|BKB Limited (“the Plaintiff”) entered into a verbal agreement with Pieter Bezuidenhout (“the Defendant”), wherein the Plaintiff would deliver fertilizer to the Defendant at the Defendant’s special instance, from time to time. Upon delivery of the fertilizer, it was an express, alternatively implied, alternatively tacit term that the Defendant would be invoiced, and that payment would be effected upon the demand for payment by the Plaintiff.|
| The Plaintiff made nine deliveries to the Defendant, between 17 November 2012 and 14 January 2013, with only two payments being made by the Defendant, on or about 24 June 2014 and 25 June 2014, leaving a balance of R 318 115.06 outstanding. On or about 14 June 2017, the Plaintiff sent a registered letter of demand, demanding payment of the above amount. Summons was then issued and served on or about 20 July 2017. The Defendant pleaded that the claim has prescribed in terms of section 11 of the Prescription Act (“the Act”). This is because each delivery of the fertilizer constituted a separate agreement and that the claim for payment would have arisen by no later than 14 January 2013 (being the last date of delivery), with the summons being served in 2017, more than three years after, thereby rendering the claim prescribed as demand was made out of time. |
Three issues were raised for adjudication, however, the most important and for purposes of this CLE, we will look at what was decided regarding the issue of prescription.
|Reference to Section 14 of the Act was made, which deals with, inter alia, prescription being interrupted by an acknowledgement of liability by the defendant (that is, where the Defendant makes part payment of the debt). For purposes of trial and determining whether prescription had arisen, the parties agreed that the period for prescription would be 3 years.|
|In Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd  ZACC 32, it was held that a creditor has exclusive power to demand that performance be made when he so chooses, which 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”. The circumstances under which the agreement was concluded and the material terms of the agreement should be taken into account, in deciding whether the debtor would be liable for payment from date when he makes part payment or when demand for payment is made.|
|In this case, taking into account the circumstances and terms of the oral agreement it was held that the parties intended for prescription to start running from the date that demand was made. In an affidavit by the Defendant (resisting summary judgment), he alleged that payment would only be due upon demand by the Plaintiff. In addition to the above, the Defendant alleged in his plea that absent of any demand by the Plaintiff of any payment, he was not liable to make any payment. In essence, the debt was neither due or payable until demand was made.|
Accordingly, it was held that prescription started running from the date that the letter of demand was despatched, being on 14 June 2017. In the circumstances, the court held that the Plaintiff’s claim had not prescribed and dismissed the Defendant’s special plea.
Circumstances under which an agreement was concluded should be considered when determining whether a claim that arises from such agreement has prescribed. In this case, the surrounding circumstances demanded a deviation from the rules of prescription as codified. In essence, there was no debt for which prescription could run over until demand was made.
Written by Puseletso Radebe and supervised by Musa Mathebula , 11 March 2019