IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)
CASE NO: 12611/2010
In the matter between:
SHACKLETON CREDIT MANAGEMENT

and

JUDGMENT DELIVERED ON 10 DECEMBER 2010

[1]   This is an opposed application for summary judgment.

[2] Plaintiff, Shackleton Credit Management (Pty) Ltd, sued the defendant, Mr Frederick Johannes Scholtz, for payment of certain amounts alleged to be due to it in terms of agreements concluded between Absa Bank Limited and Cloud Nine Apple Farm CC ("the principal debtor").

[3] Plaintiff claimed that the debts in question had been ceded to it by Absa Bank Limited.   Defendant is alleged to be liable to plaintiff in terms of a deed of suretyship in terms of which he bound himself as surety for all debts then owing by the principal debtor to Absa Bank Limited.

[4] Plaintiff's action was instituted on 28 June 2010. Its particulars of claim follow the same format in respect of each claim. They contain in each case the following allegations:

[5]    Para 78 of the Particulars of Claim reads as follows:

[6] The Master's query sheet dated 5 November 2009 bears plaintiff's allegation out. It shows that the first liquidation and distribution account had not been confirmed at that time.

[7]    Para 79 of the Particulars of Claim reads as follows;

"79. The impediment contemplated by Sections 13(1)(g) and (i) of the Prescription Act No 68 of 1969 has not yet ceased to exist."

[8]    Defendant gave notice of his intention to defend the action and plaintiff applied for summary judgment.

[9] Defendant filed an opposing affidavit. He raised a defence of prescription in the following terms:

2. The filing of the seven relevant claims against the principle debtor in liquidation however meant that the completion of prescription could only occur one year after the ceasing of this impediment.

4. In terms of both the first and second final liquidation and distribution account it is clear that no further dividends would be paid to Absa Bank or the Plaintiff and as such I deny the Plaintiff's allegation in paragraph 79 of its particulars of claim that the impediment has not yet ceased to exist.

[10] The application for summary judgment was heard by me on 27 July 2010. Counsel for plaintiff relied on the provisions of section 13 (1) (g) of the Prescription Act 68 of 1969 ("the Prescription Act"). They read as follows:-

"(1)   If

(g) 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 or against an applicant under the Agricultural Credit Act, 1966;

(i) the relevant period of prescription would, but for the provisions of this subsection, be completed before or on, or within one year after, the day on which the relevant impediment referred to in paragraph (a), (b), (c), (d), (e), (f), (g) or (h) has ceased to exist,

the period of prescription shall not be completed before a year has elapsed after the day referred to in paragraph (i).
[11] Plaintiff's particulars of claim and defendant's opposing affidavit were both drawn on the assumption that the principal debtor, although a close corporation is to be regarded as a company within the meaning of section 13(1 )(g) of the Prescription Act. I will revert to that assumption hereunder.

[12] The first question that was argued before me is when, if at all, did the impediment referred to in paragraph 13(1 )(g) of the Prescription Act cease to exist ie when, if at all, did the principal debt in each case cease to be the object of a claim filed against the principal debtor. The summons was served on defendant on 11 June 2010. If the debts in question had ceased to be objects of a claim filed against the principal debtor on or before 10 June 2009, they would have become prescribed.

[14] I am bound by these authorities. It follows that if the provisions of section 13(1)(g) of the Prescription Act do apply to close corporations, defendant would have no defence to plaintiff's claims. The question, however, is whether they do. This is a legal question which depends upon the proper interpretation of section 13(1 )(g) of the Prescription Act.

[18] A second approach to the interpretation of statutes can be described as purposive. This means that a statute must be interpreted in the light of the purpose which it seeks to achieve. This method uses the language and the purpose to serve as the starting point of the enquiry. Closely related to this approach, is the rule that the language of a statute must be read in its context. This approach, however, also does not assist plaintiff in this case as it uses the actual language as part of the starting point of the enquiry.

"...words cannot be read into a statute by implication unless the implication is a necessary one in the sense that without it effect cannot be given to the statute as it stands. In addition, such implication must be necessary in order to 'realise the ostensible legislative intention or to make the [legislation] workable."
[22] The proposed implied term is in my view not necessary in the sense that without it effect cannot be given to the principles and objects of the Prescription Act. Section 13 of the Prescription Act contains exceptions to the general rule that prescription is interrupted by way of the institution of legal proceedings for the enforcement of the debt. There is in principle no practical or legal reason why close corporations should be singled out for special treatment.

"Moreover, a strong factor militating against the implication of any such limitation is the difficulty of formulating it. In contract a term will not be implied where considerable uncertainty exists about its nature and scope, for it must be precise and obvious.... I think that the same must apply to implying a term in a statute, for the process is the same...."

How, one asks rhetorically, would the suggested implied provision be framed bearing in mind that close corporations did not exist when the Prescription Act was passed?

"Crucial to the essential characteristics of a company is its existence as an entity distinct from its members, its capacity to own property apart from its members and perpetual succession. (Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530; Klerksdorp & District Muslim Merchants Association v Mahomed & Another 1948 (4) SA 731 (T) at 738; Morrison v Standard Building Society 1932 AD 229 at 238; Stellenbosch Farmers' Winery Ltd v Distillers Corporation (SA) Ltd and Another 1962 (1) SA 458 (A) . These are also all characteristics of a close corporation in terms of the Close Corporations Act 69 of 1984 (sees 2)."

[28] The second point of distinction is that it is more difficult to imply a term into a contract than into a statutory provision. I have already referred to the stringent test in the case of a statute. In the case of a contract the existence of an implied term depends on the intention of the parties which can be proved on no stricter test than a balance of probabilities. The court also has a wider discretion to look at surrounding circumstances.

[32] In the result, the application for summary judgment is refused with costs.

A.P. BLIGNAULT