Neon and Cold Cathode Illuminations (Pty) Ltd v Ephron

• Jurisdiction: South Africa
• Judge: Trollip JA, Rabie JA, Corbett JA, Kotzé JA and Diemont JA
• Judgment Date: 11 November 1977
• Citation: 1978 (1) SA 463 (A)
• Hearing Date: 19 September 1977
• Court: Appellate Division

Trollip, J.A.:

This appeal concerns the question whether or not the appellant's right of action against respondent, a surety and co-principal F debtor, became prescribed under the Prescription Act, 18 of 1943. The main facts may be summarized as follows:

1. On 27 February 1962 appellant, a neon sign manufacturer and supplier, and Benam Holdings (Pty.) Ltd. ("Benam"), through its director David Ephron (respondent), entered into a written "rental and maintenance G agreement", herein called "the lease". According to its terms appellant undertook to construct, instal, and let to Benam a neon display sign for its business for 60 calendar months with effect from the date of its installation (1 September 1963). The rental was R19 per month, payable in advance on the first day of every month.

2 (a) Clause (g) (b) of the lease provided that, if Benam should H default in the payment of any rental, appellant would be entitled, upon notice in writing, to claim immediately the full balance of rentals for the remainder of the unexpired term of the lease. On payment Benam would be entitled to continue using the sign for such unexpired term.

(b) In terms of clause (g) (c) appellant and Benam consented to the jurisdiction of the magistrate's court for the district in which Benam carried on business, irrespective of the amount claimed by appellant.

3. Respondent at the same time also signed a separate undertaking, at

Trollip JA

the foot of the lease and beneath his signature on behalf of Benam, in these terms:

"I, the undersigned, a director of the lessee company duly authorised on A behalf of the lessee company, hereby bind myself jointly and severally in my personal capacity as surety and co-principal debtor in solidum for the due performance by the lessee company of all its obligations under this agreement."

4. After 1 September 1963 Benam failed to pay the rentals for some of the months, but up to and including April 1966 it had paid R513 in all. It then ceased all payments, so that, when the lease expired on 31 August 1968, a total amount of rentals of R627 had become due and remained unpaid.

B 5. On 25 March 1970 appellant sued respondent in his personal capacity for payment of the R627 in the Johannesburg magistrate's court. The summons was served on him on 1 April 1970. The precise cause of action relied on therein is important, since appellant maintained, as will presently appear, that that action interrupted the running of prescription. C The particulars of the claim in the summons alleged that appellant and respondent (not Benam, it should here be noted) had entered into the lease, that, in terms thereof, respondent hired the neon sign on the conditions mentioned in para. 1 above, that respondent was in arrear D with the rentals in the sum of R627, that upon payment of that amount appellant tendered the use of the sign for the remainder of the unexpired term of the lease, and that the Johannesburg magistrate's court had jurisdiction, inter alia, because respondent had consented thereto. Respondent defended the action. On 11 December 1972, at the end of the trial, appellant's claim was dismissed on the ground (it was common cause) E that respondent had been incorrectly sued on the lease as the lessee and not as surety and co-principal debtor in terms of his own undertaking mentioned in para. 3 above. No appeal was noted against that judgment.

6. On 13 February 1973 appellant again sued respondent in the Johannesburg magistrate's court for payment of the R627. The summons was served on 16 F February 1973. That commenced the present proceedings. This time appellant did sue respondent as surety and co-principal debtor in terms of the above-mentioned suretyship. Respondent defended the action. The pleadings went through several vicissitudes before reaching finality. It is unnecessary to recount them. Suffice it to say that ultimately respondent's defence was that appellant's entire claim against Benam was G for rentals that had all accrued prior to 16 February 1970, they were therefore prescribed for more than three years had since elapsed, and they were thus unenforceable against respondent. Appellant joined issue on all those points, alleging in particular that the period of prescription was six years, and that, in any event, the running of prescription was H interrupted by the service of the summons in the previous case on respondent on 1 April 1970 (see para. 5 above).

7. At the trial no evidence was adduced but the parties handed in a stated case of the agreed facts. These facts are incorporated in this summary. The magistrate granted judgment for appellant for the R627 and costs. The Tranvaal Provincial Division (by consent apparently) set aside the judgment on appeal and remitted the case to the magistrate for re-hearing and ordered the costs of the appeal and the previous hearing to be costs in the cause. No reason emerges from the record why this was done. On the re-hearing the magistrate again granted judgment in appellant's

Trollip JA

favour as before. A further appeal to the above Division (IRVING STEYN and MOSTERT, JJ.) was allowed with costs and the magistrate's judgment was altered to one for respondent with costs. With the leave of A that Court the appellant has now appealed to this Court.

8. It was common cause that the Prescription Act, 18 of 1943, despite its repeal by the Prescription Act, 68 of 1969, continued to apply to this dispute in terms of sec. 16 of the latter Act.

9. According to sec. 5 (1) (d) of the 1943 Act extinctive prescription in the present case began to run from the date on which appellant's right of B action first accrued against Benam and therefore against respondent as its surety and co-principal debtor. It became common cause before us that at no stage during the currency of the lease did appellant exercise its right under clause (g) (b) of the lease of claiming, on the failure of Benam to pay any rental on due date, payment of the full balance of the rentals C for the remainder of the unexpired term of the lease. Hence, appellant's right of action for each rental first accrued on the second day of every successive month up to and including August 1968, when the lease expired. The applicable period of prescription therefore ran from each of those dates. But, in regard to those rentals that fell due and were unpaid prior to April 1966, the running of prescription was interrupted (it was common D cause) by the payment of the rental for and in that month (see sec. 6 (1) (a) of the 1943 Act) and prescription in respect of those rentals recommenced to run from then.

That concludes the summary of the main facts.

The first question is, what period of prescription is applicable? E Different periods of extinctive prescription are specified in sec. 3 (2) of the 1943 Act. In. para. (c) (iv) thereof the period is

"three years in respect of rent due upon any contract".

Para. (d), however, says the period is

"six years in respect of written contracts... unless a shorter period is applicable under any provision of para. (c)".

F According to sec. 4, if two or more periods of prescription may be applied to one cause of action, the longest period shall apply.

For respondent it was contended that, although the lease and suretyship were written contracts, appellant's claim against Benam was for "rent due upon a contract", that, therefore, in terms of para. (c) (iv) read with G the qualification in para. (d) of sec. 3 (2) quoted above, only the shorter period of prescription of three years was applicable, that sec. 4 was thus of no...