INTRODUCTION

In South African law, prescription denotes the time period after which a debt or legal claim can no longer be enforced due to the passage of time. In certain circumstances, the running of prescription can be interrupted, which effectively resets the clock and affords the creditor with an additional opportunity to enforce its claim. An acknowledgment of debt by the debtor is one of the main mechanisms which interrupt the running of prescription. This article examines the interruption of prescription as defined by the Prescription Act 68 of 1969, citing pertinent legal provisions and judicial interpretation.

STATUTORY BASIS FOR INTERRUPTION OF PRESCRIPTION

It is stated in Section 14(1) of the Prescription Act that an acknowledgment of debt by the debtor (either express or implied/tacit) interrupts the running of prescription. This implies that the prescription period is interrupted when the debtor acknowledges the debt regardless of the form of acknowledgment (e.g. in writing or verbally). When the period of prescription is interrupted, it recommences from the date of the acknowledgment of debt.

Accordingly, a formal written statement is not necessarily required. Acknowledgment can be deduced from the debtor’s behaviour, provided that such behaviour demonstrates a clear recognition of the debt and an intention to pay.

CASE OVERVIEW: ANGLO AMERICAN PROPERTIES v COJ

In In the unreported judgment of the South Gauteng High Court in Anglo American Properties Limited v City of Johannesburg Metropolitan Municipality (Case No. 35043/12) the court was requested to determine whether Anglo’s claim had prescribed or whether an oral acknowledgment of the debt by an employee of the City of Johannesburg Metropolitan Municipality (“COJ”) had interrupted the running of prescription under Section 14 of the Prescription Act.

Anglo argued that an oral acknowledgment made during a conversation between a COJ employee and a representative of Anglo, interrupted the running of prescription. By virtue of the acknowledgment, it was confirmed that the debt existed and could be enforced. In support of their argument, Anglo’s legal team made reference to the case of Adams v SA Motor Industry Employers’ Association 1981 (3) SA 1189 (SCA), which established that in order for an acknowledgment to be valid, it must demonstrate both awareness of the debt and an intention to pay, either explicitly or through contextual inference.

Acting Justice Mokopo issued a ruling in favour of Anglo, confirming that the oral acknowledgment was a valid interruption of prescription. The court highlighted the lack of contradictory evidence and accepted the testimony by Anglo’s representative that the acknowledgment by the COJ employee implied a commitment to pay. Consequently, the court concluded that, in terms of Section 14 of the Prescription Act prescription was interrupted.

CONCLUSION

The interruption of prescription, by virtue of an acknowledgment of debt, constitutes an important exception to the general legal principles regulating the prescription of claims. The Anglo-American case illustrates that even a verbal acknowledgement of liability can be regarded as sufficient to interrupt prescription, when combined with surrounding circumstances that suggest an intention to settle the debt. Accordingly, creditors should be aware of the necessity of documenting any acknowledgments of liability in order to protect and enforce their rights.