in this case, the prescription period is six years. That period had
not elapsed at the
time the provisional sentence summons was served
and the defence of prescription should have failed.
[9] 1. The appeal is upheld with costs including the
costs occasioned by the employment of two counsel.
2. The order of the court
a quo
is
set aside and the following order is substituted:
â
The defence of prescription is dismissed with costs.â
3. The action is remitted to the court
a
quo
for the remaining issues to be determined.
_______________
NUGENT JA
MPATI DP)
VAN HEERDEN AJA) CONCUR