Chartered Life Insurance Company Ltd, later known as Liberty Active Ltd, ceded, to the Plaintiff, all its rights and interests in and to any claim that may arise from the payment of commissions from the broking agreements concluded by ECE.
The eight defendants independently bound themselves as sureties and co-principal debtors in solidum to ECE Financial Holdings (the principal debtor) for amounts due to Chartered Life Insurance Company Ltd. Accordingly, the Plaintiff, in its capacity as a cessionary, issued summons against the Defendants.
The court had to determine a special plea of prescription, and whether service of summons by a creditor on one of the principal debtor’s sureties interrupts prescriptions against another co-surety of the principal debtor.
On 24 February 2011, the principal debtor was placed in final deregistration, and on 25 October 2011, summons was issued and served on the sixth defendant and judgment was obtained by default. On 31 March 2016, summons was served on the sixth defendant. However, the sixth defendant raised a special plea of prescription which is the dispute adjudicated by the court. Accordingly, the court had to determine whether the interruption of prescription in favour of the seventh defendant interrupted prescription in favour of the sixth defendant.
The Plaintiff submitted that common law principles that interruption of prescription in favour of the principal debtor interrupts prescription in favour of the surety should be extended. The Plaintiff argued that since the creditor’s contract and the surety’s contract with the principal debtor relate to the same obligation, interruption of prescription against the surety should constitute interruption against a co-surety.
The court disagreed with the Plaintiff’s submission to extend the common law exception, that is, that the interruption of prescription against the surety constituted interruption of prescription against the principal debtor, and that such converse extension would lead to a finding that interruption of prescription in favour of one surety interrupts prescription in favour of a co-surety. The court held that such finding would be a deviation of the common law principles.
The court held that:
“I have mentioned above the importance of the accessory nature of the surety’s obligation and the commonality with the debtor’s obligation which, inter alia, underlie the extension of the decree to include the surety. The obligation of one surety to the main creditor is, however, totally independent from the obligation of another surety to the main creditor although it may relate to the same debtor and possibly the same debt.”
It was held that the obligation of one surety and that of the other are different and independent from each other, and such obligation is not accessory to that of the other. Although the obligations relate to the same principal debt and debtor, they remain distinct agreements unless otherwise agreed. A surety’s obligation is only accessory to the obligation of the principal debtor.
Therefore, the court held, there is no justification in the Plaintiff’s submission that applying the same principles which resulted in the common law exception, would, by extension, lead to a conclusion that the interruption of prescription against one surety constitutes the interruption of prescription against a co-surety and/or principal debtor.
Accordingly, the special plea of prescription was upheld, and the claim by the Plaintiff against the sixth defendant was dismissed with costs.
Interruption of prescription against one surety does not interrupt prescription against a co-surety.
Written by: Mohau Ledwaba and checked by: Musa Mathebula on 17th September 2018