Land and Agricultural Development Bank of South Africa v Phato Farms (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judgment Date: 13 August 2014
• Citation: 2015 (3) SA 100 (GP)

Land and Agricultural Development Bank of South Africa v Phato Farms (Pty) Ltd and Others
2015 (3) SA 100 (GP)

2015 (3) SA p100

Citation	2015 (3) SA 100 (GP)
Case No	58018/10
Court	Gauteng Division, Pretoria
Judge	Molopa-Sethosa J
Heard	August 13, 2014
Judgment	August 13, 2014
Counsel	Details of counsel not supplied.

Flynote : Sleutelwoorde B

Prescription — Extinctive prescription — Period of prescription — Debt secured by general notarial bond — Not constituting 'mortgage bond' to which C 30-year prescription period applying but 'notarial contract' to which 6-year prescription period applying — Prescription Act 68 of 1969, ss 11(a)(i) and 11(c).

Mortgage — Notarial bond — General notarial bond — Extinctive prescription — Period of prescription — General notarial bond constituting 'notarial contract' to which 6-year prescription period applying — Prescription Act 68 of 1969, D ss 11(a)(i) and 11(c).

Headnote : Kopnota

Subsection 11(a)(i) of the Prescription Act 68 of 1969 provides for a prescription period of 30 years iro 'any debt secured by mortgage bond'; and s 11(c) for a 6-year prescription period in respect of 'a debt arising [inter alia] E from . . . a notarial contract'.

A general notarial bond is not a mortgage bond for the purposes of ss 11(a)(i); it is a notarial contract as contemplated in ss (11)(c). (Paragraph [64] at 109D.)

Cases Considered

Annotations F

Boland Bank Ltd v Pienaar 1988 (3) SA 618 (A): distinguished

Coloured Development Corporation v Sahabodien 1981 (1) SA 868 (C): dictum at 878C – E applied

Contract Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd and Others 2003 (2) SA 253 (SCA) ([2003] 1 All SA 267): dictum in para [3] applied G

Desert Star Trading 145 (Pty) Ltd and Another v No 11 Flamboyant Edleen CC and Another 2011 (2) SA 266 (SCA): dictum in para [11] applied

Farmsecure Grains (Edms) Bpk v Du Toit and Another 2013 (1) SA 462 (FB): dictum in paras [24] – [25] applied

Ikea Trading und Design AG v BOE Bank Ltd 2005 (2) SA 7 (SCA): applied

Land and Agricultural Development Bank of South Africa v Boeke and Another (GP case No 12506/07): distinguished H

Lief NO v Dettmann 1964 (2) SA 252 (A): dicta at 264 – 265 and 276 applied

National Bank v Cohen's Trustee 1910 TPD 1305: referred to

Goodricke & Son (Pty) Ltd v Registrar of Deeds, Natal 1974 (1) SA 404 (N): dictum at 408 applied

Sentraal-Oos (Koöperatief) Bpk v Potgieter and Another (FB case No 3870/94): referred to I

Standard Bank of South Africa Ltd v Saunderson and Others 2006 (2) SA 264 (SCA) (2006 (9) BCLR 1022; [2006] 2 All SA 382): dictum in para [2] applied

Thienhaus NO v Metje & Ziegler Ltd and Another 1965 (3) SA 25 (A): dictum J at 32B – C applied.

2015 (3) SA p101

Statutes Considered

Statutes A

The Prescription Act 68 of 1969, ss 11(a)(i) and 11(c): see Juta's Statutes of South Africa 2013/14 vol 1 at 2-945.

Case Information

Details of counsel not supplied.

Special pleas of prescription, and that summons issued prematurely. The order is in para [1] below. B

Order

1.

The defendants' special pleas, both on prescription and premature claim, are upheld. C

2.

The plaintiff is ordered to pay the defendants' costs.

Judgment

Molopa-Sethosa J:

[1] On 1 November 2013 I made the following order: D

'1.

The defendants' special pleas, both on prescription and premature claim, are upheld.

2.

The plaintiff is ordered to pay the defendants' costs.'

[2] I undertook to furnish reasons for the order at a later stage. The following are the reasons.

[3] The plaintiff in this matter instituted an action against the E first defendant for payment of R3 372 119,82 based on a short-term loan agreement (the loan agreement) signed in September 2003, secured by a general notarial bond (the general notarial bond) registered over the movables of the first defendant on 13 October 2003; and against the second to fourth defendants as sureties, for R2 460 000.

[4] The defendants raised two special pleas to the plaintiff's claim against F them, that —

•

the plaintiff's claims have prescribed (the prescription plea); and

•

the plaintiff has failed to comply with the provisions of a breach clause contained in the loan agreement, and accordingly the G plaintiff's claim based on the principal debt and on the accessory obligations are premature (the premature claim plea).

[5] The parties agreed to separate the issues and to first deal with the defendants' special pleas set out above, and these were by agreement referred to this court for decision.

Background H

[6] During or about October or November 2010 the plaintiff served a simple summons on the defendants in terms of which the plaintiff sought —

•

payment of the sum of R3 372 119,82 from the first defendant I pursuant to the conclusion of a short-term loan agreement concluded between the plaintiff and the first defendant; and

•

payment of the sum of R2 460 000,00 from the second to fourth defendants, pursuant to the conclusion of suretyship agreements by the second to fourth defendants in favour of the plaintiff. J

2015 (3) SA p102

Molopa-Sethosa J

A [7] The plaintiff subsequently served a declaration which was later amended. In terms of the amended declaration the plaintiff relies on —

•

the loan agreement concluded between itself and the first defendant;

•

the general notarial covering bond registered over the movables of the first defendant in favour of the plaintiff; and

•

suretyship agreements executed by the second to fourth defendants B in favour of the plaintiff.

[8] The defendants filed a plea and counterclaim to the plaintiff's claim, and raised the two special pleas as set out above.

[9] On 12 April 2013 the plaintiff served the defendants with an adjusted C replication in response to the defendants' special pleas, in terms of which the plaintiff alleges that —

•

the general notarial covering bond is a 'mortgage bond' for the purposes of s 11(a)(i) of the Prescription Act 68 of 1969 (the Prescription Act), and accordingly carries a prescription period of 30 years;

•

D in terms of clause 8 of the notarial bond the plaintiff is entitled to claim for moneys allegedly owed on the principal debt by way of the bond, without having to comply with the notice periods contained in the loan agreement; alternatively

•

the second to fourth defendants are not party to the loan agreement and no notice in terms of the suretyship is required; further alternatively E

•

the second to fourth defendants have waived their rights to notice in the execution of the suretyship agreements.

[10] The issues for determination were thus the following:

F [11] The prescription plea: Is a general notarial covering bond a 'mortgage bond' for the purposes of s 11(a)(i) of the Prescription Act?

[12] The premature claim plea: Insofar as the plaintiff's relief based on the principal debt, ie the loan agreement, is not yet claimable against the first defendant, is the plaintiff entitled to seek relief against the first G defendant on the accessory obligation, being the notarial bond?

[13] In the alternative to the above, if the relief sought against the first defendant on the principal agreement were not yet claimable, would the plaintiff be entitled to seek relief against the second to fourth defendants based on the accessory obligations of suretyship, either by the argument H that the second to fourth defendants were not parties to the loan agreement, or by the argument that they have waived the entitlement to notice?

[14] On prescription, s 11(a)(i) of the Prescription Act provides as follows:

I '11 Periods of prescription of debts

The periods of prescription of debts shall be the following:

(a)

thirty years in respect of —

(i)

any debt secured by mortgage bond; . . . .'

[15] Subsections 11(c) and (d) of the Prescription Act provide as J follows —

2015 (3) SA p103

Molopa-Sethosa J

'(c)

six years in respect of a debt arising from a bill of exchange or other A negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph (a) or (b);

(d)

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

[16] For purpose of prescription the following facts are common cause B between the parties:

[17] Plaintiff has two causes of action against the defendants based on —

•

the loan agreement; and

•

the general notarial bond.

[18] The full amount in terms of the loan agreement became due and C payable on 1 April 2004.

[19] Summons in this matter was issued on 11 October 2010, as appears from the registrar's stamp. According to both parties the summons was served on the defendants during or about October/November 2010, D more than six (6) years after the cause of action arose. Unfortunately there are no returns of service in the papers filed before this court; however, it is not in dispute that the summons was served more than six years after the cause of action arose.

[20] It is thus common cause between the parties that the plaintiff's E claim against the first defendant, based on the loan agreement, arose more than six years prior to the service of summons on the defendants.

[21] The plaintiff, in replication to the special plea of prescription, as already stated above, pleads that the general notarial covering bond is a 'mortgage bond' for the purposes of s 11(a)(i) of the Prescription Act, and accordingly carries a prescription period of 30 years. F

[22] The defendants contend that the general notarial bond does not constitute a mortgage bond for purposes of s 11(a)(i) of the Prescription Act, and consequently that the plaintiff's claim has prescribed.

[23]...