Prescription, it’s a word that can send shivers down the spine of even the most battle hardened of attorneys. 

For a client to find out that their claim has prescribed can be devastating, however thanks to unreported judgment from the South Gauteng High Court, Anglo American Properties Limited v City of Johannesburg Metropolitan Municipality; Case No: 35043/2012, Mokopo AJ has offered attorneys and their clients a lifeline that may rescue a debt that was thought to be prescribed.

The issue before the court in this matter was whether Anglo American Properties Limited’s (Anglo) claim had prescribed or whether an oral acknowledgment of indebtedness and an undertaking to pay by the City of Johannesburg Metropolitan Municipality (CJMM) had interrupted prescription as contemplated by section 14 of the Prescription Act, No 56 of 1972.

Section 14 of the Act provides that prescription shall be interrupted by an express or tacit acknowledgment by the debtor.

Briefly, neither of the parties disputed that Anglo’s claim arose out of a tax invoice issued by CJMM on 28 July 2008, in terms of which CJMM acknowledged that Anglo’s account reflected a credit balance of R1,183,149.00.

CJMM argued that Anglo’s claim had prescribed because Anglo had knowledge of the debt for more than three years before the summons was served on 14 September 2012.

Anglo on the other hand denied that the claim had prescribed and instead argued that prescription was interrupted on 29 March 2011 when an employee of CJMM orally acknowledged to a representative of Anglo that the debt was due to Anglo and that Anglo could claim it. To further support their argument counsel for Anglo referred to Adams V SA Motor Industry Employers’ Association 1981 (3) SA 1189 SCA wherein it was held that for an acknowledgment to constitute a claim must reflect both the indebtedness and intent to pay. The intent to pay can be implicit and the reference can be had to surrounding circumstances. It was argued on Anglo’s behalf that neither side disputed the existence of the debt, the tax invoice, and what was needed for the court to determine was whether there was an intention to pay.

Mokopo AJ held that there was no doubt that the debt was due to Anglo and in the absence of any evidence contrary to that put forward by Anglo, she had to accept that there was acknowledgment and an implicit undertaking to pay. Accordingly she found that the debt had not prescribed and that the oral undertaking  by the employee of CJMM to Anglo was an express acknowledgment as contemplated in terms of section 14 of the Prescription Act and accordingly prescription was interrupted.

CJMM has subsequently applied for leave to appeal.

This means that for clients where three years have lapsed since you came to know of a claim and it may appear that your claim has prescribed, one just needs to dig a little deeper, there may just be a chance to revive your claim if there has been an express or implicit acknowledgment of debt.