Trinity Asset Management (Pty) Limited v Grindstone Investments 132 (Pty) Limited (CCCT248/16) [2017] ZACC 32; 2017 (12) BCLR 1562 (CC); 2018 (1) SA 94 (CC) (5 September 2017)

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[2017] ZACC 32
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Trinity Asset Management (Pty) Limited v Grindstone Investments 132 (Pty) Limited (CCCT248/16) [2017] ZACC 32; 2017 (12) BCLR 1562 (CC); 2018 (1) SA 94 (CC) (5 September 2017)

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CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 248/16
In the matter between:
TRINITY ASSET MANAGEMENT (PTY)
LIMITED
Applicant
and
GRINDSTONE INVESTMENTS 132 (PTY)
LIMITED
Respondent
Neutral citation:
Trinity Asset Management (Pty) Limited v Grindstone Investments
132 (Pty) Limited
[2017] ZACC 32
Coram:
Mogoeng CJ,
Nkabinde ADCJ, Cameron J, Froneman J,
Jafta J, Khampepe J, Madlanga J, Mhlantla J,
Mojapelo AJ,
Pretorius AJ and Zondo J.
Judgments:
The Court:     [1] to [7]
Mojapelo AJ (minority): [8] to [85]
Cameron J     (majority): [86] to [139]
Froneman J    (dissenting): [140] to [153];
(majority): [154] to [166]
Heard on:
4 May 2017
Decided on:
5 September 2017
Summary:
Contract — interpretation — when debt becomes “due
and payable”
Prescription — general rule —
begins to run when debt arises — unless parties clearly
stipulate otherwise
Prescription Act 68 of 1969
—
section 12
— prescription generally not delayed when debt is
“due and payable” only after demand
JUDGMENT
THE COURT:
[1]
This is an application for leave to appeal against a decision
of the Supreme Court of Appeal (hearing an appeal from the High Court

of South Africa, Western Cape Division, Cape Town), which dismissed
an application in which an order provisionally liquidating
the
respondent was sought.  In the three judgments that follow, the
Court considers three primary questions:
(a)
Given the provisional nature of the proceedings, is the
defence of prescription properly before this Court?
(b)
Does the parties’ contract point to an intention to
defer the date when the debt became “due” and thus to
delay
the onset of prescription?
(c)
Did the applicant’s claim prescribe?
[2]
The factual background and issues are set out in the first
judgment by Mojapelo AJ.  All members of the Court concur
in
his exposition of the facts and issues.  The Court
unanimously concludes, though for different reasons, that leave to
appeal
should be granted.  By a majority of ten judges to one,
it further holds that the defence of prescription is properly before

the Court.  Froneman J disagrees, on the basis that the parties
failed to deal adequately with the “
Badenhorst
principle”.  He sets out his reasoning in the third
judgment.
[3]
The Court, by a majority of six to five, finds that the
parties to the contract did not intend to defer when the debt became
due
and hence to delay prescription.  The debt is found to
have prescribed.  The appeal is consequently dismissed.

The second (majority) judgment is written by Cameron J with
Khampepe J, Madlanga J, Mhlantla J and Pretorius AJ

concurring.
[4]
Froneman J, the sixth member of the majority, concurs in the
dismissal of the appeal first because of the
Badenhorst
principle.  He holds that, in the absence of a finding that the
Badenhorst
principle does not apply to disputed legal issues,
there is no ground for faulting the High Court’s dismissal of
the application
for provisional liquidation.  The appeal must
fail and the refusal of the provisional liquidation application in
the High
Court should be confirmed on this ground.
[5]
Second, however, if he is wrong in his view that the failure
to deal adequately with the
Badenhorst
principle precludes
final determination of the prescription issue, Froneman J concurs in
the second judgment’s construction
of the parties’
contract, with additional reasons.  Cameron J, Khampepe J,
Madlanga J, Mhlantla J and Pretorius AJ
concur in these
additional reasons.
[6]
Mojapelo AJ, with Mogoeng CJ, Nkabinde ADCJ, Jafta J and
Zondo J concurring, finds that the parties to the contract
intended
to defer when the debt became due, and thereby the running
of prescription, until demand was made for payment of the debt.  They

would therefore have upheld the appeal.
[7]
In the result, the following order is granted:
1.
Leave to appeal is granted.
2.
The appeal is dismissed.
3.
The applicant is to pay any taxed costs incurred by the respondent.
MOJAPELO AJ (Mogoeng CJ, Nkabinde
ADCJ, Jafta J and Zondo J concurring):
Introduction
[8]
This matter concerns the interaction between prescription and
contractual freedom.  More specifically, it raises the issue of

whether a policy consideration of not allowing an inactive creditor
to delay prescription should override the intention of the

contracting parties to give the right to the creditor to determine
the date of repayment by demand.
[9]
The applicant is Trinity Asset Management (Pty) Limited
(Trinity) and the respondent is Grindstone Investments 132 (Pty)
Limited
(Grindstone).
Factual
background
[10]
On 1 September 2007, the parties entered into a written loan
agreement in terms of which the respondent borrowed a capital amount

of R3 050 000 (loan capital) from the applicant.  At
the time of the conclusion of the agreement, the directors
who
represented the applicant and the respondent were Mr Quinton George
and Mr James Deane, respectively.
[11]
The applicant paid the loan capital in three tranches of R1.5
million, R1 million and R500 000 on 13 February 2008, 15
February
2008 and 21 February 2008, respectively.  The three
tranches were paid into the bank account of Mr Deane.  On 2 June

2009, Mr Nicholas Cunningham-Moorat also became a director of the
respondent.  Then, on 6 April 2011, the respondent resolved
to
enter into a covering mortgage bond in favour of the applicant.
On the same day, a power of attorney was signed by Mr

Cunningham-Moorat on behalf of the respondent in favour of Mr
Thomas Gunston and various others to register a covering
mortgage
bond in favour of the applicant.
[12]
On 19 September 2013, Mr George requested repayment in an
email which he sent to Mr Cunningham-Moorat.  In response, on 25
September 2013, Mr Cunningham-Moorat acknowledged and accepted
the request as a call on the loan and stated that he would start

liquidating assets in order to make repayment.
[1]
However, no payment was made by the respondent to the applicant.
Accordingly, on 9 December 2013, a letter of demand
was served by the
Sheriff on the respondent as contemplated in
section 345(1)(a)(i)
of
the then Companies Act.
[2]
In terms of the letter, the applicant claimed payment of
R4 613 310.52 within 21 days.  In response, the
respondent denied indebtedness to the applicant.
Litigation history
High Court
[13]
On 18 July 2014, the applicant applied in the High Court of
South Africa, Western Cape Division, Cape Town (High Court)
[3]
for the provisional liquidation of the respondent on the basis of the
respondent’s failure to pay its debts, as provided
for in
section 345 of the Companies Act.  The applicant alleged that
the respondent was indebted to it in the amount of R4 613 310.52

together with interest thereon.  It sought an order for the
provisional liquidation of the respondent on the grounds that:
the
respondent was unable to pay its debts
[4]
;
the respondent was commercially insolvent; and it was just and
equitable that it be wound up.
[5]
[14]
The respondent raised the preliminary defence of prescription
to the applicant’s claims.  It raised further defences
that are not of immediate relevance to this judgment.
[6]
With regard to prescription, the respondent contended that the
amounts lent and advanced during February 2008 prescribed
in October
2010,
[7]
alternatively, on 13 March 2011, 15 March 2011 and 21 March 2011,
being three years after the loan amounts were lent and advanced.
[15]
The High Court considered only the defence of prescription,
[8]
referred to the law relating to defences in liquidation applications
as set out in
Hülse-Reutter
[9]
and held that prescription raised by the respondent was indeed a
valid defence.
[10]
It held further that it was not required to determine the merits of
the defence or whether the defence raised was likely
to succeed at
trial.
[11]
Accordingly, the application for provisional liquidation was
dismissed.
[16]
The High Court granted leave to appeal to the Supreme Court of
Appeal (SCA).
Supreme Court of Appeal
[17]
The SCA dismissed the appeal with a majority judgment written
by Willis JA, with Theron JA and Swain JA concurring (majority).  A

dissenting minority judgment was written by Dlodlo AJA, with Bosielo
JA concurring (minority).
[18]
The majority found that the claim had prescribed.  It
held that the debt was due “the moment it was lent and
therefore,
in terms of section 11(d) of the 1969
Prescription
Act, prescription
begins to run from that date”.
[12]
On whether there is or should be an exception to the general
rule that debts payable on demand are due immediately upon advance,

the majority held that it was “not necessary . . .
to express itself finally on the correctness of this proposition”

as, in its view, it was “far from clear” that the parties
had this intention.
[13]
Further, the majority held that clause 2.3 was “merely
a procedural term of the agreement” and thus not
a necessary
condition for the cause of action.
[14]
[19]
The minority held that the debt had not prescribed.  It
reasoned that in order to determine when a debt is “due”,

regard must be had to (1) the intention of the parties and (2) the
policy considerations concerning a supine creditor delaying

prescription.
[15]
As per
Deloitte Haskins
,
[16]
a debt is due (and thus prescription starts to run) when it is
immediately claimable or when the debtor is under an obligation
to
perform immediately.
[20]
The minority agreed with the general principle that, where no
time for repayment is stipulated, the debt is due immediately.
[17]
However, it recognised an exception to the rule: where the parties
expressly agree otherwise.
[18]
In this case, it reasoned, the agreement clearly and unequivocally
provided that performance is due on demand.
[19]
In other words, demand is a condition precedent for the debt to
become payable.  Accordingly, prescription would “only

begin to run from the date of the demand.”
[20]
[21]
The applicant applied on 18 October 2016 to this Court for
leave to appeal.
Further developments
[22]
While the appeal processes were underway, the respondent was
provisionally liquidated in the High Court by FirstRand Bank Limited

on 28 November 2016 on the basis that it was unable to pay its debts
(FirstRand application).  A rule
nisi
was initially
issued returnable on 10 January 2017.  Following an intervention
in the application by the applicant in this
matter (Trinity), a
settlement agreement was reached among the applicant, FirstRand Bank
Limited and the provisional liquidators
of the respondent.  In
this regard, it was agreed, among other things
¸
that the
rule
nisi
in the FirstRand application would be extended
to 5 June 2017 (or such further extension date as may be required) to
allow this
Court to deliver its judgment in this matter.  The
FirstRand application will, therefore, not affect this application.
Following
the provisional liquidation order in the FirstRand
application, the liquidators of the respondent decided to abide the
decision
of this Court.  This Court then appointed a member of
the Johannesburg Society of Advocates to argue the position of the
respondent
pro bono, in order to enable a balanced consideration of
the issues by this Court.  The Court appreciates counsel making
themselves
available at short notice.
In this Court
Applicant’s submissions
[23]
The applicant’s main contention is that the majority in
the SCA erred in finding that, as a matter of law, a debt which is

repayable on demand becomes due the moment the advance is made,
without regard to the expressed intention of the parties.
The
correct approach, the applicant contends, is that in all contractual
cases where the debt is payable on demand, the court must
interpret
the contract to ascertain the intention of the parties as expressed
in the contract and establish whether demand is a
condition precedent
for the enforcement of a claim.  If it is, then the debt becomes
due only after demand has been made in
the terms of the agreement.
The applicant accepts that, in all other cases, a debt
payable on demand is immediately
due.  The applicant supports
the reasoning of the minority in the SCA, submitting further that it
respects the intention of
the contracting parties and thereby honours
the principle of freedom of contract and ultimately the right of
access to court.
Respondent’s submissions
[24]
The respondent submits that this Court should not invoke its
jurisdiction in the applicant’s favour as, firstly, winding-up

a company is a discretionary remedy.  In this regard, the
respondent submits that it is not proper for this Court to exercise

its discretion in favour of the applicant given that (1) the
applicant brought the liquidation application to resolve a bona fide

dispute and (2) the applicant persists in this appeal while at the
same time pursuing an alternative remedy (with reference to
the fact
that the applicant has instituted action proceedings to recover the
debt involving the same subject matter as this appeal).

Secondly, the respondent submits that the matter has become moot as
the winding-up order being sought in these proceedings has
already
been granted against the respondent.  Accordingly, no practical
effect stands to be served by granting leave to appeal
as well as a
second provisional winding-up order.
[25]
On the merits, the respondent submits that i
t
is a well-established principle that a creditor cannot postpone the
running of prescription against it if all that is required
to render
the debt payable is a unilateral act by the creditor.  A
creditor cannot avoid the incidence of prescription by
refraining
from performing that act.
Leave to appeal
[26]
The two issues are (1) the liquidation of the respondent and
(2) the prescription of the applicant’s claim against the
respondent.
[27]
As regards liquidation, there is a general principle that,
where there is a genuine and bona fide dispute concerning the
respondent’s
indebtedness to the applicant, the application for
liquidation should be dismissed (
Badenhorst
principle).
[21]
This principle acknowledges that liquidation proceedings are
not the proper realm to determine disputed debts, and that the

proceedings should not be abused in an attempt to enforce
repayment.
[22]
[28]
Applying the
Badenhorst
principle, the High Court held
that the defence of prescription raised by the respondent was indeed
a valid defence.
[23]
The High Court held further that it was not required to determine the
merits of the defence or whether the defence raised
was likely to
succeed at trial.
[24]
Accordingly, the application for provisional liquidation was
dismissed.
[25]
As the High Court found, whether the respondent is indebted to the
applicant or not is a genuine and bona fide dispute.
The
dispute turns on whether the applicant’s claim has prescribed.
The High Court correctly applied the
Badenhorst
principle and
dismissed the application.  The dispute was indeed palpable and
this was confirmed (in retrospect) by the very
fact that the issue
led to a split decision in the SCA and is now before this Court.
[29]
However, on appeal, the parties agreed that the central issue
was whether the applicant’s claim had prescribed.  This

was the issue which they formulated for the SCA and which that Court
interrogated and gave judgment upon.  It is against that

judgment and decision that the applicant seeks leave to appeal to
this Court.  Neither the majority nor the minority judgment

grappled with the
Badenhorst
principle.
[30]
The issue placed squarely before this Court is therefore the
correctness or otherwise of the decision of the SCA on prescription.

There is no issue with regard to the application of the
Badenhorst
principle by the High Court.
[31]
The question that arises is whether
Badenhorst
bars
this Court from considering the prescription issue.
[26]
In other words, would it, in the circumstances, be in the
interests of justice to dismiss this matter based on the
Badenhorst
principle?  I think not.
[32]
The prescription issue that arises on these facts, namely
whether parties may by agreement give the creditor the right to
determine
when a debt falls due and, therefore, the commencement of
the running of prescription, is properly before this Court.
As
noted by the SCA, the wording of this particular agreement
[27]
appears in many loan agreements.
[28]
An interpretation of clause 2.3 requires a balance
between the expressed intention of the contracting parties and the
policy considerations
underlying prescription.  This will
undoubtedly have weighty implications for commerce in general, as
well as the banking
and credit industries in particular.
Accordingly, t
he issue raises an arguable point of law of
general public importance.
[33]
Furthermore, this is a constitutional matter as it directly
concerns the
Prescription Act,
[29
]
which, this Court has held, “limits the rights guaranteed by
section 34 of the Constitution”.
[30]
It involves the interpretation of legislation and activates the
constitutional duty to promote the spirit, purport and objects
of the
Bill of Rights.
[31]
[34]
It is thus in the interests of justice for leave to appeal to
be granted for this Court to clarify and to provide some certainty
on
the prescription point.
Prescription and contractual freedom
[35]
Professor Loubser summarises the purpose of prescription as
ensuring protection of and fairness to the debtor, enhancing
effectiveness
and efficiency of the courts, promoting social
stability, and achieving legal certainty and finality between the
debtor and creditor.
[32]
With this in mind, I turn to examine the apparent tension
between prescription and contractual freedom.
Prescription
[36]
The current
Prescription Act provides
that “a debt shall
be extinguished after the lapse of [the applicable period]”
[33]
which in this instance is “three years”,
[34]
and that prescription “shall commence to run as soon as the
debt is due.”
[35]
[37]
The term “due” is not defined in the
Prescription
Act.  Its
meaning was recently considered by the SCA in
Miracle
Mile
where it was held:
“In terms of
the [Prescription] Act, a debt must be immediately enforceable before
a claim in respect of it can arise.  In
the normal course of
events, a debt is due when it is claimable by the creditor, and as
the corollary thereof, is payable by the
debtor.  Thus, in
[
Deloitte Haskins
]
[36]
at 532G-H, the court held that for prescription to commence running,
‘there has to
be a debt immediately claimable by the creditor or, stated in another
way, there has to be a debt in respect
of which the debtor is under
an obligation to perform immediately’.
(See also
The
Master v I L Back & Co Ltd
1983 (1) SA 986
(A) at 1004F H).
In
Truter v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA) ([2006] ZASCA
16) para 16, Van Heerden JA said that a debt is due when
the creditor acquires a complete cause of
action for the recovery of
the debt, i.e. when the entire set of facts which a creditor must
prove in order to succeed with his
or her claim against the debtor is
in place”.
[37]
[38]
A debt is due when it is immediately claimable by the creditor
and immediately payable by the debtor.  In
Truter
[38]
the SCA held that, for the purpose of prescription, a debt is due
when the creditor acquires a complete cause of action to approach
a
court to recover the debt.
[39]
The provision was differently worded in
section 5(1)(d)
of the
repealed 1943
Prescription Act which
provided that prescription
began to run “in respect of an action, other than for damages,
from the date on which the right
of action first accrued against the
debtor”.
[39]
[40]
A fundamental principle of prescription, which is much clearer
under the current
Prescription Act, is
that it will begin to run only
when the creditor is in a position to enforce his right in law, not
necessarily when that right
arises.
[40]
[41]
A further principle has been developed, based on policy
considerations, which provides that a creditor should not by his or
her
own inaction delay the running of prescription.
[41]
This policy-based principle appears to have influenced courts to
accept as a general rule that all debts payable on demand
are
immediately enforceable on the conclusion of the contract, and that
it is at this point that prescription begins to run.
[42]
[42]
Thus, when interpreting the words, “payable on demand”,
the Court in
Oneanate
stated:
“A loan
without agreement as to a time for repayment is at common law
repayable on demand.  Although by no means linguistically
clear,
the phrase ‘payable on demand’ is used in this context in
our law to mean that no specific demand for repayment
is necessary
and the debt is repayable as soon as it is incurred.  When suing
for repayment there is no need to allege a demand
and such a demand
is not part of the plaintiff’s cause of action.”
[43]
Contractual freedom
[43]
However, the parties to an agreement may intend that demand be
a condition precedent to the enforcement of the debt, and
consequently,
the debt will be “due” only when demand is
made in terms of the agreement.
[44]
This sound principle of contracts has been accommodated by the
courts as an exception to the general rule stated above.
[45]
The “exception”
[46]
was, for instance, noted by the High Court in
De Bruyn
:
“[I]n keeping
with the principle that a creditor cannot delay the commencement of
prescription by failing to take a step within
his power, it has been
held on a number of occasions that a loan repayable on demand is
immediately due for purposes of prescription.
It is only where
the giving of notice is a condition precedent for a claim, and thus a
necessary ingredient of the creditor’s
cause of action, that
the running of prescription is deferred until the giving of
notice.”
[47]
[44]
This formulation honours the principle of freedom of contract
and the corollary principle that agreements seriously entered into

should be enforced (
pacta sunt servanda
).  As this Court
noted in
Barkhuizen
:
“[P]ublic policy, as informed by the Constitution, requires in
general that parties should comply with contractual obligations
that
have been freely and voluntarily undertaken.  This consideration
is expressed in the maxim
pacta sunt servanda
, which, as the
Supreme Court of Appeal has repeatedly noted, gives effect to the
central constitutional values of freedom and dignity.
Self-autonomy,
or the ability to regulate one’s own affairs, even to one’s
own detriment, is the very essence
of freedom and a vital part of
dignity.”
[48]
[45]
With regard to the policy consideration in issue before this
Court, an analogous matter was recently considered by the SCA in
Miracle Mile
.
[49]
The Court was called upon to decide whether prescription began
to run when the creditor was
able to elect
to accelerate
payment or whether it began to run when the creditor
actually
elects
to accelerate payment.
[46]
The SCA held that the debt in that case became due only when
the creditor
actually
elected to accelerate payment, at which
point prescription began to run.
[50]
Further, it held that the policy considerations concerning an
inactive creditor cannot override the clear provisions of the
Prescription Act.
[51
]
This seems to me to be correct: such policy considerations
should not override the intention of the parties clearly expressed
in
a contract.
[47]
In sum, the relevant principles may, in my view, be restated
as follows.  A contractual debt becomes due as per the
terms
of that contract.  When no due date is specified, the debt
is generally due immediately on conclusion of the contract.

However, the parties may intend that the creditor be entitled to
determine the time for performance, and that the debt becomes
due
only when demand has been made as agreed.  Where there is such a
clear and unequivocal intention, the demand will be a
condition
precedent to claimability, a necessary part of the creditor’s
cause of action, and prescription will begin to run
only from demand.
This, in my view, is not an incident of the creditor being
allowed to unilaterally delay the onset of prescription.
It is
the parties, jointly and by agreement seriously entered into,
determining when and under what circumstances or conditions
a debt
shall become due.
[48]
What of the creditor who fails to exercise the right to make a
demand for a prolonged or even indefinite period?  Firstly, the

latter.  It is within the creditor’s discretion to enforce
or not to enforce the debtor’s obligation to repay.
Secondly,
as for the creditor who makes demand after a prolonged delay, the
court would interpret the agreement to discern
the intentions of the
parties and read in that such a right must be exercised by the
creditor within a reasonable period.
[52]
What is reasonable will depend on the facts of each case.  This
formulation would honour the parties’ intentions
while giving
effect to the purposes of prescription.
[49]
At first glance, a provision which gives one party the sole
discretion to determine the claimability of a loan appears to
constitute
an invalid potestative condition.  Upon closer
examination, however, this is not so.  The nature of potestative
conditions
was examined in
Benlou
:
“I am
fortified in my view by the distinction drawn in our law between a
pure and a mixed potestative condition.  Commonplace
examples of
the two types of conditions are respectively: ‘I will pay you
R500 if I wish to do so’ (a
condicio si voluero
).  And:
‘I will pay you R500 if I do not visit Cape Town before the end
of the year’.  The pure condition
is invalid because it
depends entirely upon the will of the promisor whether or not he will
pay.  The mixed condition is,
however, unobjectionable
(D.45.1.99.1; D.45.1.108; D.45.1.115.1; Voet 45.1.19).  The
reason for the benevolent approach to
mixed conditions is thus
explained by Pothier [in]
A Treatise on the Law of
Obligations
(translation by Evans) vol 1 at 29:
‘Lastly,
though I promise something under a condition, which depends upon my
will whether I will accomplish it or not . . .
as, if I
promise to give you ten pistoles in case I go to Paris, the agreement
is valid; for it is not entirely in my power to
give the money or
not, since I can only refuse to do so in case I refrain from going to
Paris.’”
[53]
[50]
As is readily apparent, such a condition concerns the
unilateral decision to
perform
by the party who is so
“obliged”.  When it comes to a provision mutually
and expressly agreed concerning the making
of demand, that which is
left in the sole discretion of the creditor is the contractual right
given to choose if and when to
enforce
the agreement.  This
is not nearly as controversial as it may first appear considering
that a creditor is not ignoring a duty
to enforce, but rather has
that right (flowing from a contract seriously entered into) and as
such has a choice on whether to exercise
this right or not, subject
to the proviso that the creditor must do so within a reasonable time.
The policy-based rule should
apply to a creditor who
unilaterally assumes the right to determine when prescription will
start to run, and not to one who is
authorised by contract to do
so.
[54]
Has the debt prescribed?
[51]
Did the parties in this case intend that the creditor would be
entitled to determine the time for performance and that the debt
would become due only once demand had been made?  The answer
turns on the proper interpretation of the contract.
[52]
In
Endumeni
, the SCA held:
“[I]nterpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory
instrument or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of
the document as a
whole and the circumstances attendant upon its coming into
existence.  Whatever the nature of the document
consideration
must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which
the provision appears;
the apparent purpose to which it is directed and the material known
to those responsible for its production.
Where more than one
meaning is possible, each possibility must be weighed in the light of
these factors.  The process is objective,
not subjective.  A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines
the apparent purpose of the
document.  Judges must be alert to, and guard against, the
temptation to substitute what they
regard as reasonable, sensible or
businesslike for the words actually used.  To do so in regard to
a statute or statutory
instrument is to cross the divide between
interpretation and legislation; in a contractual context, it is to
make a contract for
the parties other than the one they in fact made.
The inevitable point of departure is the language of the
provision itself,
read in context and having regard to the purpose of
the provision and the background to the preparation and production of
the document.”
[55]
[53]
Further guidance in interpreting contracts may be gathered
from the following further decisions of the SCA.  In
Sassoon
,
the SCA (then Appellate Division) held:
“The first
step in construing a contract is to determine the ordinary
grammatical meaning of the words used by the parties
(
Jonnes v
AngloAfrican Shipping Co (1936) Ltd
1972 (2) SA 827
(AD) at
834E).  Very few words, however, bear a single meaning, and the
‘ordinary’ meaning of words appearing
in a contract will
necessarily depend upon the context in which they are used, their
interrelation, and the nature of the transaction
as it appears from
the entire contract.”
[56]
[54]
Similarly, in
Privest
, the SCA held as follows:
“The language
used in the agreement is the first port of call in ascertaining the
common intention of the parties.  In
this regard, the language
must be given its ordinary and grammatical meaning unless this
results in absurdity, repugnancy or inconsistency
with the rest of
the agreement.”
[57]
[55]
As this is an objective assessment, regard must be had, not to
the parties’ stated intentions about the provisions of the
contract, as these would be subjective, but to the particular
provision and the agreement as a whole.  The material terms of

the agreement which stand to be interpreted to shed light on the
intention of the parties are as follows:
“2.1
The Lender hereby lends to the Borrower and the Borrower hereby
borrows from the Lender, the
sum of R3 050 000.  This
sum is hereinafter referred to as the ‘Loan Capital’.
2.2
The Loan Capital was lent and advanced on 1 September 2007,
notwithstanding the date of
signature hereof.
2.3
The Loan Capital shall be due and repayable to the Lender within 30
days from the date of
delivery of the Lender’s written demand.
2.4
Interest shall be charged by the Lender on the Loan Capital at the
Money Market Rate from
date of payment to date of repayment.  This
interest shall be due and payable on the date on which the Loan
Capital is due
and payable in terms of clause 2.3.  Any interest
which accrues after this date shall be due and payable on accrual
thereof.
3.1
The Borrower shall procure that a second mortgage bond is registered
over the Property as
security for the amounts due in terms of this
agreement.”
[56]
The agreement is not silent on the date of payment.  It
also does not provide that the debt be payable on demand
simpliciter
(without qualification).  It prescribes demand in a specific
manner as an essential step to be taken, and with a particular

effect.  It was a necessary step and a condition precedent to
the enforcement of the debt.  There are a few textual pointers

to this.  In terms of clause 2.3: (a) demand had to be made in
writing (an oral one would not have been compliant) and (b)
once
demand had been made in the prescribed manner, then the “date”
from which the loan capital would become repayable
would become
determinable.  Not before.  It would be “30 days from
the date of delivery of the [creditor’s]
written demand.”
The debtor would be allowed 30 days within which to settle the
debt.  In this context, demand
was not a simple procedural step
that they had in mind.  It was a material condition from which
the due date would be determined.
Without fulfilment of this
condition, the due date could not be determined.  It was an
agreed way in which the creditor
would put the debtor under an
obligation to pay, a condition precedent to enforceability.
[57]
Further, clause 2.4 (the interest clause), with which clause
2.3 must be read, makes it clear that the parties had two separate
dates in mind: (i) the date from which interest was to be charged
which is the date on which the loan is advanced (“from the
date
of payment of the loan”) and (ii) the date on which the
interest so charged shall be repayable – becomes due –

which is the date on which the capital shall become repayable in
terms of clause 2.3 (“due and repayable”).  Interest

was not to be repaid on the same date on which it was charged.  If
the parties had intended these two dates to be the same,
they would
have said so in the agreement – namely that interest shall be
repayable on the same date that it is charged.  They
did not say
so.  That was not their intention.  Interest was to be
charged on one day, and then at another future date
and following
certain conditions, it would be repayable.  The future event was
the making of demand by the creditor in writing
in terms of
clause 2.3.  The parties provided for the two events (the
charging of interest and its repayment) in two
separate sentences,
each fairly clear in its meaning.  This adds to the clarity of
their intention.
[58]
Furthermore, it appears that the parties intended the loan to
be a long term one, repayable after a long period, certainly long
after the date on which the loan was advanced.  They did not
anticipate the creditor taking steps to enforce repayment immediately

after advancing the loan capital.  Interest was to be charged in
the meantime and at some future date still to be determined
the
capital and interest would be repaid.  Hence, in order to secure
the debt over this long period, the parties placed the
debtor under
an additional obligation in clause 3.1.  The debtor had to
procure that a second mortgage bond was registered
over a property to
secure the amounts due in terms of the agreement.  A registered
mortgage bond would have given the parties
at least 30 years before
the debt prescribed.
[58]
That was the approximate period in which their mental timeline
ran.
[59]
It was the intention of the parties thus that the debt would
not become repayable until and unless it was called up in writing by

the creditor.  The demand made as prescribed would constitute
the calling up of the loan and trigger its enforceability.  As

it happened, the bond was never registered.  However, the fact
that they had in mind that type of security reinforces the

interpretation and the view that what they intended was not immediate
repayment, but repayment after a fairly long time.  Clause
3.1
thus sheds light on clause 2.3, as indeed the contract as a whole
should and does.  It is not insignificant that even
on 6 April
2011, more than three years from the date of the agreement, and in
keeping with the initial intention of the parties,
the respondent was
still taking steps to pass a covering bond in favour of the
applicant.
[60]
The fact that, in providing for repayability, the parties
employed the term “due and repayable”, which mirrors
the language of the Prescription Act, indicates that they had in mind
to shift the commencement of prescription – the due
date of the
debt.  They intended to provide for the due date of the debt and
not leave it up to the operation of the law to
determine.  They
thus provided that the loan capital, and consequently its interest,
would be due and repayable within 30
days “from the date”
of the creditor’s written demand, not earlier.  To suggest
that they intended the debt
to be due immediately is to overlook the
meaning of the words and language they used and to render them
naught.
[61]
Finally, while the parties used the word “due” in
the combination “due and repayable” with reference to the

time when the debt would be repayable (in clauses 2.3 and 2.4),
they also used the single word “due” in a different

context in clause 3.1 to describe the amount that had to be secured
by the bond.  In this context, the word “due”
in
clause 3.1 probably means an existing debt and not necessarily a
repayable or claimable debt.  This, however, does not
affect the
unambiguous meaning of the word in clauses 2.3 and 2.4 where, with
the emphatic conjunction with “repayable”,
it bears the
same meaning as in the
Prescription Act, namely
payable or
enforceable.
[62]
Another factor worth mentioning is that the parties fixed 1
September 2007 as the date of the agreement, on which “the loan

capital was advanced” (clause 2.2).  In actual fact,
however, the loan capital was only paid to the debtor in three

tranches in February 2008, more than five months later.  An
interpretation that holds that the repayment of the debt was “due”

immediately would lead to an absurdity in that the debt would then be
held to have been due (repayable) even before the capital
had been
paid to the debtor.  It is the kind of absurdity that
Endumeni
[59]
urges us to avoid.
[63]
In short, applying the rules of interpretation referred to
earlier, on a simple interpretation of clause 2.3, read in context,
the
parties intended very specific things for the debt to become due:
firstly, there had to be a demand, secondly, the demand had to
be
made in writing, and thirdly, once the demand had been made the
debtor would then have 30 days to settle the debt before the
creditor
would be entitled to enforce repayment.
[64]
Considering all of the above, it is apparent that the most
sensible meaning to ascribe to clause 2.3 is that the parties
intended
that the applicant be entitled to determine the time for
performance and that the debt only became due when demand was made.
In
other words, the parties intended for a written demand to be
a necessary condition to the enforcement of the loan agreement.
[65]
The SCA majority stated that a debt can be immediately
claimable even though demand may be necessary for it to be
payable.
[60]
In other words, a distinction, it is suggested, must be drawn
between payability and claimability.  I am unable to agree
with
this formulation.  In the context of prescription, claimability
is the flip side of payability.  To demonstrate
the obvious
difficulty with the payable/claimable distinction let us consider the
following.  Where a debt is not yet
payable
, the debtor
is under no obligation to repay.  However, if the debt is
nevertheless
claimable
prescription would begin to run.  This
will leave the creditor in the impossible position of being unable to
recover the debt
as any attempt to do so would be met with the
successful exception that the debtor is currently not under any
obligation to repay
or, after three years, a successful plea of
prescription.  In this scenario, how is it possible to say that
the debt is claimable
if not yet payable?  The debtor’s
obligation to make payment (payable) is a necessary part of the
creditor’s cause
of action (claimable).
[66]
This distinction is illusory as held by the SCA in
Miracle Mile
where it was stated that “a debt is
due when it is claimable by the creditor, and as the corollary
thereof, is payable by
the debtor”.
[61]
[67]
In the present matter, had the applicant attempted to enforce
the agreement by means of legal action before delivering a written

demand and awaiting the lapse of the 30 day period, the respondent
would have raised a successful exception that the debt was not
yet
payable and as such not yet “due” (claimable).
[68]
What must not be conflated or confused is the coming into
existence of a debt and when that debt becomes due.  In
List
,
the SCA (then Appellate Division) observed:
“[T]he date
on which a debt arises usually coincides with the date on which it
becomes due, but that is not always the case.
The difference
relates to the coming into existence of the debt on the one hand and
the recoverability thereof on the other
hand.”
[62]
[69]
Furthermore, the SCA majority found clause 2.3 to be “merely
a procedural term of the agreement” not a necessary condition

for the cause of action.
[63]
Reference was made to
Tamarillo
wherein it was stated
that:
“A true
suspensive condition in a contract has the effect of postponing the
operation of the contract until the happening
of some uncertain
future event.  (
Resisto Dairy (Pty) Ltd v Auto Protection
Insurance Co Ltd
1963 (1) SA 632
(A) at 644.)”
[64]
[70]
In
Resisto Dairy
, the SCA (then Appellate Division)
stated:
“The question
whether a condition in the [contract] is one suspending the operation
of the [contract] depends upon the nature
of the condition; if in its
nature it is not suspensive, it cannot be made so merely by calling
it a condition precedent.”
[65]
[71]
This is merely another way of calling for the proper
interpretation of the contract.  Moreover, the SCA in
Miracle
Mile
held that compliance with the notice provisions of an
acceleration clause was “not simply a procedural matter but is
essential
to establishing a cause of action”.
[66]
Similarly, in this matter compliance with clause 2.3 is
essential to establishing the applicant’s cause of action.
[72]
The SCA quoted
Oneanate
, presumably with regard to the
qualifier “without agreement as to time”.
[67]
It is true that clause 2.3 does not specify a date nor is the
date objectively determinable.  It is a date to be determined
by
the creditor.
Oneanate
, as is readily apparent from the
quote, was dealing with a situation where there was no agreement as
to time for repayment.  Moreover,
and what makes that case
distinguishable on the law, is that there was no intention by the
parties in
Oneanate
to make demand necessary.
[68]
All this then brings us back to the main question whether this
was the intention of the parties.  In other words, did
the
parties intend for demand to be a condition precedent to enforcement?
And my short answer is yes.
When was demand made?
[73]
On 19 September 2013, the applicant sent an email to the
respondent stating:
“Nick, could
you confirm that you are happy to settle the outstanding amount on
the property fund and give an indication as
to when it will be done?
Steve, could you
confirm with Nick the amount outstanding?”
[74]
On its own, this does not seem to be sufficiently clear and
unequivocal to be a demand.
[69]
However, this must be read in light of the response by the
respondent:
“This note
serves to confirm that Trinity has called the property fund.
The current outstanding balance is R4,55 m.
We have
executed on an associated asset sale to support this call.  All
things being equal, we expect these funds to release
within 60-90
days.”
The respondent understood the
applicant’s email (and the applicant intended it) to constitute
a demand calling for the repayment
of the debt.  Written demand
was properly made in terms of clause 2.3 on 19 September 2013.
Although it is not necessary
to decide this point, on this
interpretation prescription commenced 30 days after that demand which
falls on or about 20 October
2013.
[70]
[75]
I would suggest that, properly construed, the demand
prescribed in clause 2.3 need not be scrutinised too strictly.
It
is not a formal letter of demand to initiate legal
proceedings, which has to contain all the elements of the cause of
action.  What
clause 2.3 contemplated is something in
writing to call up the debt (making it due).  In the language of
De Bruyn
[71]
it is no more than “the giving of notice” that the
repayment is no longer suspended.  This appears to be how the

author of the email and its recipient understood it to be.
[76]
Even if I were wrong on the above construction of demand and
the email was not a demand, the letter sent on 9 December 2013,
although
drafted as a letter for the purposes of section 345(1)(a) of
the Companies Act, nevertheless constituted a written demand within

the purview of clause 2.3.  There could have been no doubt
after that date or, at the latest 30 days after that date,
that the
loan was due and repayable.  The loan was advanced in tranches
in February 2008.  On either interpretation,
there was
approximately a six-year period between the loan being advanced and
the demand being made.  Is this within a reasonable
time?
[77]
This question cannot be answered in abstract.  As stated
above, each case must be determined on its own facts.  Had the

debt been due immediately, the creditor would have had three years in
which to enforce repayment.  Here, the parties intended
to give
the creditor the right to determine when the debt became due.  It
was, by necessary inference, the parties’
intention for the
debt to become due at the very least more than three years after each
advance was made.  In the circumstances
discussed above, this
period was not unreasonable and thus falls within the acceptable
limits of the creditor’s contractual
right to call up the debt.
[78]
In my view, therefore, from the end of 2013, prescription
began to run.  It was then interrupted in terms of
section 15(1)
of the
Prescription Act by
the service of summons on the respondent
in November 2015.
[72]
[79]
The applicant’s claim has not prescribed.  In the
light of this conclusion, and having regard to the developments that

preceded it, it would have been necessary to make a declaratory order
to that effect in order to provide certainty.
Remedy
[80]
In the light of my conclusion on prescription, would I have
ordered that the respondent be provisionally liquidated as prayed for

by the applicant?  There are numerous considerations pointing
away from making such an order.
[81]
Firstly, the High Court (and subsequently the SCA) considered
and decided the defence of prescription only.  There are other

defences that the respondent raised in the High Court which have not
been considered.  Having regard to the test for evaluating
the
defence to liquidation, which the High Court articulated
correctly, there is no reason why this Court should now consider
the
remaining grounds and defences to liquidation and decide the matter
as a court of first and final instance.
[82]
Secondly, the respondent has already been placed under
provisional liquidation on 28 November 2016 by the High Court in the
FirstRand
application.
[83]
Thirdly, the applicant has successfully intervened and is now
a party in the liquidation application pending in the High Court.  It

is therefore in a position to assert whatever right it may have with
regard to the liquidation of the respondent.
[84]
The applicant has sought to persuade this Court to grant a
second provisional winding-up order so that it may achieve an earlier
concursus creditorum
(crystallisation of creditors), because
the date for the liquidation of the respondent will then be deemed to
be the date on which
the application was presented, namely
18 July 2014.  This is earlier than the date when the
FirstRand liquidation
was instituted.
[73]
This fact is however countered by the fact that the applicant
has already committed itself, in an agreement with the parties
in the
FirstRand application, to not seek the final liquidation of the
respondent in this case, even if this Court was to grant
it a
provisional liquidation.  I am unable to appreciate the
interests of justice in granting a provisional order to a party
which
is already committed not to seek a final order.  This has
elements of an abuse of court process.
[85]
Lastly, as discussed in considering whether to grant leave to
appeal, the
Badenhorst
principle, although not a bar to
considering the prescription issue, may be a bar to granting a
provisional liquidation order as
prayed for.  Although I find
that the debt has not prescribed, prescription was a valid and bona
fide defence when it was
raised.  Furthermore the other defences
raised in the High Court have not been considered.  As far as I
am aware, they
have also not been withdrawn.  There is no
compelling case for this Court to consider those defences as a court
of first and
last instance.
CAMERON J (Khampepe J, Madlanga J,
Mhlantla J and Pretorius AJ concurring):
Introduction
[86]
I have had the benefit of reading the judgment of my
colleague, Mojapelo AJ (first judgment).  I agree that
leave to appeal
should be granted.  I also agree that the
Badenhorst
principle does not obstruct a determination of the
point at issue here.  That principle is less of a principle than
a sensible
rule of practice.  It says that if you want to claim
a debt you know is disputed, you should not bring liquidation
proceedings
to do it.  You should claim the debt by way of
action – and only once your claim has been established may you,
if necessary,
seek to liquidate or sequestrate.
[87]
When the dispute about the debt is not about whether it exists
or its amount but about its exigibility, things are different.

Then the doubt arises from a disputed principle, not contested
facts.  This means that the liquidating or sequestrating court

is not diverted into a time-consuming and complex factual enquiry.
The only point before it is a law point.  That law
point can be
determined with precision and with dispatch.
[88]
That is what happened here.  Yekiso J at several points
seemed to be stating that he was applying
Badenhorst
.
However, what he in fact did was to rule conclusively against
Trinity that, for legal not factual reasons, its claim had

prescribed.  The fact that the High Court may seem to have
disposed of the matter by applying
Badenhorst
does not
diminish the conclusory nature of its finding on prescription.
[89]
The High Court considered the parties’ submissions,
including Grindstone’s submission that the prescription defence
was a “good and valid defence,
based on facts that are
common cause
”.
[74]
It concluded that “prescription, as raised by the
respondent [i.e. based on common cause facts] is indeed a valid
defence”.
[75]
This after a detailed analysis of case law relating to prescription.
When the High Court went further to state what
it was “required”
to do and, seemingly based on what it was “required” to
do, concluded that “the
grounds upon which the claim is
disputed are not unreasonable”
[76]
,
it did not invalidate its finding that, in law, the prescription
defence, as raised by Grindstone, was valid.  If, then,
based on
common cause facts, the prescription defence was valid, what more had
to be established at trial, in relation to this
“valid”
defence?
[90]
The High Court’s judgment conclusively extinguished
Trinity’s claim.  That was also the parties’
understanding.
They set aside their other disputes and
expressly agreed that the only issue on appeal to the SCA would be
the law point –
whether Trinity’s claim had prescribed.
They did so for perfectly sound reasons.  It made good practical
sense
for them to do so.
[91]
A good analogy is when an applicant at risk of harm seeks an
interim interdict.  When the facts are unclear, the interdicting

court must weigh prospects, probabilities and harm.  But when
the respondent, who is sought to be interdicted, has a killer
law
point, it is just and sensible for the court to decide that point
there and then.  The court is in effect ruling that,
whatever
the apprehension of harm and the factual rights and wrongs of the
parties’ dispute, an interdict can never be granted
because the
applicant can never found an entitlement to it.
[92]
Exactly the same here.  The High Court found that Trinity
could never enforce its claims against Grindstone, regardless of any

factual dispute or rights and wrongs.  The question then is
whether the High Court was wrong, as a matter of law, to decide
this
law point.  I do not understand the
Badenhorst
principle
to preclude a determination, by a liquidating or sequestrating court,
of a killer law point based on common cause facts.
As Rogers J
pointed out in
Orestisolve
:
“[T]he rule,
which is not inflexible, would not generally be an obstacle to
liquidation if the court felt no real difficulty
in deciding the
legal point.  . . . [T]he equivalent rule in England finds
application where the dispute is shown to be one
‘whose
resolution will require the sort of investigation that is normally
within the province of a conventional trial’.
A purely legal
question would not have that character.”
[77]
[93]
This is not to say that a liquidating or sequestrating court
can never rely on
Badenhorst
to refer legal issues, even on
common cause facts, to a trial court.  First instance
courts may have many reasons for
kicking for touch.  But
Badenhorst
does not preclude a court from deciding a
straight-forward legal issue based on common cause facts.  And
that is what the
High Court did here.  The prescription point
was therefore properly before the SCA and was understood as being so
by both
the majority and minority.  And it is properly before
this Court.
[94]
But beyond that, I cannot agree with the first judgment.
I disagree that the appeal should succeed.  In my view,
prescription
started its deadly trudge on the day the loan at issue
in these proceedings was advanced, and the parties’ written
agreement
did not postpone it.  My primary basis for
disagreement is that the first judgment attaches undue significance
to the word
“due” where it appears in clause 2.3 of
the parties’ loan agreement.
[95]
That said, I agree with the first judgment’s exposition
of the legal principles governing when a debt payable on demand is

due
[78]
– but I disagree with the way the first judgment applies those
principles to the facts here.  I cannot agree that a
holistic
reading of the loan agreement shows that the parties intended to
delay the “dueness” of the claim, and consequently
the
running of prescription, until a letter of demand was issued.
The first judgment finds that the letter of demand was
an essential
ingredient of Trinity’s cause of action,
[79]
and a “necessary condition to the enforcement of the loan
agreement”.
[80]
I disagree.
Meaning of “due”
[96]
Section 12(1)
of the
Prescription Act provides
that
prescription “shall commence to run as soon as the debt is
due”.
[81]
The
Prescription Act doesn
’t define “due”,
but long-standing SCA decisions have given it content.  In
Deloitte Haskins
the Court said that “prescription
shall commence to run as soon as the debt is due” means that—
“there has to
be a debt immediately claimable by the creditor or, stated in another
way, that there has to be a debt in respect
of which the debtor is
under an obligation to perform immediately. . . .  It follows
that prescription cannot begin to run
against a creditor before his
cause of action is fully accrued, i.e. before he is able to pursue
his claim.”
[82]
[97]
Truter
said a debt is “due”—
“when the
creditor acquires a complete cause of action for the recovery of the
debt, that is, when the entire set of facts
which the creditor must
prove in order to succeed with his or her claim against the debtor is
in place or, in other words, when
everything has happened which would
entitle the creditor to institute action and to pursue his or her
claim.”
[83]
[98]
In
Miracle Mile
, the SCA reaffirmed the existing
doctrine applied in
Deloitte Haskins
and
Truter
.
Under the statute, it said—
“a debt must
be immediately
enforceable before a
claim in respect of it can arise.  In the normal course of
events, a debt is due when it is claimable
by the creditor, and as
the corollary thereof, is payable by the debtor.”
[84]
[99]
Section 5(1) of the 1943
Prescription Act differed
from
section 12
of the
Prescription Act.  Section
5(1)(d)
of the 1943
Prescription Act provided
that prescription began to run
“in respect of an action, other than for damages, from the date
on which the right of action
first accrued against the debtor”.
[100]
The current statute is markedly different (due versus first
accrual).  This is because the date on which a debt becomes
“due”
may not coincide with the date on which it arises.
There is a difference between the debt coming into existence, and the
date on which it becomes “due”.
List
illuminated this:
“The
difference relates to the coming into existence of the debt on the
one hand and the recoverability thereof on the other
hand. . . . It
is a distinction which is recognised by the Legislature in the 1969
Prescription Act; section
12 provides that prescription begins to run
‘as soon as the debt is due’, whereas
section 16
, which
relates, not to the running of prescription, but to the application
of the Act, significantly refers to ‘a debt
which
arose’.”
[85]
When are loans “payable on
demand” ordinarily due?
[101]
When a contract doesn’t say when precisely a debtor must
perform or repay, the general rule is that the debt is “due

immediately upon conclusion of the contract”.
[86]
But what about a creditor whom the contract gives power
unilaterally to determine when the debtor must perform – by

making demand?  Loubser points out that “opinions are
divided” on whether prescription begins to run as soon as
the
creditor has the right to demand that performance be made, or when
actual demand is made.
[87]
Saner suggests that a contractual term that performance
is due “on demand” simply reinforces the implicit term

that performance is due as soon as the deal is made.
[88]
[102]
Oneanate
is instructive.
[89]
The first-instance Court had to determine when prescription began to
run on a bank’s claim for repayment of four separate
amounts
debited to a current account.
[90]
When were the separate debts in the overdrawn account “due and
repayable”?  The Court invoked the long-standing
common
law rule that a loan without stipulation as to a time for repayment
is “repayable on demand”.
[91]
But what does “repayable on demand” mean?  The Court
said that “[a]lthough by no means linguistically
clear”,
the phrase means that “no specific demand for repayment is
necessary and the debt is repayable as soon as it
is incurred.”
[92]
The practical effect is this.  When suing for repayment the
creditor doesn’t need to allege a demand: demand is
not part of
the plaintiff’s cause of action.
[93]
After considering English, Canadian, Australian and New Zealand law,
the Court held that, unless the parties agree otherwise,
a loan
“repayable on demand” is repayable from the moment the
advance is made and that no specific demand for repayment
need be
made for the loan to be immediately due and repayable.
[94]
[103]
Hence the High Court in
Oneanate
concluded that
prescription begins to run against the bank in respect of monies
loaned on overdraft as soon as the advance is made.
For
practical purposes, prescription commences running on the date upon
which the debit is entered into the account.
[104]
Here, of course, the loan was not “payable on demand”
but rather repayable 30 days after demand.  Does the

additional 30-day period afforded to the debtor to repay change
anything?  Does it take this agreement outside the law applying

to loans “payable on demand”?  No.  The 30-day
period makes no difference.  The point of the jurisprudence
is
that the creditor has the unilateral power to demand performance from
the debtor at any time from advance – not that,
following
demand, the debtor must pay immediately (“on demand”) or
30 days later.  In both instances, the creditor
has the sole
power to demand performance at any time.
[105]
It is this fact – that the creditor has the exclusive
power to demand that performance be made when the creditor so chooses

– that has given rise to the general rule applying to loans
“payable on demand”, namely that prescription begins
to
run when the debt arises, unless there is a clear indication to the
contrary.
[95]
This loan agreement
[106]
So the question is whether this loan agreement gives us enough
signs to justify dumping the general principle that in loans “payable

on demand” prescription begins to run as soon as the money is
paid.  And our starting premise is that the parties’

contract fixes when a contractual debt becomes due.
[96]
[107]
In a sophisticated argument, counsel for Trinity invoked the
shift in statutory wording from 1943 to 1969.  She contended
that
“due and payable” in clause 2.3 was significant
because it resonated with “due” in
section 12(1)
of
the present statute.  This meant that the parties intended that
prescription should not run until demand under clause 2.3
had
been made.  The wording is indeed suggestive.  But
counsel’s argument doesn’t bring the conclusion home.
[108]
One telling sign is that the agreement itself uses the word
“due” elsewhere – with results that knock a hole in

the argument.  Clause 3.1 provides that “[t]he Borrower
shall procure that a second mortgage bond is registered
over the
Property as security for the amounts due in terms of this agreement.”
[109]
If Trinity’s argument is right, no mortgage bond could
ever have been registered for any amounts “due” under the

agreement, because none were “due” until 30 days after
demand was made.  And, once demand was made, and the amounts

“due” became payable, it would (on Trinity’s
argument) be silly to try to register a mortgage bond for only 30

days (registration itself usually takes months).
[110]
This means “due” in clause 3.1 cannot mean what
Trinity says “due” means in clause 2.3.  “Due”

must, for reasons of ordinary intelligibility,
[97]
mean the same wherever it appears in the parties’ agreement.
In its setting, “due” here plainly means “the

amounts advanced and repayable in terms of this agreement”.
But the parties didn’t say that.  They said
“due”.
And that is a strong pointer away from Trinity’s argument.
It significantly weakens the suggestion
that, because of the verbal
resonance with “due” in the statute, “due” in
clause 2.3 means that the monies
paid over to Grindstone are
claimable only after demand.
[111]
The first judgment relies on the loan agreement’s
interest clause to say that the demand requirement delayed
prescription.
[98]
The suggestion is that, because the parties clearly intended interest
to be charged from when the loan was paid over, but
that interest was
“due and payable” only when the loan capital was “due
and payable”, prescription was
delayed.  To me, this
doesn’t wash.  “Charged” in clause 2.4 doesn’t
entail that the word “due”
in clause 2.3 should be
afforded a heightened significance.  It is conceivable that, as
with the loan capital, interest
would be “due” for the
purposes of the
Prescription Act on
advance, but would only be
repayable along with the loan capital.  Indeed, interest usually
only starts running from when
a debt is “due”.
[99]
On the first judgment’s approach, interest would only start
running from when demand was made, as this would be the point
at
which the debt became “due”.  That is commercially
unsound.  And hence improbable.
[112]
The loan agreement provides that, regardless of the date of
signature, the loan capital was deemed to be “lent and advanced

on 1 September 2007” (clause 2.2).  In actual fact, the
funds were advanced in separate tranches in 2008.  The
first
judgment holds that, if the debt were “due” on advance,
this would be an absurdity because the debt could not
have been “due”
before it was even advanced.
[100]
No.  This misses that clause 2.2 creates a fictitious advance
date for the loan.  And fiction often entails absurdity.

But if it is absurd that the debt should be “due” before
the funds were advanced, then it is even more absurd that
the
agreement stipulated that the actual advance took place before it
did.
[113]
This is not to play clever tricks with logic or the parties’
expressed language.  The point is that absurdity is inherent
in
the clause itself.  And the first judgment’s approach is
caught up in it too.  The first judgment finds that
interest was
charged on advance.
[101]
1 September 2007 is the agreed advance date.  How can interest
be charged from this date when we know that the funds
were advanced
only in 2008?  The point is this.  If the parties agree on
a fictional advance date – as often happens
in commercial loan
agreements – any seemingly “absurd” consequences
are attributable to the deeming provision
itself, and not because of
the general principle that prescription begins to run as soon as the
money is paid for loans “payable
on demand”.
[114]
Back to the mortgage bond Grindstone was supposed to register
under clause 3.1.  Trinity said this obligation shows that

the parties envisaged a long non prescriptive period.  This
argument too is weak.  Even a short-term loan can be
secured by
a mortgage bond (as long as the registration formalities can be
practicably accomplished).  Still less does the
fact that the
parties envisaged a mortgage bond being registered over the property
help the conclusion that demand was necessary
to make the debt “due”.
[115]
Trinity subtly invoked the principle that “deals are
deals” and must be upheld (
pacta sunt servanda
).
That is a grand principle, but its roots find stony ground here.
Context is pivotal in reaching a sound assessment
of meaning.
The context, really, gives us no clue that the parties’ meaning
was to delay prescription until 30 days
after demand.
[116]
The loan agreement is short and featureless.  It’s
a run-of-the-mill loan deal, plucked from some attorney’s desk

in a hurry, and almost certainly not specially crafted or drafted.
The agreement is devoid of significant attributes; the
loan itself is
not unusual; the terms are blandly routine; there is little
distinctive about the parties; and there are no unusual
stipulations.
[117]
All this points to the conclusion that “due and payable”
in clause 2.3 was used loosely.  It said Grindstone would
have
to pay up 30 days after Trinity sent a written demand – not
that the written demand was required to render the debt
“due”,
still less that prescription was held up until demand was properly
made.
[118]
The majority in the SCA made a telling point along these
lines.  It said that clause 2.3 is a—
“standard
notice clause appearing in innumerable loan agreements throughout the
land.  The interpretation placed on this
clause by [the minority
judgment] could have far-reaching implications for the running of
prescription in all such everyday instances.”
[102]
[119]
The first judgment does not engage with these “far-reaching
implications”.  But they are significant.
They
should not be trampled roughshod.  To hold that a
run of-the-mill notice clause delays prescription is to place

enormous power in the hands of a creditor.  It is to permit
a deviation from otherwise applicable prescription principles
where
the parties’ signification is anything but clear and
unequivocal.
Existing jurisprudence
[120]
The first judgment holds that the debt is not “due”
until demand has been made because, absent demand, Trinity has not

acquired a complete cause of action.
[103]
In other words, the debt is neither claimable nor repayable until
demand has been made.
[104]
Since the debt is neither claimable nor repayable until then, the
debt is not “due” for prescription purposes.
[121]
This is not without force.  “Due” and “due”.
One in the statute; the other in this contract.
Indeed, at
first blush, there seems to be some shoehorning required to find
that, despite the requirement of demand, the loan here
was “due”
as soon as it was paid over.  The conclusion that the loan was
“due” on advance for the
purposes of the
Prescription Act
entails
that, as soon as the loan was paid over, the debt was
“immediately claimable” by Trinity, and that Grindstone
was therefore
“under an obligation to perform
immediately”.
[105]
[122]
On closer examination, there is no inconsistency.  What
prescribes is Trinity’s right to claim payment.  And that

right is unaffected by when payment must actually be made.  This
means that Trinity had the right to claim payment immediately,
even
though Grindstone had 30 days to pay.  Once paid over, Trinity
is able to trigger repayment of the loan from Grindstone
anytime.
The debt, in this sense, is immediately claimable and enforceable.
There is no conditionality attached to
the making of demand and the
claimability of the debt.
[123]
By contrast, if the loan agreement had provided that “the
lender will not demand repayment of the loan at any time before at

least 30 days have lapsed since advance of the funds”, it would
have been very different.  There, the conditionality
attached to
the lender’s right to claim back the loan would delay
enforceability and claimability of the debt.  But
that is not so
here.  Here, the right to claim back the loan is exercisable by
Trinity at any time from advance.  And
Grindstone is by
corollary under an immediate obligation to perform in terms of the
demand.  There is no incongruence between
the finding that
prescription begins to run on advance of the loan and the meaning
given to the term “due”.
[106]
[124]
Ultimately, it is a question of fact whether the parties
intended demand to be a condition precedent for the debt to be
“due”.
[107]
Loubser postulates the vivid example of a family trust.
[108]
Say you make a loan to a close relative, your daughter, or your
father.  The daughter is studying.  Or the parent
is hard
up.  The circumstances show that the loan is on the
never-never.  The debt won’t be due, in any sense,
legal,
technical or practical, until you say, “Please won’t you
pay back”.  In that case, it is clear that
the parties
intend demand to be a condition precedent to repayment.  The parties
do not intend the debt to be “due”
until demand is
made.
[109]
This contrasts strongly with any ordinary commercial loan agreement.
For the parties to delay prescription is simple.
They just have
to say so.  But they must say so.  If they don’t, the
featurelessness of their agreement –
as here – means that
prescription starts to run immediately once the money is paid over.
[125]
Stockdale
[110]
provides a further example that contrasts with the contract here.
In that case, the defendant had signed two acknowledgments
of debt in
favour of the plaintiffs.  When the plaintiffs wanted their
money back, the defendant raised prescription.
Traverso AJP
scrutinised the circumstances surrounding the conclusion of the
acknowledgements of debt.  These were signed
in favour of the
plaintiffs, who were the parents of the defendant’s husband.
The plaintiffs lent the defendant money
to pay off an existing bond.
The “understanding” between the parties was that, while
the plaintiffs’ son
lived in the house or worked for them or
remained married to the defendant, the plaintiffs would not call up
the debt.
[111]
That meant prescription didn’t run.
[126]
In terms of clause 2 of the
Stockdale
acknowledgments
of debt, the defendant undertook to “repay the capital amount
outstanding and interest . . . within 30 days
from the date notice is
given by the creditors”.
[112]
[127]
The Court reinforced the general principle—
“in all
obligations in which a time for payment has not been agreed the debt
is due forthwith.  However, it is also clear
that this may be
qualified in the light of the particular circumstances of the
case.”
[113]
[128]
The Court considered that – specifically because the
parties were related to one another and had an understanding that the

debt would not be called upon immediately or soon after advance –
“the only reasonable inference to be drawn . . . is

that nobody regarded the loan as immediately repayable”.  The
loan would only become “due” if there were
changes in the
parties’ living arrangements, marital status or employment
situation.
[114]
So the prescription defence failed.
[129]
Significantly, the Court pointed out that “no specific
date for demand was fixed in the document and no condition was linked

to the demand”.
[115]
Despite this fact, the Court found that it was clear that it was
“never contemplated that the ‘notice’
to repay
could or would be given within 30 days of the date of the
acknowledgements”.
[116]
[130]
This is a good example of parties clearly intending demand to
be made before prescription would run.  The Court’s
reasoning
was centred on the special, familial relationship between
the parties.  This formed the basis for the conclusion that the
parties never intended demand to be made immediately following
advance, or within any period of time soon thereafter.  It was

only if the specific circumstances changed that the plaintiffs would
call up the loan.
[131]
There’s nothing like that here.  No distinguishing
features of the agreement.  No circumstances surrounding its
conclusion to justify a similar outcome.  No suggestion
that Trinity could not make demand straight after advance, or
that it
would demand only if circumstances changed.  Indeed, anything
like that would be inimical to most ordinary commercial
loan
agreements.  Of course, commercial circumstances might entail
the opposite.  Then the agreement will say so.
This one
doesn’t.  Loubser rightly reminds us that a clear
indication is essential because of the policy considerations
that a
creditor should not unilaterally be able to delay prescription.
[117]
Final observations
[132]
The problem with Trinity’s approach, were it vindicated,
appeared vividly during oral argument.  When asked whether the

debt could endure indefinitely, say for 80 years, counsel for Trinity
had a reply ready.  It was that a term should be implied
that
Trinity must make demand within a reasonable time.  But that
creates more problems.  What is “a reasonable
time”?
And given the utter featurelessness of this agreement, how do we
determine when it would have been “reasonable”
for
Trinity to make demand?  Immediately?  No?  Then when?
[133]
My conclusion means it is not necessary to consider the effect
of the emails dated 19 and 25 September 2013, or the letter of demand

of 9 December 2013 in terms of section 345(1)(a)(i) of the Companies
Act.  This is because by then the debt had already long

prescribed – at latest in 2011, three years after the loan
tranches were advanced.
[134]
To the extent that it is necessary to say so, I have serious
misgivings about the conclusion that the September emails were a
demand
under clause 2.3.
[118]
In
Combined Developers
, Davis J considered whether a
creditor’s email to the debtor constituted proper demand,
noting that no exact amounts
were set out and no request was made to
pay per return.  Hence it was not unreasonable to conclude that
the creditor was awaiting
a response from the debtor as to when it
would pay, and thereafter assess the situation.
[119]
The Court concluded that, because the clause was
“draconian . . . it [was] the least that could be expected for
a proper
demand to be made, which would inform [the] respondents of
the entire amount”.
[120]
[135]
Here, the email of 19 September 2013 was not unambiguous –
nor did it establish a fixed date for performance, nor did it set
out
the amount due.  It did not place the debtor on terms.  In
fact, it “demands” nothing.  The email
back from
Grindstone cannot alter the nature of the demand to make it
unambiguous.
[121]
There are only two options: either the email constituted a valid
demand under clause 2.3, or it did not – but unless

Grindstone’s response constituted a waiver of its entitlement
to rely on the fact that the email did not constitute a valid
letter
of demand, that response couldn’t fix up the holes in Trinity’s
demand.  In short, the fact that Grindstone
understood the email
to constitute a demand didn’t make demand valid for contractual
purposes.
[136]
In his judgment, Froneman J gives additional reasons for
concluding that the parties’ contract did not postpone the
onset
of prescription.  I concur in those reasons.
Conclusion
[137]
It is undoubtedly so that the verbal resonance of “due”
in clause 2.3 with
section 12(1)
of the
Prescription Act helps
Trinity’s argument.  But in the end, it is just too
slender to warrant the inference Trinity seeks.  The plain
and
un-extraordinary nature of the loan agreement, coupled with the
absence of a clear signification to the contrary, leads to
the
conclusion that the parties did not delay prescription until demand.
Costs
[138]
On 30 March 2017, the provisional liquidators of Grindstone
indicated their intention to abide by the decision of this Court, and

not to make submissions.  The Court then requested
Ms Nkosi-Thomas SC of the Johannesburg Society of Advocates to
assist
it with submissions on behalf of Grindstone.  We are
indebted to her for her pro bono assistance in the best traditions of

the legal profession.  Ms Nkosi-Thomas supported an order
dismissing the appeal with no order as to costs.  However,
there
can be no reason why any costs that Grindstone may have incurred in
the litigation before 30 March 2017 should not follow
the outcome.
The order will reflect that.
[139]
The following order is granted:
1.
Leave to appeal is granted.
2.
The appeal is dismissed.
3.
The applicant is to pay
any taxed costs incurred by the respondent.
FRONEMAN J
(Cameron J, Khampepe J, Madlanga J, Mhlantla J
and Pretorius AJ concurring in [154] to
[166]):
Introduction
[140]
I have had the privilege of reading the judgments of Mojapelo
AJ (first judgment) and Cameron J (second judgment).  I
agree that the outcome of this matter should be that the application
for the provisional liquidation order must be dismissed.
To get
to that conclusion, I travel a different route, in some respects,
from each of their judgments, hence the need for this
one.
[141]
Both judgments agree that leave to appeal must be granted.
I do too, but also for an additional reason.  I consider there

to be an antecedent issue to be dealt with before one can get to the
issue of prescription.  It concerns whether what has
become
known as the
Badenhorst
principle also applies to purely legal
issues that arise in provisional liquidation proceedings.  The
principle holds that
where there is a genuine and bona fide
(good faith) factual dispute concerning a debtor’s indebtedness
to a creditor
seeking provisional liquidation of the debtor’s
estate, the application for provisional liquidation should normally
be dismissed.
[122]
There is as yet no authoritative certainty whether this
principle also applies to genuine and reasonable legal disputes
arising from undisputed facts.
[123]
It is in the interests of justice to consider this issue as well.
[142]
Both the first and second judgments assume that the
prescription issue is properly before us, in the main because the
parties agreed
before the SCA, and in this Court
,
that it should be.  But that is not good enough.  If,
objectively, the High Court did not attempt to make a final

pronouncement on the issue of prescription then the parties cannot
turn that into a final decision by agreement between themselves
to
treat it as final.  Nor can the High Court purport to make a
final decision where the law does not allow it to do so.
So the
least that is required is for us to interrogate whether the High
Court purported to make a final and definitive decision
on the
prescription issue and, if so, whether it was entitled to go that
route.
[143]
Having accepted that the prescription issue is squarely before
this Court, the first and second judgments then veer off in opposite

directions.  In the first judgment Mojapelo AJ holds that
Trinity’s claim against Grindstone has not prescribed, while
in
the second, Cameron J holds that it has.  If I am wrong in my
view that the failure to deal adequately with the
Badenhorst
principle precludes final determination of the prescription
issue, I need then to come clean on the merits of the prescription
issue.
On that issue I concur with the second judgment
although, once again, with additional reasons.
[144]
All this needs some explanation, which I will now attempt to
provide.
The Badenhorst principle
[145]
Liquidation proceedings are designed to bring about a
concurrence of creditors to ensure an equal distribution of the
insolvent
estate between them, and are inappropriate to resolve a
dispute as to the existence of a debt.  In order to prevent the
possible
abuse of the liquidation process, the rule was developed to
the effect that where there is a genuine and good faith factual
dispute
concerning an alleged insolvent debtor’s indebtedness
to a creditor, the application for provisional liquidation should
normally
be dismissed.
[124]
[146]
The High Court judgment is capable of being understood as
saying that its refusal of the provisional liquidation order was
based
on the existence of a good faith dispute about the legal issue
of prescription – in other words, it
did
apply the
Badenhorst
principle to a disputed legal issue.
[125]
If that is a proper or feasible interpretation of the High Court
judgment, which I think it is, then an appeal against it
can only
succeed if its application of the
Badenhorst
principle to
legal disputes was incorrect.  If not, its finding of a good
faith legal dispute can hardly be faulted, given
the difference of
opinion on the merits of the prescription issue in both the SCA and
this Court.
[147]
The applicant argued before us that it was accepted practice
that the rule does not apply to disputed legal issues, only disputed

factual issues.  That may or may not be correct, but hardly
disposes of the legal question of whether the alleged practice
is in
accordance with the correct legal position.
[126]
This question has not been authoritatively settled.
[148]
In dealing with this in
Orestisolve
, Rogers J pointed
out that:
“If the
Badenhorst
[principle]’s foundation is abuse of process,
it might be said that it is as much an abuse to resort to liquidation
where
there is a genuine legal dispute as where there is a genuine
factual dispute.”
However, he went on to say:
“[I]f the
Badenhorst
[principle] extends to purely legal disputes, I
venture to suggest that the rule, which is not inflexible, would not
generally
be an obstacle to liquidation if the court felt no real
difficulty in deciding the legal point.”
[127]
[149]
A similar kind of ambivalence exists in relation to deciding
legal issues in temporary interdict proceedings.  In
Fourie
,
Viljoen J held that a judge confronted with a legal issue needed to
decide it, even if the relief sought was of a temporary nature.
[128]
Decision of the legal point would dispose of the matter finally.
Fourie
has not been uniformly followed.  In
Ward
,
Blignault AJ also adopted a kind of compromise approach to the effect
that “ordinary questions of law” should be finally

decided even in interlocutory proceedings, but not where “difficult
questions of law” are involved.
[129]
[150]
This Court has not yet pronounced on what the correct position
is.  In
National Gambling Board
the issue was
expressly left open.
[130]
What further complicates matters is that in some divisions of the
High Court the practice of provisional liquidation orders
being
issued is not followed: most liquidation applications are followed by
final orders.
[131]
In those instances the
Badenhorst
principle may be inapposite
as an approach to the determination of factual disputes.
[132]
And, as pointed out by Cameron J in the second judgment, the facts
relating to the “due” clause in the loan agreement
are
very sparse.
[133]
[151]
For these reasons I disagree with the acceptance in the first
and second judgments that the prescription issue is properly before

us.  If it is, then the reasons for rejection of the
applicability of the
Badenhorst
principle to legal issues,
even on undisputed facts, must be articulated.  That has not
been done, nor did the SCA deal with
that issue.  And to do so
now, in the absence of full argument, is not appropriate.
[152]
In the absence of a finding that the
Badenhorst
principle does not apply to disputed legal issues, there is no ground
for faulting the dismissal of the application for provisional

liquidation in the High Court.  For different reasons than those
of the majority in the SCA, I would nevertheless hold that
the
outcome should have been the same: the appeal must be dismissed and
the dismissal of the provisional liquidation application
in the High
Court should be confirmed.
[153]
But if I am wrong in this, then I agree with the second
judgment that the claim for repayment of the loan has prescribed, and
that
the appeal should be dismissed for that reason as well.
Prescription
[154]
The second judgment expresses agreement with the first
judgment’s “exposition of the legal principles governing
when
a debt payable on demand is due”,
[134]
but disagrees with its application here, primarily because “the
first judgment attaches undue significance to ‘due’
where
it appears in clause 2.3 of the parties’ loan agreement”.
[135]
I cannot endorse the first judgment’s exposition of the legal
principles governing when a debt payable on demand is
due without
qualification.  And the content of that qualification also
explains why my reason for holding that the debt here
has prescribed
goes beyond the treatment of the meaning of “due” in
clause 2.3 of the loan agreement, even though I
agree with the second
judgment’s treatment of that meaning.
[155]
The first judgment states the general principles in this way:
“In sum, the
relevant principles may, in my view, be restated as follows.
A contractual debt becomes due as per
the terms of that
contract.  When no due date is specified then the debt is
generally due immediately on conclusion of the
contract.
However, the parties may intend that the creditor be entitled to
determine
the time for performance
and that
the debt
becomes due only when demand has been made as agreed
.  Where
there is such a clear and unequivocal intention,
the demand will
be a condition precedent to claimability
, a necessary part of the
creditor’s cause of action, and prescription will only begin to
run from demand.  This, in
my view, is not an incident of the
creditor being allowed to unilaterally delay the onset of
prescription.  It is the parties,
jointly and by agreement
seriously entered into, determining when and under what circumstances
or conditions a debt shall become
due.”
[136]
(My emphases.)
[156]
The qualification I have to this statement relates to equating
a “
time for performance”
stipulated in a contract
with a “
demand
[that]
has been made
as
agreed”
, and then characterising this demand as “
a
condition precedent to claimability”
.  I would prefer
to stay with the recognised distinction in our law between
contractual terms or obligations, time clauses,
demands to place
defaulting contracting parties in
mora
debitoris
(default on the part of the debtor), and suspensive conditions.
From my perspective, the failure to distinguish between these

different concepts creates uncertainty and also explains why the
conclusion that the debt here has not prescribed is not sustainable.
[157]
Our law recognises that the terms of the contract –
express, tacit or implied – determine the obligations parties
to
a contract owe to each other.
[137]
To be distinguished from contractual terms or obligations are
conditions:
“[T]he word
‘condition’ in relation to a contract, is sometimes used
in a wide sense as meaning a provision of
the contract, i.e. an
accepted stipulation, as for example in the phrase ‘conditions
of sale’.
In this sense the
word includes ordinary arrangements as to time and manner of delivery
and of payment of the purchase price, etc
– in other words the
so called
accidentalia
of the contract.  In the sense of
a true suspensive or resolutive condition, however, the word has a
much more limited meaning,
viz. of a qualification which renders the
operation and consequences of the whole contract dependent upon an
uncertain future event
. . . .  Where the qualification defers
the operation of the contract, the condition is suspensive, and where
it provides
for dissolution of the contract after interim operation,
the condition is resolutive.”
[138]
[158]
Where a qualification relates to a certain future event, even
though the time it will occur is not certain, it is not a condition,

but a time clause:
“A term or
time clause in a contract is a clause by virtue of which the creditor
grants to the debtor a period within which
the latter may discharge
his obligation . . . or by which the operation of the contract is
restricted to a certain time.”
[139]
A time clause is a contractual term
which qualifies an obligation with reference to a future event which
is certain to occur even
if it is uncertain when the event will
occur,
[140]
unlike a condition where the qualification is dependent on whether an
uncertain future event will occur or not occur.
[141]
[159]
Where no time for performance is stipulated in a contract the
claim for performance arises upon conclusion of the contract and the

need for a demand to place the debtor in breach does not change
this.  As Corbett J stated in
Theron
, “it is not
the law that a debtor must be placed in
mora
before he may be
sued for specific performance.”
[142]
Or as stated by Botha JA in
Standard
Finance Corporation
:
“The rule
that demand is necessary to entitle a plaintiff to costs or other
relief to which he may be entitled in consequence
of the debtor’s
mora
, does not mean that demand is a condition precedent to
the plaintiff’s right of action under the contract.”
[143]
[160]
The necessity of a demand to place a debtor in
mora
in
relation to an obligation where no time for performance has been
stipulated, does not detract from the conclusion that specific

performance of the obligation is available at any time at the option
of the creditor.  The exigibility of the primary performance

obligation in terms of the agreement stands apart from the creation
of a secondary obligation flowing from the breach of contract.

Therefore the commencement of prescription of the primary
obligation stands apart from the commencement of
mora
through
demand.
[144]
[161]
Where does this leave clause 2.3 of the loan agreement?
The clause is not a “condition precedent” or suspensive

condition.  It did not suspend the operation of the contract
itself, because the loans were advanced.  And it did not
suspend
the exigibility of repayment, because the lender could at any time
make demand for repayment on 30 days’ notice.
[162]
Nor is it a time clause “by virtue of which the creditor
grants to the debtor a period within which the latter may discharge

his obligation . . . or by which the operation of the contract is
restricted to a certain time”.
[145]
To repeat: the lender could at any time demand repayment.  Even
if the 30-day demand clause was not a part of the loan
agreement, the
lender would still have had to place the borrower in
mora
.
A
mora
demand for repayment must be reasonable, but
parties may determine the reasonableness of the period by agreement.
That is
what happened here.
[163]
The
mora
demand was a term of the contract, but it had
nothing to do with the commencement of prescription.  Specific
performance for
repayment of the loan could have been claimed by
Trinity immediately upon conclusion of the loan agreement.  That
is when
it became due.  There is no underlying injustice in the
sense that it was prevented by the clause from enforcing repayment
of
the loan at any time it wished to do so.
[146]
[164]
The first judgment relies on
Miracle Mile
[147]
in support of its interpretation of the clause as one where the debt
becomes due only when the creditor actually elects to accelerate

payment at which point prescription begins to run.
[148]
I have no difficulty with the principle that parties may
contractually agree when prescription starts to run, and that in
the
case of acceleration clauses in instalment contracts that might only
be when the acceleration clause is invoked, not when it
is agreed
to.  But that deals with a situation where two different debts
are involved: the normal monthly instalment that
is due each month
and in respect of which prescription starts to run; and the
accelerated debt for the full amount.  It makes
good sense that
the prescription periods will be different.
[149]
But loans payable on demand do not create two separate debts and the
rationale underlying the interpretation of the acceleration
clause in
Miracle Mile
is absent here.
[165]
I thus agree with the second judgment that the claim under the
loan agreement has prescribed, also for these additional reasons.
[166]
On either of the two bases outlined, the dismissal of the
application for provisional liquidation in the High Court was the
correct
outcome.
For the Applicant:
D M Davis instructed by Korbers
Incorporated.
For the Respondent:
L G Nkosi-Thomas SC and O Ben Zeev
instructed
by the Chairperson of the Johannesburg Society of Advocates (upon
request by the Court).
[1]
He also confirmed that the “outstanding balance [was] R4.55m”.
[2]
61 of 1973.  This section in relevant part reads:
“(1)
A company or body corporate shall be deemed to be unable to pay its
debts if—
(a)
a creditor, by cession or otherwise, to whom the company is indebted

in a sum not less than one hundred rand then due—
(i)
has served on the company, by leaving the same at its registered

office, a demand requiring the company to pay the sum so due”.
[3]
Trinity Asset Management (Pty) Ltd v Grindstone Investments 132
(Pty) Ltd,
unreported judgment of the High Court of South
Africa, Western Cape Division, Cape Town, Case No 12677/2014 (31
July 2015) (High Court
judgment).
[4]
Section 344(f) of the Companies Act provides that a company may be
wound up by a court if “the company is unable to pay
its debts
as described in section 345”.
Section 345(1)(c) provides that a
company or body corporate shall be deemed to be unable to pay its
debts if “it is proved
to the satisfaction of the Court that
the company is unable to pay its debts.”
[5]
Section 344(h) of the Companies Act stipulates that a company may be
wound up by a court if “it appears to the Court that
it is
just and equitable that the company should be wound up.”
[6]
The other defences included: (a) the applicant’s license to
provide financial services in terms of the Financial Advisory
and
Intermediary Services Act 37 of 2007 had been suspended on 11 June
2014 and the applicant was thus precluded from collecting
monies;
(b) no instructions were given by the directors of Grindstone to
Trinity to advance the loan amounts to Mr Deane; and
(c) the loan
amounts were paid over to Mr Deane personally, and thus the
respondent was not indebted to the applicant.
[7]
As per clause 2.2 of the agreement, the loan was deemed to be
advanced on 1 September 2007.
[8]
The High Court specifically stated that it did not find it necessary
to consider the other defences in the light of its finding
on
prescription.  See High Court judgment above n 3 at para 35.
[9]
Hülse-Reutter v HEG Consulting Enterprises (Pty) Ltd
1998
(2) SA 208 (C).
[10]
High Court judgment above n 3 at para 33.
[11]
Id.
[12]
Trinity Asset Management (Pty) Ltd v Grindstone Investments 132
(Pty) Ltd
[2016] ZASCA 135
(SCA judgment) at para 12.
[13]
Id at para 16.
[14]
Id at paras 16-8.
[15]
Id at para 36.  See
Stockdale v Stockdale
2004 (1) SA 68 (C).
[16]
Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe
Hellerman Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) (
Deloitte Haskins
) at 532G-H.
[17]
SCA judgment above n 12 at para 37.
[18]
Id at para 38.  See De Wet and Van Wyk
Die Suid Afrikaanse
Kontraktereg en Handelsreg
5 ed (LexisNexis Butterworths, Durban
1992) (De Wet and Van Wyk) at 292.
[19]
SCA judgment above n 12 at para 41.
[20]
Id.
[21]
Badenhorst v Northern Construction
Enterprises
(
Pty
)
Ltd
1956 (2) SA 346 (T)
at 347-9; reaffirmed by the SCA in
Kalil
v Decotex (Pty) Ltd
1988 (1) SA 943
(A) at 980B and
discussed in
Exploitatie- en Beleggingsmaatschappij
Argonauten 11BV v Honig
[2011] ZASCA 182
;
2012 (1) SA 247
(SCA)
(
Honig
) at paras 11-2.
[22]
Id.
[23]
High Court judgment above n 3 at para 33.
[24]
Id.
[25]
Id at paras 33 and 37.
[26]
In
Honig
above n 21, the SCA stated at para 12 that “the
Badenhorst
[principle] is not inflexible”.
[27]
See [55] below.
[28]
SCA judgment above n 12 at para 20.
[29]
68 of 1969.
[30]
Makate v Vodacom Ltd
[2016] ZACC 13
;
2016 (4) SA 121
(CC);
2016 (6) BCLR 709
(CC) at para 90.
[31]
Section 39(2) of the Constitution.
[32]
Loubser
Extinctive
Prescription
(
Juta
& Co Ltd, Cape Town
1996) at
24.
See also
Road Accident Fund v Mdeyide
[2010]
ZACC 18
;
2011 (2) SA 26
(CC);
2011 (1)
BCLR 1
(CC)
at para 8.
[33]
Section 10(1).
[34]
Section 11(d).  This is the applicable provision in this case
as the debt does not fall into any of the other prescribed

categories.
[35]
Section 12(1).
[36]
Deloitte Haskins
above n 16.
[37]
Standard Bank of South Africa Ltd v Miracle Mile Investments 67
(Pty) Ltd
[2016] ZASCA 91
;
2017 (1) SA 185
(SCA) (
Miracle Mile
)
at para 24.
[38]
Truter v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA)
at para 16.
[39]
Act 18 of 1943.
[40]
See
Lubbe “Die Aanvang van Verjaring waar
die Skuldeiser oor die Opeisbaarheid van die Skuld kan Beskik”
(1988) 51
THRHR
135.
[41]
Uitenhage Municipality v Molloy
[1997]
ZASCA 112
;
1998 (2) SA 735
(SCA) at 742E-743B;
Benson
v Walters
1984 (1) SA 73
(A) at 86C;
and
The Master v I L Back and Co Ltd
1983 (1) SA 986
(A) (
I L Back
)
at 1005G.
[42]
See
Webb v Van der Wath
1914 OPD 17
at 19;
Nicholl v
Nicholl
1916 WLD 10
at 12;
Cassimjee v Cassimjee
1947 (3)
SA 701
(N);
Lambrecht v Lyttleton Township (Pty) Ltd
1948 (4)
SA 526
(T) at 529; and
Damont N.O. v Van Zyl
1962 (2) SA 47
(T) at 50D-51F.
[43]
Standard Bank of SA Ltd v Oneanate Investments
(Pty) Ltd
1995 (4) SA 510
(C)
(
Oneanate
)
at 546I-547B.
[44]
See
Loubser above n 32 at 60;
Delport
“
Prestasie ‘op aanvrag’ en Art
12(1) van die Verjaringswet 1969” (1979) 12
De
Iure
65 at 70 and
De Wet and
Van Wyk above n 18.
[45]
See
Santam Ltd v Ethwar
[1998] ZASCA 102
;
1999 (2) SA 244
(SCA) at 252I-J and
Stockdale
above n 15 at paras 15-8.
[46]
I am not sure why such a basic principle of the law, the need to
interpret contracts by seeking to establish the objective intention

of the parties, should be regarded as an exception.  Surely
this is a basic rule.  The rule with regard to the meaning
of
“payable on demand” is an aid to interpretation which is
invoked only where the parties did not make their intention
clear as
to what meaning they attach thereto.  The starting point in
contractual interpretation is the intention of the
parties, as
expressed in their agreement.
[47]
De Bruyn v Du Toit
[2015] ZAWCHC 20
(
De Bruyn
) at para
6.
[48]
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007
(7) BCLR 691
(CC) at para 57.
[49]
Miracle
Mile
above n 37.
[50]
Id at para 15.
[51]
Id.
[52]
See
Stockdale
above n 15 at para 15 where Traverso AJP
stated:
“Voet
12.1.19 says that in the case of a loan for consumption, where no
time for repayment has been fixed, the money must
be repaid ‘not
forthwith, but after the passage of a moderate time, so that in the
meantime the borrower will have been
able to enjoy at least some
advantages out of the loan and the use of the money’.  This
sentiment was echoed by Mason J
in the case of
Mackay v
Naylor
1917 TPD 533
at 538, where the Court held that a
reasonable time must be allowed to the borrower to enable him to
have some ‘real benefit
from the transaction’.”
And at para 16 held that “[t]he
plaintiffs, cognisant of the circumstances in which the defendant
found herself obviously
afforded her a reasonable time, in the
circumstances, to make the repayment of the loan.”
See also the authorities quoted in
Fluxman v Brittain
1941 AD 273
at 294:
“Voet
(45.1.19) states that the rule must be accepted with some moderation
of the time for performance, and in regard to
the contract of
mutuum
he states in the passage already quoted (12.1.19) that the loan must
be repaid after a reasonable time, remarking that, although
it is
true that in all obligations in which the time for fulfilment is not
fixed, the debt is presently due, yet it should not
be presumed that
for that reason the humanity and even the discretion of the Judge
are taken away, so that a reasonable delay
may be given (‘must
be given’ – according to the translation in
the
Aanhangzel tot het Hollandsch Rechtsgeleerdheid Woordenboek,
s.v. Mutuum
) by the lender or the Judge to the borrower who is
sued, as the nature of the case requires.  Pothier (
Mutuum,
Oeuvres
, vol. 5, sec. 48), dealing with contracts of loan in
which no term is mentioned for repayment states that the lender
ought to
grant a time more or less long according to the
circumstances, in the discretion of the Judge, for the restitution
of the sum
lent, and that the borrower has against the demand of the
lender, if he sues him before this time, an exception by which he
ought
to obtain from the Judge a delay for the payment.”
See also
Bowditch v Peel and Magill
1921 AD 561
at 572-3 wherein Innes J, examining the time at which a
creditor must elect a method of enforcement, stated that:
“A person
who has been induced to contract by the material and fraudulent
misrepresentations of the other party may either
stand by the
contract or claim a rescission.  (Voet, 4.3, secs. 3, 4, 7).
It follows that he must make
his election between those two
inconsistent remedies
within a reasonable time
after
knowledge of the deception.  And the choice of one necessarily
involves the abandonment of the other.  He cannot
both
approbate and reprobate.”
This quotation from
Bowditch
was
cited with approval in
Absa Bank Ltd v Moore
[2016] ZACC 34
;
2017 (1) SA 255
(CC);
2017 (2) BCLR 131
(CC) at para 50.
[53]
Benlou Properties (Pty) Ltd v Vector Graphics (Pty) Ltd
[1992] ZASCA 158
;
1993 (1) SA 179
(A) (
Benlou
) at 186F-H.
See also
Withok Small Farms (Pty) Ltd v Amber Sunrise Properties
5 (Pty) Ltd
[2008] ZASCA 131
;
2009 (2) SA 504
(SCA) at para 7.
[54]
In the field of contracts, and with reference to prescription, I
cannot see any problem with the legality of the following

transaction.  A says to B: “With regard to that loan you
requested, here is R100 000.  I will not need it
any time
soon and will let you know when I need it (demand).  But should
I die before I ask you to pay it back (make the
demand), please pay
it into my estate within a year of my death”.  B
accepts.  It is a serious loan agreement,
and the debt ought
not to prescribe before A calls up the loan.
[55]
Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) (
Endumeni
) at para
18.  See also
Cool Ideas 1186 CC v Hubbard
[2014] ZACC
16
;
2014 (4) SA 474
(CC);
2014 (8) BCLR 869
(CC) at para 28.
[56]
Sassoon Confirming and Acceptance Co (Pty) Ltd v Barclays
National Bank Ltd
1974 (1) SA 641
(A) (
Sassoon
) at 646B.
[57]
Privest Employee Solutions (Pty) Ltd v Vital Distribution
Solutions (Pty) Ltd
[2005] ZASCA 52
;
2005 (5) SA 276
(SCA)
(
Privest
) at para 21.  See also
Coopers & Lybrand
v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-F.
[58]
See
section 11(a)(i)
of the
Prescription Act.
[59]
Endumeni
above n 55.
[60]
SCA judgment above n 12 at para 13.
[61]
Miracle Mile
above n 37 at para 24.
[62]
List v Jungers
1979 (3) SA 106
(A) at 121C-E.
[63]
SCA judgment above n 12 at para 16.
[64]
Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd
1982 (1) SA 398
(A)
(
Tamarillo
) at 432C.
[65]
Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co Ltd
1963
(1) SA 632
(A) (
Resisto Dairy
) at 643H.
[66]
Miracle Mile
above n 37 at para 26.
[67]
SCA judgment above n 12 at para 17.  See
Oneanate
above
n 43 at 546I.
[68]
Oneanate
id.  Furthermore, this case was overturned on
appeal:
Standard Bank of South Africa Ltd v
Oneanate Investments (Pty) Ltd (In Liquidation
)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) (
Oneanate
SCA judgment), although this
dictum
as quoted above [42] was not discussed (see 823I-827F).
[69]
What constitutes a valid demand in law is a question of fact.  See
Kragga
Kamma Estates CC v Flanagan
[1994] ZASCA
137
;
1995 (2) SA 367
(A)
at 374E-G wherein discussing whether there had a been a valid
cancellation the Court stated that:
“But
whatever its form, the demand had to be unambiguous and indicate a
fixed date, reasonable in the circumstances, for
performance (
Nel
vs Cloete
1972 (2) SA 150
(A)
at 159H).  And, of course, it had to indicate that the creditor
wished to receive his money (
Dougan
vs Estment
1910
TPD 998
at 1001); that the debtor was required to perform (
Alfred
McAlpine and Son
(
Pty
)
Ltd
vs Transvaal Provincial Administration
1977 (4) SA 310
(T)
at 351H); and he must have been placed on terms to do so
(
Johannesburg City
Council vs Norven Investments
(
Pty
)
Ltd
1993 (1) SA 627
(A)
at 633E).  Whether this has been done, is a question of fact
for the decision of the court (
Wessels’
Law of Contract
, 2 ed,
vol 2 at 2893).”
[70]
The 31
st
day after demand had been made.  Applying
the civil method of computation: including the day on which the
period begins
to run and excluding the last day.  See the
discussion and cases cited in
Holmes v North Western Motors
(Upington) (Pty) Ltd
1968 (4) SA 198
(C) at 202F-203D.
[71]
Above n 47 at para 6 and see [43] above.
[72]
This section provides that: “The running of prescription
shall, subject to the provisions of subsection (2), be interrupted

by the service on the debtor of any process whereby the creditor
claims payment of the debt.”
[73]
Section 348 of the Companies Act provides that: “A winding-up
of a company by the Court shall be deemed to commence at
the time of
the presentation to the Court of the application for the
winding-up.”
[74]
High Court judgment above n 3 at para 32.
[75]
Id at para 33.
[76]
Id at para 32.
[77]
Orestisolve (Pty) Ltd t/a Essa Investments v NDFT Investments
Holdings (Pty) Ltd
2015 (4) SA 449
(WCC) (
Orestisolve
) at
para 12.
[78]
See [47]:
“In sum, the
relevant principles may, in my view, be restated as follows.
A contractual debt becomes due as per
the terms of that
contract.  When no due date is specified then the debt is
generally due immediately on conclusion of the
contract.
However, the parties may intend that the creditor be entitled to
determine the time for performance and that
the debt becomes due
only when demand has been made as agreed.  Where there is such
a clear and unequivocal intention, the
demand will be a condition
precedent to claimability, a necessary part of the creditor’s
cause of action, and prescription
will only begin to run from
demand.  This, in my view, is not an incident of the creditor
being allowed to unilaterally
delay the onset of prescription.
It is the parties, jointly and by agreement seriously entered into,
determining when and
under what circumstances or conditions a debt
shall become due.”
[79]
See [64].
[80]
Id.
[81]
Section 12 of the Prescription Act provides:
“(1)
Subject to the provisions of subsections (2), (3), and (4),
prescription
shall commence to run as soon as the debt is due.
(2)
If the debtor wilfully prevents the creditor from coming to know
of
the existence of the debt, prescription shall not commence to run
until the creditor becomes aware of the existence of the
debt.
(3)
A debt shall not be deemed to be due until the
creditor has knowledge of the identity of the debtor and of the
facts from which
the debt arises: Provided that a creditor shall be
deemed to have such knowledge if he could have acquired it by
exercising reasonable
care.
(4)
Prescription shall not commence to run in respect of a debt based
on
the commission of an alleged sexual offence as contemplated in
sections 3
,
4
,
17
,
18
(2),
20
(1),
23
,
24
(2) and
26
(1) of the
Criminal
Law (Sexual Offences and Related Matters) Amendment Act, 2007
, and
an alleged offence as provided for in
sections 4
,
5
, and
7
and
involvement in these offences as provided for in
section 10
of the
Prevention and Combating of Trafficking in Persons Act, 2013, during
the time in which the creditor is unable to institute
proceedings
because of his or her mental or psychological condition.”
[82]
Deloitte Haskins
above n 16 at 532F-J.  See also
I L
Back
above n 41 at 990D-E, where the Court held:
“A debt
being due in this context involves two things, namely that the
creditor is in a position to claim payment forthwith
and that the
debtor does not have a defence to the claim.  In other words,
that the creditor’s cause of action is
complete.”
For more detail regarding the meaning
of “cause of action”, see
Evins v Shield Insurance Co
Ltd
1980 (2) SA 814
(A) at 838D-H, where Corbett JA made the
following pertinent remarks:
“In
McKenzie
v Farmers’ Co-operative Meat Industries Ltd
1922 AD 16
this Court held that, in relation to a statutory provision defining
the geographical limits of the jurisdiction of a magistrate’s

court, ‘cause of action’ meant—
‘every fact
which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to judgment
of the Court.
It does not comprise every piece of evidence which is necessary to
prove each fact, but every fact which
is necessary to be provided.’”
[83]
Truter
above n 38 at para 16.
[84]
Miracle Mile
above n 37 at para 24.
[85]
List
above n 62 at 121C-E.  The majority in the SCA
sought to rely on this case as authority for the proposition that a
distinction
could be drawn between the claimability and payability
of a debt (SCA judgment above n 12 at para 13).  But this seems
wrong.
The Court in
List
was not concerned with when
the debt became “due”, but rather when the debt arose.
It had to decide that to
determine whether the
Prescription Act
or
the South-West African Proclamation applied.  See 121E-H and
122C:
“Counsel for
the appellant accepted as correct the finding of the Judge a quo
that the debt became due on 1 January 1971,
but submitted that the
debt arose on the same date as that on which it became due. . . .
The obligation
arose
when List wrote the letter; only payment
was suspended.
. . .
I am accordingly
satisfied that this was a debt which arose before 1 December 1970
when the
Prescription Act came
into force; from this it follows that
the provisions of the South-West African Proclamation must be
applied in order to determine
whether or not the debt is
prescribed.”
I agree with the first judgment that
the distinction sought to be drawn between claimability and
repayability is somewhat artificial.
It also does not accord
with the existing jurisprudence.  See, for example,
Umgeni
Water v Mshengu
[2009] ZASCA 148
; (2010) 31
ILJ
88 (SCA)
at para 5, where the Court held that “due” in terms of
section 12(1)
of the
Prescription Act “must
be given
[its] ordinary meaning.  In its ordinary meaning a debt is due
when it is immediately claimable by the creditor
and, as its
correlative, it is immediately payable by the debtor.  Stated
another way, the debt must be one in respect of
which the debtor is
under an obligation to pay immediately.”  See also
HMBMP
Properties (Pty) Ltd v King
1981 (1) SA 906
(N) at 909B-E;
Western Bank Ltd v S J J van Vuuren Transport (Pty) Ltd
1980
(2) SA 348
(T) at 351C-D; and
Lancelot Stellenbosch Mountain
Retreat (Pty) Ltd v Gore N.O.
[2015] ZASCA 37
at para 15.
[86]
Loubser above n 32 at 53.
[87]
Id at 53-4.
[88]
Saner
Prescription in South African Law
(LexisNexis, Durban
1996) at 3 65.
[89]
Oneanate
above n 43 (reversed on grounds not material to this
analysis);
Oneanate
SCA judgment above n 68 at 827A-B
held that “the facts averred in the [bank’s] declaration
in relation to the
three debits which the court a quo held had
prescribed were ‘part and parcel of the original cause of
action’ and
merely represented a fresh quantification of the
original claim ‘or the addition of further items’ to
make up the
claim based on monies lent and advanced referred to in
the simple summons”, with the result that “due and
repayable”
was not in issue.
[90]
Oneanate
above n 43 at 542H-I.
[91]
Id at 546I-J.
[92]
Id.
[93]
Id.
[94]
Id at 550-1.
[95]
Id.  See also
De Bruyn
above n 47 at para 7.
[96]
Loubser above n 32 at 53.
[97]
Compare, in a statutory context,
Head of Department, Mpumalanga
Department of Education v Hoërskool Ermelo
[2009]
ZACC
32
;
2010 (2) SA 415
(CC);
2010 (3) BCLR 177
(CC) at
para 70:
“[P]recepts
of statutory interpretation suggest that the word . . . should have
the same meaning wherever it occurs in the
statute, since there is
‘a reasonable supposition, if not a presumption’ that
the same words in the same statute
bear the same meaning throughout
the statute.”
[98]
See [57].
[99]
See
section 2
of the
Prescribed Rate of Interest Act 55 of 1975
,
which provides that:
“(1)         Every
judgment debt which, but for the provisions of this subsection,

would not bear any interest after the date of the judgment or order
by virtue of which it is due, shall bear interest from the
day on
which such judgment debt is payable, unless that judgment or order
provides otherwise.
(2)         Any interest
payable in terms of subsection (1) may be recovered as if it
formed
part of the judgment debt on which it is due.
(3)
In this section ‘judgment debt’ means a sum of money due
in terms
of a judgment or an order, including an order as to costs,
of a court of law, and includes any part of such a sum of money, but

does not include any interest not forming part of the principal sum
of a judgment debt.”
This provision should be contrasted
with
section 2A
, which provides that interest on unliquidated debts
runs from the date on which payment of the debt is claimed by the
service
on the debtor of a demand or summons.
[100]
See [62].
[101]
See [57].
[102]
SCA judgment above n 12 at para 20.
[103]
See [47].  It must be pointed out that, despite the use of the
phrase “cause of action” as it features in the
case law,
what prescribes in terms of the
Prescription Act is
not a
“cause of action” per se, but a claim or a right of
action.  See Saner above n 88 at 3 61.
See also
Drennan Maud & Partners v Pennington Town Board
[1998]
ZASCA 29
;
1998 (3) SA 200
(SCA) at 212F-J where Harms JA held:
“In short,
the word ‘debt’ does not refer to the cause of action,
but more generally to the ‘claim’.
. . .  In
deciding whether a ‘debt’ has become prescribed, one has
to identify the ‘debt’, or, put
differently, what the
‘claim’ was in the broad sense of the meaning of that
word.”
[104]
See [47].
[105]
Deloitte Haskins
above n 16 at 532F-J.
[106]
The first judgment relies on
Miracle Mile
above n 37 in
support of the proposition that prescription begins to run only when
the creditor actually elects to accelerate
payment and not when the
creditor is able to accelerate payment (see [45] to [46]).  But
this finding must be assessed in
the light of the facts of that
case.
Miracle Mile
involved an acceleration clause.
In such an instance, there are effectively two prescription periods
at play: the prescription
period in relation to each instalment that
is due on a specific date, and the prescription period in relation
to the right to
accelerate payment of the full debt.  The
latter right only arises if and when the debtor defaults on the
relevant instalment
repayments.  In such an instance, it makes
sense that prescription in relation to the right to accelerate
payment of the
full debt may only arise when the creditor actually
elects to accelerate payment and not before then.  This is
because,
before this point, the prescription period at play is that
in relation to the instalment that has not been paid.  In the
case of two debts, it makes sense for the prescription periods to
differ.  But this is markedly different to a loan repayable
on
demand, where there is only one debt and one prescription period.
The former is the situation in
Miracle Mile
where there were
set dates for instalment repayments.  The implication of this
was that, from the date the debtor did not
repay the instalments
due, prescription began to run in relation to that instalment.
If prescription also began to run
on that same date in respect of
the acceleration clause, it would effectively render the
acceleration clause nugatory.
Because then the prescription
period for the instalment and for accelerating the full amount of
the loan would be the same.
In such an instance, one can
appreciate the Court’s finding.  But this does not mean
that, in all cases, prescription
begins to run only when the
creditor actually demands repayment of the debt and not when the
creditor can demand repayment –
in the acceleration clause
context or outside of it.  This view is reinforced by Saner
above n 88 at 3 65, where the
author provides that, in the
context of demand not delaying prescription:
“This
[principle] must not, however, be extrapolated too far: where an
instalment agreement allows the creditor to elect,
on breach of
payment of an instalment . . . to give notice to accelerate payment
of the full outstanding amount, prescription
only starts to run when
that notice is given, and not from when the debtor commits the
breach on failure to pay an instalment.”
[107]
Loubser above n 32 at 61.
[108]
Id at 60.
[109]
Id.
[110]
Stockdale
above n 15.
[111]
Id at para 4.
[112]
Id.
[113]
Id at para 15.
[114]
Id at para 6.
[115]
Id at para 14.
[116]
Id.
[117]
Loubser above n 32 at 63.  The author states:
“On account
of the policy consideration that a creditor should not be able to
rely on his own failure to demand performance
from the debtor in
order to delay the running of prescription the courts will require
clear indication that the parties intended
demand to be a condition
precedent for the debt to become due, in which case prescription
will only begin to run from the date
of demand.”
[118]
See the first judgment [74].
[119]
Combined Developers v Arun Holdings
2015 (3) SA 215 (WCC).
[120]
Id at para 43.
[121]
See [74].
[122]
See above n 21.
[123]
Compare
Orestisolve
above n 77 at para 12.
[124]
See above n 21.
[125]
Compare paras 38-40 of the High Court judgment above n 3 with para 5
of
Trinity Asset Management (Pty) Ltd v Grindstone Investments
132 (Pty) Ltd
[2015] ZAWCHC 214.
[126]
In
Orestisolve,
above n 77 at para 12, Rogers J remarked: “I
have not found any case in which the
Badenhorst
[principle]
has been applied, either at the provisional or final stage, to
purely legal disputes”.
[127]
Id at 455C-E.
[128]
Fourie v Olivier
1971 (3) SA 274
(T) at 285B-E.
[129]
Ward v Cape Peninsula Ice Skating Club
1998 (2) SA 487
(C) at
498F-H.
[130]
National Gambling Board v Premier, KwaZulu-Natal
[2001] ZACC
8
;
2002 (2) SA 715
(CC);
2002 (2) BCLR 156
(CC) at para 52.
[131]
Johnson v Hirotec (Pty) Ltd
[2000] ZASCA 43
;
2000 (4) SA 930
(SCA) at para 9.
[132]
Compare
Orestisolve
above n 77 at para 11.
[133]
See [116].
[134]
See [95].
[135]
See [94].
[136]
See [47].
[137]
Van der Merwe et al
Contract – General Principles
4 ed
(Juta & Co Ltd, Cape Town 2012) at 278-84; Lubbe and Murray
Contract – Cases, Materials and Commentary
(Juta &
Co Ltd, Cape Town 1994) at 414-46; Maxwell “Obligations and
Terms” in Hutchison and Pretorius (eds)
The Law of Contract
in South Africa
2 ed (Oxford University Press, Cape Town 2010)
at 234-48; and Christie and Bradfield
Christie’s The Law of
Contract in South Africa
6 ed (LexisNexis, Cape Town 2011) at
159-234.
[138]
Per De Villiers AJ in
R v Katz
1959 (3) SA 408
(C) at 417D-G.
See also
Jurgens Eiendomsagente v Share
[1990] ZASCA 81
;
1990
(4) SA 664
(A) at 674I (
Jurgens
); Van der Merwe et al. id at
287; Lubbe and Murray id at 429-37; Maxwell id at 249-51 and
Christie and Bradfield id at
159-234.
[139]
Wessels
The Law of Contract in South Africa
(Hortors Ltd,
Johannesburg 1937) at 1439.  See also
Bernitz v Euvrard
1943
AD 595
at 602; Lubbe and Murray above n 137 at 443-4; Van der Merwe
et al above n 137 at 294-5 and Christie and Bradfield above n 137
at
251.
[140]
Jurgens
above n 138 at 674I.
[141]
Wessels above  n 139, see also [155] and [156].
[142]
Theron v Theron
1973 (3) SA 667
(C) at 672.
[143]
Standard Finance Corporation of South Africa Ltd (in liquidation)
v Langeberg Ko-operasie Bpk
1967 (4) SA 686
(A) (
Standard
Finance Corporation
) at 691. See also
Ridley v Marais
1939
AD 5
at 9;
Lamprecht v Lyttleton Township (Pty) Ltd
1948 (4)
SA 526
(T) at 529; and
Nel v Cloete
1972 (2) SA 150
(A) at
159-60.
[144]
Lubbe above n 40 at 137.
[145]
See Wessels above n 139.
[146]
Compare Lubbe above n 40 at 136 and 149-52.
[147]
Above n 37
.
[148]
Above at [45] to [46].
[149]
Compare Lubbe’s discussion of the views of McLennan in Lubbe
above n 40 at 152.