Suretyship and prescription : the effect of a delay or interruption in prescription against the principal debtor on the obligation of the surety
| Record Number | lesotho_v19_n2_a3 |
| Pages | 87-116 |
| Date | 01 January 2012 |
| DOI | 10.10520/EJC192857 |
| Author | K. Ramabele-Thamae |
| Published date | 01 January 2012 |
SURETYSHIP AND PRESCRIPTION:
THE EFFECT OF A DELAY OR
INTERRUPTION
IN
PRESCRIPTION
AGAINST THE PRINCIPAL DEBTOR
ON
THE OBLIGATION OF THE SURETY
K.
Ramabele-Thamae'
Abstract
11iis
article
looks
at
how
the
Supreme Court
of
Appeal
of
South
Africa
has
dealt
with
the
issue
of
discharge
of
the
surely
/Jy
prescription
where
there
is
a delaying
or
intem1pting factor
on
the
obligation
of
the
principal
debtor,
Two
sides
are
shown;
one
side
leans
towards protection
of
the
creditor
by
binding
the
surety
to
the
creditor
as
long
as
the
debt
remains
unpaid while
the
other
side
gives protection
to
tire
suretlj
by
permitting
discharge
as
soon
as
the
period
of
prescription
has
completed its
course,
The
approach
currently adopted
by
Ifie Supreme Court
of
Appeal favours protection
of
the
creditor,
A judgment granted
against
the
principal
debtor
binds
both
the
principal
debtor
and
surety
for
30
years
even
if
the
surety
was
never
sued
nor
had
no
prior
notice,
As a result,
the
surely cannot
rely
on
prescription
as
a
defense
to
seek
discharge
from
the
obligation
to
the
creditor
as
long
as
the
debt
remains unpaid, This seemingly generous
protection given
to
the
creditor
is
likely
to
discourage
third
parties
from
binding themselves
as
sureties, It
is
argued that
the
best
approach
is
one
which
does
not burden
the
surety with
extended
liabili~f
and
it
must
be
tire
creditor's fault
for
failing
to
~
Lecturer, Faculty
ofla,v,
Dept
of Private La\v, National University of Lesotho,
En'1ail:kucnacsele@yahoo.cont.
88
Suretyship & Prescription: The effect
ofa
delay
take
steps
to
interrupt prescription running
in
favour
of
the
surety. Jhe
law
as
it stands
needs
to
strike a
balance
between
the
interests
of
the
creditor and surety by ensuring that protection
of
tlie
creditor
is
not
done
at
the
expense of
the
surely Placing
too
much burden
on
the
surety
makes
suretyship a
less
attructi'ce
form
of
security.
Introduction
The
prevailing
approach
followed
by
the
South
African
Supreme
Court
of
Appeal
on
the
running
of
prescription
and
suretyship
is
that
any
interruption
or
delay in prescription
running
in
favour
of the
principal
debtor
also affects prescription
running
in
favour
of
the
surety
by
delaying
or
interrupting
it. This
was
the decision in the case
of
fans
v
Nedcor
Bauk
Lid.' The
court
pointed
out
that
the
weight
of
Roman-Dutch
law
authority
pointed
to this
approach
as
the accepted
common
law
position
and
to
permit
the claim of
the
surety
to
prescribe before
that
of the
principal
debtor
would
be
almost
subversive
of
the
whole
contract of suretyship.2 This is because the
very
existence
of
the
debt
is
dependent
upon
the
existence of
the
suretyship,
while
the
object
of
the latter is to
ensure
proper
payment
of
the
debt.3
By
this decision, the
Supreme
Court
of
Appeal
overruled
a
long
standing
decision by Baker J
in
Randllank v
De
Jager4,
which
held
otherwise.s
The
Supreme
Court
of
Appeal
in
Jans
v
Nedcor
Bank
reverted
back
to the
approach
it first
adopted
on
this issue
in
Cronin v
---·---------
1 2003
(6)
SA 646 (SCA); [2003] 2 ALL SA 11 (SCA).
2 Ibid, par 30, pg 662.
3 ibid, par 30, pg 662.
41982 (3)
SA
418 (C).
s
The
Supren1e
Court
of
Appeal
in RandBank v
De
Jager
held
that
prescription
against
the
surety
runs
independently
of
prescription
against
the
principal
debtor,
Therefore,
interruption
or
delay
in the
running
of
prescription
against
the
principal
debtor
does
not
affect
prescription
running
jn
favour
of
the
surety.
The
effect
11vould
be
that
the
surety
can
be
discharged
from his security obligation before
the
principal
debtor.
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