Prescription is a legal principle in terms of which a debtor’s liability to pay an outstanding debt is extinguished after the passing of prescribed time periods. This will apply, provided that the debtor has not during such prescribed period, in any way acknowledged his/her liability to pay such debt. If the creditor served a summons during the prescribed period or where the debtor acknowledges liability, the prescription period will be interrupted and will start to run afresh from the date on which the summons was so served, or the liability acknowledged.
Periods of prescription of debts
The periods of prescription of debts are:
a) 30 years in respect of any debt secured by mortgage bond; any judgment debt; any debt in respect of any taxation imposed or levied by or under any law; any debt owed to the State in respect of any share of the profits, royalties, or any similar consideration payable in respect of the right to mine minerals or other substances;
b) 15 years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of (a);
c) six years in respect of a debt arising from a bill of exchange or other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of (a) or (b);
d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.
When does prescription begin to run?
Prescription commences as soon as the debt is due. If the debtor willfully prevents the creditor from coming to know of the existence of the debt, prescription does not commence until the creditor becomes aware of the existence of the debt.
A debt cannot be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises provided that a creditor is deemed to have such knowledge if he could have acquired it by exercising reasonable care.
Prescription cannot commence in respect of a debt based on the commission of an alleged sexual offence as contemplated in sections 3, 4, 17, 18(2), 20(1), 23, 24(2) and 26(1) of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007, and an alleged offence as provided for in sections 4, 5, and 7 and involvement in these offences as provided for in section 10 of the Prevention and Combating of Trafficking in Persons Act, 2013, during the time in which the creditor is unable to institute proceedings because of his or her mental or psychological condition.
Completion of prescription delayed in certain circumstances
If the creditor is a minor or is insane or is a person under curatorship or is prevented by superior force including any law or any order of court from interrupting the running of prescription, the debtor is outside the Republic; or the creditor and debtor are married to each other; or the creditor and debtor are partners, and the debt is a debt which arose out of the partnership relationship; or the creditor is a juristic person, and the debtor is a member of the governing body of such juristic person; or the debt is the object of a dispute subjected to arbitration; or 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 (Act 28 of 1966); or the creditor or the debtor is deceased and an executor of the estate in question has not yet been appointed; and the relevant period of prescription would be completed before or on, or within one year after, the day on which the relevant obstruction has ceased to exist. The period of prescription cannot be completed before a year has elapsed.
A debt which arises from a contract, and which would become prescribed before a reciprocal debt which arises from the same contract becomes prescribed, cannot become prescribed before the reciprocal debt becomes prescribed.
Interruption of prescription by acknowledgement of liability
The running of prescription can be interrupted by an express or tacit acknowledgement of liability by the debtor. If the running of prescription is interrupted, prescription can commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt, from the date upon which the debt again becomes due.
Judicial interruption of prescription
The running of prescription can be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt. Unless the debtor acknowledges liability, the interruption of prescription can lapse, and the running of prescription cannot be deemed to have been interrupted if;
Ø The creditor does not successfully prosecute his claim under the process in question to final judgment or if he does so prosecute his claim but abandons the judgment or the judgment is set aside.
Ø The running of prescription is interrupted, and the debtor acknowledges liability, and the creditor does not prosecute his claim to final judgment, prescription can commence to run afresh from the day on which the debtor acknowledges liability or, if at the time when the debtor acknowledges liability or at any time thereafter the parties postpone the due date of the debt, from the day upon which the debt again becomes due.
Ø The running of prescription is interrupted, and the creditor successfully prosecutes his claim under the process in question to final judgment and the interruption does not lapse, prescription shall commence to run afresh on the day on which the judgment of the court becomes executable.
Ø Any person is joined as a defendant on his own application, the process whereby the creditor claims payment of the debt shall be deemed to have been served on such person on the date of such joinder.
Acquisition of ownership by prescription
Acquisition of ownership by prescription: A person can, by prescription become the owner of a thing which he/she has possessed openly and as if he/she were the owner thereof for an uninterrupted period of thirty years or for a period which, together with any periods for which such thing was so possessed by his predecessors in title, constitutes an uninterrupted period of thirty years.
Involuntary loss of possession: The running of prescription cannot be interrupted by involuntary loss of possession if possession is regained at any time by means of legal proceedings instituted within six months after such loss for the purpose of regaining possession, or if possession is lawfully regained in any other way within one year after such loss.
In a nutshell, in terms of the Prescription Act 68 of 1969 ("the Act"), debts prescribe after a period of 3 years. To avoid losing the legal right to enforce a claim (payment of a debt), a creditor must interrupt prescription by instituting proceedings against a debtor before the end of the 3-year period.
In terms of Section 12 of the Act, the 3-year prescription period is calculated, and begins to run, from the date on which the debt becomes due. A debt in terms of the Act is only deemed to be due when a creditor has knowledge of both the identity of the debtor as well as of all the facts from which the debt arises.
Also, in terms of Section 14 of the Prescription Act, the running of prescription is interrupted by an express or tacit acknowledgement of liability by a debtor.