When is a debt not a 'debt'?Once upon a time, not too long ago, the word "debt"1 in the 1969 Prescription Act2 (the "Act") covered just about any obligation to do anything. That, in turn, meant that virtually any obligation to do anything,3 or to demand that another party do something, was susceptible to the exigencies of the relevant prescriptive period in the Act. The notion that a "debt" for the purposes of the Act covered a broad scope of legal obligations arose primarily from the pronouncement in Desai NO v Desai4 to the effect that:
However, since 20176, a “debt” has a more constrained meaning: the definition has been considerably restricted. The narrow meaning now ascribed to the word arises primarily from Escom v Stewarts & Lloyds of SA (Pty) Ltd7 where it was held that:
This somewhat restricted definition of the word “debt” has now been adopted by the Constitutional Court in two separate judgments, relatively coterminous, in 2016 and 2017, namely Makate v Vodacom Ltd9 (“Makate”) and Off-beat Holiday Club v Sanbonani Holiday Spa Share Block Ltd10 (“Off-beat”). In Makate the appellant had sought a declaration to the effect that the parties had concluded an oral agreement, that Vodacom would pay the appellant for the lucrative idea he had originated for Vodacom’s business and for an order directing Vodacom to commence with bona fide negotiations to determine a reasonable remuneration payable to the applicant (appellant).11 It was the claim relating to Vodacom being ordered to start the bona fide negotiations which was held by the High Court12 to have been extinguished by prescription. It appears from the High Court’s judgment that its final decision on the prescription question turned on the interpretation of the word “debt” as it appears in subsections 10(1) and 12(1) of the 1969 Prescription Act.13 The High Court gave the word a wide meaning in saying that it:
For its conclusion that a “debt” contemplated in section 10(1) of the Act includes a claim to negotiate the terms of an agreement, the High Court relied on the decision in Desai v Desai, and specifically on the passage quoted above.15 But in Makate’s case, on final appeal, the Constitutional Court commented on the passage in Desai’s case, after quoting it, as follows:
The Constitutional Court then went on to point out that the Appellate Division in Desai’s case had not spelt out anything in section 10(1) of the Act demonstrating that the word “debt” was used in such a wide sense.17 The Court also made the point that so broad a construction of the word “debt” was inconsistent with earlier decisions of the Appellate Division which had given the word a more “circumscribed” meaning, in particular the Escom case (in the passage referred to above) as well as others.18 Noting that the decisions in Desai and Escom were pre-constitutional, the Court then proceeded to consider the provisions of the 1969 Prescription Act in light of subsection 39(2)19 of the Constitution and the right embodied in section 34 granting to everyone the right to have a dispute adjudicated in a court of law. It held that section 10 read with sections 11 and 12 of the 1969 Prescription Act limits the rights guaranteed under section 34 of the Constitution.20 The Court however concluded, on the prescription issue, that “…in present circumstances it is not necessary to determine the exact meaning of ‘debt’ as envisaged in section 10”. The reason for this was because “…the claim we are concerned with falls beyond the scope of the word as determined in cases like Escom, which held that a debt is an obligation to pay money, deliver goods or render services.”21 In Makate’s case, so the Court held, the applicant (appellant) had not asked for the enforcement of any such obligation: all he had requested was an order compelling Vodacom to commence negotiations with him for the determination of compensation for the use of his idea. The Court therefore concluded, on this point:
Just over twelve months after the decision in Makate, in Off-beat, the Constitutional Court emphatically supported the narrow definition of the word “debt” embraced in the earlier case. Mhlantla J (writing for the majority) commented as follows23 on the conclusion reached as to the meaning of “debt”:
In light of the decisions of the Constitutional Court in Makate and Off-beat, it must now be settled law that, in the post constitutional order, a “debt” for the purposes of sections 10(1) and 12(1) of the Act means:
This narrower definition of the meaning of “debt” in the Act was confirmed by the SCA in Frieslaar NO v Ackerman26 when it quoted with approval the shorter Oxford English Dictionary meaning of “debt” as:
The Court therefore held that the obligation of the respondents to pay transfer costs (money) and other related costs in terms of the sale agreements constituted a debt in terms of section 10(1) of the 1969 Prescription Act. It follows from these recent decisions that any right to demand, or obligation to pay or render, anything other than money, goods or services, which might previously have been a prescribable “debt”, will no longer be subject to the vicissitudes of prescription. For more information please visit: https://store.lexisnexis.co.za/products/prescription-in-south-african-law-skuZASKUPG670. 1 The word “debt” is not defined in the Act and must therefore be subject to interpretation by the courts. About LexisNexis® Legal & ProfessionalLexisNexis Legal & Professional is a leading global provider of legal, regulatory and business information and analytics that help customers increase productivity, improve decision-making and outcomes, and advance the rule of law around the world. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis® and Nexis® services. LexisNexis Legal & Professional, which serves customers in more than 130 countries with 10,000 employees worldwide, is part of RELX Group, a global provider of information and analytics for professional and business customers across industries. In South Africa LexisNexis® has been assisting companies and professionals to remain abreast of changing legislation and shifts in the regulatory environment for over 80 years, using leading-edge technology, tools and online solutions. South African investment firm, Tsiya Group, acquired a minority interest in the company in July 2012. About the authorJohn Saner SC (MA (cum laude) LLB (Wits) has been a member of the Cape Bar for thirty years and has specialised in medical negligence litigation for the past twenty years. As a result, he has been at the forefront of developments in this field of practice and the law and has seen and experienced the changes and rapid increase in medical negligence litigation in those years. He has extensive practical experience in every aspect of medical malpractice law from case selection through to appeals and everything in between, including inquests and disciplinary proceedings.
John took silk in 2014 and continues to practice and litigate solely in the medical negligence field, as a member of the Cape Bar from his base in Tampa, Florida, USA.
John is also author of Medical Malpractice in South Africa, Prescription in South African Law and Agreements in Restraint of Trade published by LexisNexis South Africa.
| ||