REPUBLIC OF SOUTH AFRICA

IN THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG

CASE NO:  24284/2012

(1)	REPORTABLE: YES / NO
(2)	OF INTEREST TO OTHER JUDGES: YES/NO
(3)	REVISED. 

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                   DATE			        SIGNATURE

In the matter between:

ROAD STONE CIVIL & PAVING CONTRACTORS CC		    Plaintiff

and

BCO CONSTRUCTION (PROPRIETARY) LIMITED                         Defendant
______________________________________________________________ 

J U D G M E N T
______________________________________________________________

TSHABALALA, J:

[1] 	The plaintiff instituted the present action against the defendant for payment of an amount of money allegedly owing by the latter to the former for work done by the plaintiff on the instruction and at the instance of the defendant for the benefit of a third party (hereafter referred to as the employer).

[2] 	It is common cause that:

2.1	An agreement was concluded between the plaintiff and the defendant or the employer during July 2007 pursuant to which the plaintiff rendered certain services for the benefit of the employer.

2.2	The plaintiff was not paid for some of those services.

2.3	The plaintiff submitted progress payment invoices to the defendant for the work done in respect whereof it expected payment from the defendant.

2.4	According to the particulars of claim a dispute arose between the parties relating to progress payment invoices 3530 and 3779 respectively dated the 23rd July 2007 and 20th June 2008. 

2.5	The parties differ on whether the agreement of July 2007 was oral or written and whether there was a second compromise agreement entered into between the parties or not on the 7th November 2008. 

2.6	There is also a dispute about the actual terms of the agreement and whether the agreement was between the plaintiff and the employer or the defendant.

2.7	According to the plaintiff the defendant made four payments of different amounts to the plaintiff between the 19th June 2008 and the 21st October 2008.  The defendant admits that three of the four payments were made during the relevant period but testified contrary to its plea that one of such payments was made during 2007 and not 2008. 

[3] 	The defendant raised a special plea that the plaintiff’s claim had prescribed on the following grounds:

3.1	The defendant had made the last payment to the defendant on the 18th November 2008.

3.2	The summons was served on the defendant more than three years after the plaintiff’s claim arose alternatively

3.3	Summons was serviced after three years of the date when payment was due; further alternatively

3.4	It was served three years after the date that prescription was interrupted by the payment referred to in 3.1 hereof.
[4] 	According to the plaintiff the basis of its claim against the defendant is the oral compromise (agreement) which was concluded between the parties on the 7th November 2008 in terms whereof the defendant agreed to pay the plaintiff an amount of R770 505,06 within a reasonable period, which reasonable period lapsed on the 31st January 2011.

[5] 	On the 18th November 2008 the defendant paid the plaintiff an amount of R180 000,00 leaving an outstanding balance of R590 505,06.

[6] 	To prove the case of prescription, the defendant called F Masselli as its only witness and the plaintiff closed its case without calling any witness.

[7] 	The onus to prove prescription rests on the one alleging it.  In casu the defendant.

[8] 	According to F Masselli who is the director of the defendant there was no oral compromise (agreement) concluded between itself and the plaintiff on the 7th November 2008.  According to his evidence the plaintiff’s claim was only payable once the defendant would have received payment from the employer.  The defendant has to date not received such payment from the employer, which employer has since been liquidated.  On the defendant’s own admission the plaintiff’s claim had not, and could not prescribe in view of the employer’s liquidation. Prescription of the plaintiff’s claim could therefore only start running once the employer had paid the plaintiff’s claim to the defendant.

[9] 	On the plaintiff’s version, as set out on the pleadings the plaintiff’s claim could prescribe only on the defendant’s failure to pay the plaintiff within a reasonable period computed from the 7th November 2008, which reasonable period would have lapsed on the 31st January 2011, and from which date prescription had commenced to run.

[10] 	On behalf of the plaintiff I was urged not to take into consideration the plaintiff’s particulars of claim, but to have regard only to the special plea.

[11] 	It was argued further that defendant’s special plea did not conform to the requirements for pleading a defence of prescription in as much as there is no allegation about the date when the defendant alleges that the debt became due.

[12] 	The plaintiff did not submit any evidence to rebut that of the defendant.  In so far as the evidence tendered on behalf of the defendant remains unchallenged such evidence stands. The only version against which to weigh such unchallenged evidence of the defendant is the one set out in the pleadings.

[13] 	According to the plaintiff a dispute arose between the parties regarding progress payment invoices dated the 23rd July 2007 and the 20th June 2008 (see para 2.5 supra).  Notwithstanding such a dispute, the plaintiff took no action against the defendant until when it instituted the present proceedings on the 26th June 2012. 
[14] 	On the plaintiff’s version as set out in its particulars of claim and the reply in terms of Rule 37.4 prescription could not start running against its claim before the 31st January 2011 being the last day when the reasonable period within which the defendant should have been able to discharge its indebtedness to the plaintiff.

[15] 	F Masselli was pertinently asked if the defendant had acknowledged its indebtedness to the plaintiff on the 24th November 2010.  He had emphatically denied this.  He was referred to a letter dated the 24th November 2010 written by himself to the plaintiff (see page 7 of the Index to trial bundle).  He denied that such a letter constituted an acknowledgment of the plaintiff’s debt and denied that it amounted to an undertaking to pay the plaintiff.  According to Masselli there was no correspondence between the plaintiff and the defendant during the period July/August 2008 until the summons was issued on the 26th June 2012 save for the letter dated 24 November 2010 referred to herein.

[16] 	I have already mentioned that on Masselli’s evidence and version, the plaintiff’s claim has not prescribed and until the liquidated employer pays the plaintiff’s claim to the defendant, payment cannot be due.

[17] 	On the plaintiff’s pleaded version payment became due only within a reasonable period that the defendant would have been able to pay the plaintiff, which according to him was after the 31st January 2011. 

[18] 	According to our legal system there are different extinctive periods of prescription ranging from thirty years to three years. It is common cause that the prescriptive period applicable in this matter is three years.  According to the special plea this period commenced the day when the defendant made the last payment to the plaintiff viz on the 18th November 2012. 

[19] 	The determination I am called upon to make, is whether prescription had started running on the 18th November 2008 on defendant’s version or on the 31st January 2011 on the plaintiff’s version.

[20] 	Section 12(1) of Act 68 of 1969 provides that “prescription shall commence to run as soon as the debt is due”.

[21] 	Section 14 of the same Act provides:

“(1)  	The running of prescription shall be interrupted by an express or tacit acknowledgment of liability by the debtor.

	(2) 	If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place, or if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt, from the date upon which the debt again becomes due.”

[22] 	As to when the debt becomes due, I am bound by the various judgments of the SCA which include but are not limited to the following and what was stated therein, viz:

	22.1 	Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd:

	“Section 12(1) of the Prescription Act … provides that ‘prescription shall commence to run as soon as the debt is due’.  This means that there has to be 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.”

	22.2 	Truter v Deysel 2006 (4) SA 168 (SCA) at para [16] where the following was stated:

“… a debt due means a debt including a delictual debt which is owing and payable. A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, i.e. when the entire set of facts which the creditor must prove in order to succeed with his/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.”

22.3	Similar sentiments as those expressed in the Deloitte case above were expressed in The Minister v I L Back and Co Ltd & Others 1983 (1) SA 986 (A) at 1004.

[23] 	In casu due to the fact that the plaintiff did not testify or replicate to the special plea, it is unknown whether the alleged admission of debt that it relies upon is the letter of the 24th November 2010 or some other admission made in another form.  The letter of the 24th November 2010 reads:
	“Re:	UPPER EAST SIDE CONTRACT – BOKSBURG

We write to advise you that we held a meeting with the Employer, regarding the outstanding monies due to our Company, and are positive of a settlement, between ourselves.

We have accepted this proposal and will advise you as soon as we have further news. Attached letter received from our attorneys, Kim Warrne, Rambau & Associates.”

In view of the defendant’s unchallenged denial that there was any other communication between itself and the plaintiff save for this letter, there is no other evidence supporting the alleged admission of debt.

[24] 	In order for section 14(1) of Act 68 of 1969 to take effect the acknowledgement by the debtor:

24.1	“must amount to an admission that the debt is in existence and that he is liable”.  See Petzer v Radford (Pty) Ltd 1953 (4) SA 314 (N) at 317 (Full Bench) which was cited with approval in Markham v SA Finance and Industrial Co Ltd 1962 (3) SA 669 (A) at 676.

24.2	Must cover at least every element of the debt and exclude every defence as to its existence.  See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA).

[25] 	If the plaintiff relies on the letter of the 24th November 2010 as proof of the admission of liability, such reliance is misplaced in that the letter does not amount to such an admission of liability to the plaintiff.  For this reason it did not interrupt prescription.

[26] 	If on the other hand the plaintiff relied on another form of admission, which has neither been pleaded or put to the defendant’s witness or testified to by the plaintiff I have no evidence upon which I can make a finding that prescription was interrupted by such admission. The only information before me, which counsel for the plaintiff correctly argued was not evidence, is the plea and the version that was put to F Masselli.

[27] 	Once the defendant as the onus bearer has established a prima facie case that a claim has prescribed, the duty of rebuttal, if not the reverse onus shifts to the creditor (plaintiff) to prove the interruption of prescription through either an express or tacit acknowledgment of liability by the defendant. See Pentz v Government of the RSA 1983 (3) SA 584 (A) and the Benson case infra.

[28] 	In casu the plaintiff has failed to prove or establish the interruption of prescription by an acknowledgment of liability on the part of the defendant.  For this reason the plea of prescription on the issue of the interruption of prescription must succeed.

[29] 	I finally proceed to deal with the reasonableness of the time period taken by the plaintiff to serve the summons on the defendant or the period it allowed the defendant to pay off the outstanding balance it is claiming from the defendant.

[30] 	On the particulars of claim, the following is explicit:

30.1	The disputed oral compromise was concluded on the 7th November 2008.

30.2	The balance of settlement amount … would be paid by the defendant to the plaintiff within a reasonable time given that the defendant did not have the means to settle the said balance in a single payment on the 7th November 2008 (own underlining).

30.3	The defendant effected one further payment in terms of the oral compromise to the plaintiff on 18th November 2008 in an amount of R180 000 (i.e. eleven days after the oral compromise).

30.4	A reasonable time for the defendant to have paid the plaintiff the balance of R590 505,06 lapsed on the 31st January 2011 (i.e. twenty six months after the oral compromise).

[31] 	Clearly on the plaintiff’s version in particular 30.2 cited above the debt was due, according to the plaintiff, on the 7th November 2008. 
[32] 	The last payment to be made by the defendant to the plaintiff was on the 18th November 2008. 

[33] 	On the plaintiff’s own version the defendant had money to pay the plaintiff on the 18th November 2008 a mere eleven days after the oral compromise.

[34] 	The latter payment was the final payment that the plaintiff had received from the defendant.

[35] 	According to the defendant, no further payment or communication between itself and the plaintiff took place after this payment, and whatever contract had existed terminated in either July or August 2008. 

[36] 	The plaintiff did not plead nor put to the defendant or testify that there was an agreement between the parties to alter the payment date to the date which he alone determined and fixed at 31 January 2011. 

[37] 	The fact that the plaintiff perceived the defendant to be without means on the 7th November 2008 did not make the debt not due and could not and did not suspend the running of the prescriptive period. Kotze v Ongeskiktheidsfonds van Universiteit van Stellenbosch 1996 (3) SA 252 (C) at 261G-H reiterated a view I agree with when the following was stated:

“Waar die skuldeiser egter wel in staat om sy reg af te dwing, maar dit nie doen nie, is daar geen rede om hom teen die gevolge van verjaring te beveilig nie.

Daarby is daar ten minste sterk indirekte steun vir die beginsel dat ‘n skuldeiser nie deur sy eensydige willekeurige optrede die aanvang van die verjaringstermyn kan uitstel nie, en daar is vir dekades reeds met goedkeuring in ons regspraak daarna verwys …”

A similar principle was applied in Benson and Another v Walters and Others 1984 (1) SA 73 (A) at 86C-D.

[38] 	In terms of our common law the position where a date for the payment of a debt is omitted or not agreed upon, prescription commences from the moment the money is advanced. By analogy where the debt is due for services rendered payment is due and claimable on compliance with the claim process or after the services have been rendered.  According to the plaintiff’s particulars of claim, it had performed all its obligations to be entitled to payment.

[39] 	Having regard to all that I have set out above, I am satisfied that:

39.1	Prescription commenced to run on the 18th November 2008.

39.2	The letter dated the 24th November 2010 addressed to the plaintiff did not amount to an acknowledgment of debt in order to produce the effect envisaged by section 14(1) of Act 68 of 1969.

39.3	The only issue that could have interrupted the running of prescription was the last payment of the 18th November 2008. 

39.4	The plaintiff presented no evidence to substantiate its assertion that prescription was interrupted or suspended and re-commenced on the 1st February 2011. 

39.5 	The fact that the defendant had paid R180 000,00 on the 18th November 2008 is an independent confirmation that when such payment was made the debt was already due and payable.

39.6 	When the plaintiff served the summons on the defendant, on or after the 26th June 2012, its claim had already prescribed.

[40] 	Accordingly the special plea succeeds and the claim is dismissed with costs.

						_____________________________
							    N D TSHABALALA
						JUDGE OF THE SOUTH GAUTENG
						  HIGH COURT, JOHANNESBURG

COUNSEL FOR PLAINTIFF		ADV J VAN ROOYEN

INSTRUCTED BY				DONN E BRUWER ATTORNEY

COUNSEL FOR DEFENDANT		ADV W J BEZUIDENHOUT

INSTRUCTED BY				KWA ATTORNEYS

DATE OF HEARING			UNKNOWN

DATE OF JUDGMENT			20 SEPTEMBERBER 2013