Kilroe-Daley v Barclays National Bank Ltd

• Jurisdiction: South Africa
• Judge: Rabie CJ, Jansen JA, Nicholas JA, Galgut AJA and Howard AJA
• Judgment Date: 04 September 1984
• Hearing Date: 22 May 1984
• Court: Appellate Division

Galgut AJA:

The respondent, a registered banking institution, was the plaintiff in the Court a quo. I shall refer to it as "the Bank". Dodo Shipping Co (Pty) Ltd was one of its customers. It had been granted extensive overdraft facilities. I shall refer to it as "Dodo".

Appellant (second defendant in the Court below) had on 30 April 1973 (I quote from paras 8 and 9 of the Bank's declaration)

"8.

F ... signed a document in terms whereof she bound herself as surety in solidum and co-principal debtor for all debts or other obligations of whatever nature, both present and in future, from whatever cause arising, which may be or become due, owing or payable G by the company (Dodo) to the plaintiff. A copy of the aforesaid document is annexed hereto, marked 'C'...

9.

To secure her indebtedness to the plaintiff, arising out of annexure 'C' hereto but limited to a sum not exceeding R70 000 together with interest thereon, the second defendant hypothecated the immovable property H registered in her name in terms of deed of transfer T30010/1963 to the plaintiff under first mortgage bond B39348/1973."

The date of the above bond is 18 October 1973. A company, Paardekraal Ondernemings (Edms) Bpk (Paardekraal) had also bound itself to the Bank as surety in solidum and co-principal debtor in respect of Dodo's liability. Paardekraal's liability was limited to R40 000.

I As at 31 July 1974 Dodo's indebtedness to the Bank was R228 273,37. The Bank on that date demanded payment of that sum from Dodo, the appellant and Paardekraal.

Dodo was unable to pay its debts and it was wound up by the Court in terms of s 344 (f) of the Companies Act 61 of 1973. The date of the final winding up order is 15 October 1974. On 1 April 1976 the Bank

Galgut AJA

filed a claim against Dodo (in liquidation). The claim was A accepted by the liquidator in an amount of R210 299,37.

The final liquidation and distribution account of Dodo (in liquidation) was confirmed by the Master of the Supreme Court on 9 August 1978. Plaintiff duly received its dividends on its proved claim. No further dividends are payable.

Thereafter the Bank caused summons to be issued against B Paardekraal as first defendant and appellant as second defendant. The amount claimed from appellant was R51 646,67 plus interest thereon. How this amount was arrived at is not material to the issue before us. There was also a claim for an order declaring the property, mortgaged by the appellant, C executable. The summons was served on appellant on 31 March 1980. The importance of the respective dates will appear later.

Appellant and Paardekraal separately entered appearance to defend the action. The Bank then applied for summary judgment against each of them. Summary judgment was not granted. The Bank then filed its declaration. The relevant allegations D against appellant are in paras 8 and 9 thereof - as to which, see above.

Appellant in a special plea alleged that the due date of Dodo's liability to the Bank was 31 July 1974; that in the normal course of events the Bank's claim against Dodo would have become prescribed by 31 July 1977; that inasmuch as her liability as surety and co-principal debtor was accessory to E Dodo's liability, the claim against her would also normally have become prescribed by that date; that by reason of the provisions of s 13 (1) (g) and (i) of the Prescription Act 68 of 1969 (the Act) the completion of the period of prescription had been delayed till a date not later than one year after 9 August 1978; that, as the summons was served on appellant after F that date, viz on 31 March 1980, the Bank's claim against her had become prescribed.

It is convenient to set out at this stage certain relevant statutory provisions. The relevant sections of the Act read:

"11.

Periods of prescription of debts.

The periods of prescription of debts shall be the following:

(a)

G thirty years in respect of -

(i)

any debt secured by mortgage bond;

(ii)

any judgment debt;

(iii)

............

(iv)

............

(b)

............

(c)

............

(d)

H save where an Act of Parliament provides otherwise, three years in respect of any other debt.

12 (1)

When prescription begins to run

Subject to the provisions of ss (2) and (3) prescription shall commence to run as soon as the debt is due."

Subsections (2) and (3) are not relevant.

"12 (1)

Completion of prescription delayed in certain circumstances - If...

(a)

I ............

(b)

............

(c)

............

(d)

............

(e)

............

(f)

............

Galgut AJA

(g)

A 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 28 of 1966, or the Farmers' Assistance Ordinance 11 of 1962 of the territory of South West Africa; or

(h)

............; and

(i)

the relevant period of prescription would, but for the B provisions of this subsection, be completed before or on, or within one year after, the day on which the relevant impediment referred to in para (a), (b), (c), (d), (e), (f), (g) or (h) has ceased to exist,

the period of prescription shall not be completed before a year has elapsed after the day referred to in para (i)."

Section 408 of the Companies Act reads:

"408

Confirmation of account -

C When an account has lain open for inspection as prescribed in s 406 and -

(a)

no objection has been lodged;

(b)

.... [These subsections deal with the proce-

(c)

.... dure when objections are lodged.]

the Master shall confirm the account and his confirmation shall have the effect of a final judgment, save as against D such persons as may be permitted by the Court to re-open the account after such confirmation but before the liquidator commences with the distribution."

The Bank in its replication denied "that s 13 (1) (i) has any application to the instant matter" and went on to aver that "its claim against Dodo will, in terms of s 11 (a) of Act 68 of 1969, only become prescribed on 9 August 2008".

E At the commencement of the trial in the Court a quo the minutes of the pre-trial conference were handed in. These reflect that the above facts and dates were common cause. The further relevant paragraphs read:

"3. The trial will proceed against second defendant only on the question whether plaintiff's claim has prescribed or not.

F 4. It is recorded that plaintiff has settled its claim against first defendant in the sum of R30 000.

5. In the event of the honourable Court holding that plaintiff's claim has not prescribed plaintiff shall be entitled to judgment against second defendant; this judgment shall be for the amount of plaintiff's claim as set out in its declaration less the sum of R30 000 received by plaintiff from first defendant on 10 June 1982."

G It is not disputed that the due date of the liability to the Bank was 31 July 1974 and that, in terms of s 12 (1) of the Act, prescription commenced to run from that date.

The learned trial Judge having considered the provisions of s 408 of the Companies Act and of s 11 (a) (ii) of the Act went on to say in his reasons for judgment:

H "It follows in my view that when the final liquidation account was confirmed in this matter by the Master on 9 August 1978 the Master's confirmation had the effect, in regard to the account as a whole, of a final judgment.

The further question which was also raised was whether a final judgment was necessarily a judgment of a court.

In my view it is clear that the Legislature intended, by the I use of the words 'final judgment' to mean that it should be equated to a judgment of a court of law, and that it should have precisely the same effect."

He accordingly held that the applicable period of prescription was that set out in s 11 (a) (ii), viz 30 years, and hence the Bank's claim had not become prescribed. He then gave judgment in favour of the Bank as prayed less R30 000 paid by Paardekraal. The appeal is against the whole of the judgment and order.

Galgut AJA

From now on, unless otherwise stated, all references to A sections, will be to sections of the Prescription Act.

The facts are not in dispute. The issues before this Court are whether appellant's contention that, by reason of s 13 (1) (g) and (i), the Bank's claim had become prescribed within one year after 9 August 1978 is correct or whether the relevant period of prescription is 30 years either in terms of s 11 (a) (i) or B in terms of s 408 of the Companies Act read with s 11 (a) (ii).

Section 13 (1) was considered in this Court in Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A). At 578 et seq GROSSKOPF AJA, who delivered the judgment of the Court, discussed certain philosophical C explanations justifying extinctive prescription. There is no need to repeat what was there said. See also the remarks of MARAIS AJ in Cape Town Municipality v Allie NO 1981 (2) SA 1 (C) at 5. At 579B of the Murray & Roberts report it is said:

"It is accepted in the Act that there are circumstances in which it would be unfair to require of the creditor that he D institute proceedings within the time normally allowed. This unfairness arises in the main where it is impossible or...