Creditors must be sure to issue summons before the debt in question prescribes.
Does a debt prescribe if the creditor serves a summons on the debtor, and then sits back and does nothing?
Prescription is a word that strikes fear into the heart of every litigant and his attorney.
The term extinctive prescription connotes the complete extinguishing of a legal right on the grounds that the legally defined prescriptive period has gone by without the creditor's having instituted legal proceedings to enforce the right.
In other words, if a person has a legal right and if he fails, for the stipulated prescriptive period, to take legal action to enforce that right, he forfeits the right.
The justification for this principle is clear.
Law - and indeed justice - requires certainty. Legal certainty (and fairness to a debtor) would be fatally undermined if a person, who claimed to have a legal right (for example, a right to the payment of money) were allowed to just to sit back, and let many years go by without taking any legal steps to enforce that right and then - years after the event, when documents supporting the debtor's defence to the claim may have gone missing and witnesses who would have testified in the debtor's favour may have died or become untraceable - suddenly take steps to enforce the right.
The Prescription Act 68 of 1969 provides in section 10(1) that a debt (a word to which the law gives a wide interpretation, not confined to money debts, and essentially meaning any legal claim) is extinguished by prescription after the effuxion of the prescriptive period laid down in that Act.
Aside from some special prescriptive periods for debts secured by mortgages, judgments, and tax debts, the general prescriptive period is three years from the date that the debt became legally due.
The Act also provides in section 15(1) that prescription is interrupted - that is to say, the hands of clock which is ticking away the prescriptive period stop moving -
by the service on the debtor of any process whereby the creditor claims payment of the debt
In other words, what interrupts the running of prescription is the service of legal process, for example, the service of a summons on the debtor. A mere letter of demand is insufficient.
Hence, a creditor who is owed money, or a person who has a legal claim of any other kind, should be acutely aware of the point in time at which prescription started running and should be sure to serve a summons on the debtor before the prescriptive period - usually three years - has gone by.
If the creditor fails to do so, then the debt or other claim is extinguished and he forfeits forever the right to compel payment.
Will delay on the part of the creditor in taking litigation to a conclusion cause his claim to prescribe?
Assuming that the creditor does serve a summons on the debtor within the prescriptive period (thereby interrupting the running of prescription) is there a second prescriptive period within which the creditor must take the legal proceedings all the way to judgment?
In other words, is a creditor's right to compel payment of a debt extinguished by prescription if, after summons, he then takes no further action?
This was one of the issues facing the Supreme Court of Appeal in Cadac (Pty) Ltd v Weber-Stephen Products Co 2011 (3) SA 570 (SCA).
This question arises because section 15(2) of the Prescription Act explicitly provides that (emphasis added)
… the interruption of prescription [by service of a summons] shall lapse, and the running of prescription shall not be deemed to have been interrupted, if the creditor does not successfully prosecute his claim under the process in question to final judgment …
Arguably, this latter provision is capable of being interpreted to mean that, if a creditor, having served a summons on the debtor claiming payment of the debt, then sits by and takes no further action, the claim will prescribe just as though no summons had been served.
Happily for creditors, the Supreme Court of Appeal ruled that this is not what this provision means. The court ruled that the service of a summons interrupts the running of prescription, and prescription does not resume running if the creditor takes no further action.
But, in these circumstances, the debtor has the right, in terms of the Rules of Court, to apply to court to compel the creditor to take the necessary further steps to move the litigation to completion. If the creditor were to fail to do so, a court could have his claim struck out - not on the basis of prescription, but on the grounds of non-compliance with the Rules of Court.
As a matter of litigation strategy, therefore, the fundamental lesson remains, that the step of critical importance is the serving of a summons before the prescriptive period has run its course.