PRESCRIPTION IN RELATION TO A DEBT
How long does a creditor have, to institute a claim for the recovery of a debt, that is due to him?
In terms of the Prescription Act no. 68 of 1969 (“the Act”) the period of enforceability differs according to the type of debt applicable.
|PERIOD OF ENFORCEABILITY||TYPE OF DEBT|
|30 years (SS 11(a))||Debt secured by mortgage bond, judgment debt (court order, costs order), debt in respect of taxation imposed or levied under any law; any debt owed to the State in respect of any share of the profits, royalties or similar consideration payable in respect of the right to mine minerals or other substances|
|15 years (SS11(b))||In respect of debt owed to the State and arising out of any advance or loan of money or sale or lease of land by the State to the debtor, unless a longer period applies in terms of section Section 11(a) of the Act|
|6 years (SS 11(c))||In respect of a debt arising from a bill of exchange or other negotiable instruct or from a notarial contract, unless a longer period applies in terms of SS 11(a) and (b) above|
|3 years (SS11(d))||Save where an Act of Parliament provides otherwise, three years in respect of any other debt|
|Generally, most debts fall under this sub section and accordingly the most common period of prescription in practice is three years.|
When does Prescription being to run in respect of a debt?
- Generally prescription begins to run, either when the debt becomes due, alternatively, if the debtor prevented the creditor from coming to know of the existence of the debt, prescription will commence when the creditor becomes aware of the existence of the debt.
- For a debt to be enforceable the creditor must have knowledge of the identity of the debtor and the facts from which the indebtedness arose. The creditor would be deemed to have such knowledge if he could have acquired same by exercising reasonable care.
What circumstances could delay the period of Prescription from operating?
In terms of section 13 of the Act the completion of the period of prescription can be delayed in certain circumstances, for instance:
- The creditor is a minor, insane or under curatorship;
- The debtor is outside of the RSA;
- The creditor and debtor are married to each other;
- The creditor and debtor are partners and the debt arose from the partnership relationship;
- The creditor is a juristic person and the debtor is a member of the governing body of such juristic person;
- The debt is the object of a dispute subjected to arbitration;
- The debt is the object of a claim filed against the estate of a debtor who is deceased or against the insolvent estate of the debtor or against a company in liquidation;
- The creditor or debtor is deceased and an executor of the estate in question has not yet been appointed
Interruption of Prescription by Acknowledgment of Liability or by Judicial Process
- The period of prescription is interrupted by an express or tacit (implied) acknowledgment of liability by the debtor. Here prescription would begin to run afresh. Alternatively, if the parties agreed to postpone the due date of the debt, then prescription will begin to run afresh from the agreed due date. (Section 14 of the Act)
- The running of prescription is interrupted by the service on the debtor of any court process (for instance a Summons or Notice of Motion) whereby the creditor claims payment of the debt. (Section 15 of the Act)
I hope the above gives you a better idea of how Prescription applies in respect of a debt. The issue of Prescription and rights of ownership of an item are dealt with separately in the Act and was not dealt with herein. Should you wish to discuss further please do not hesitate to contact Boogaard Attorneys.