Prescription is a rule of law that is designed to extinguished claims/debts. It’s regulated by the Prescription Act 68 of 1969 (“the Act”). A debt, which is described as the payment of money or delivery of goods or services, will prescribe after the lapse of a certain time period. This means that the claimant/creditor will not be able to issue a claim once the time period has lapsed.
The Consequences of Prescription
❖ The debtor will not be liable to the creditor for a debt; or
❖ The creditor may not institute legal action against the debtor for a debt.
Commencement of Prescription
In terms of section 12(1) and (2) of the Prescription Act, Prescription will run as soon as the debt become due (a debt is due once the creditor can identify the debtor and the facts from which the debt arises) or until the creditor becomes aware of the existence of the debt.
Time periods provided by the Prescription Act
❖ The Act sets out numerous periods for different types of legal actions.
Three (3) years in respect of the following:
❖ Any other debt, such as contractual or delictualdebts.
Fifteen (15) years in respect of the following:
❖ Any debt owed to the State and arising out of a loan of money or sale or lease of land by the State to a debtor.
Thirty (30) years in respect of the following:
❖ Any debt secured by a mortgage bond;
❖ Any judgment debt;
❖ Debts owed to the state in respect of any share of profits, royalties or any similar consideration payable in respect of rights to mine minerals.
Six (60) years in respect of the following:
❖ Any debt arising from a negotiable instrument such as a cheque or a notarial contract.
In terms of Section 13(1) of the Act, prescription will be delayed when:
❖ The creditor is a minor, insane or a person under curatorship;
❖ The debtor is at that time outside the Republic;
❖ The creditor and debtor are married to each other;
❖ The creditor and debtor are partners and the debt arose out of 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 in arbitration;
❖ The executor of either the debtor’s or the creditor’s deceased estate (either in the case of a debtor or a creditor) has not yet been appointed 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.
Prescription can be interrupted in two ways:
a) Prescription will be interrupted by the debtor’s express or tacit acknowledgment of his or her liability (Section 14 of the Prescription Act).
b) Prescription may be interrupted by means of judicial interruption. This means that the prescription will be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt. However, it must be bone in mind that the running of prescription shall not be deemed to have been interrupted, if the creditor does not successfully prosecute his claim under the process in question to final judgment or if he does so prosecute his claim but abandons the judgment or the judgment is set aside (Section 15 Prescription Act).
NB: It must be noted however that the normal Prescription rules does not apply to debts owed to the State; such as: Tax, Municipal Debt, TV Licences and Loans from the State.
Disclaimer: This article is general information and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.