The SCA disallowed the appeal and held that the debt has prescribed because the date when a debt becomes due must not be conflated with the date when repayment is demanded. So a debt that is repayable on demand becomes due when the money is lent to the debtor.
Trinity Asset Management (Pty) Ltd v Grindstone Investments (Pty) Ltd (1040/15) [2016] ZASCA 135 (29 September 2016) per Willis JA (Theron and Swain JJA concurring with Dlodlo AJA and Bosielo JA dissenting)
Excerpts from the majority judgment without footnotes
[11] In terms of s 11(d) of the Prescription Act 68 of 1969 (the 1969 Prescription Act), prescription of this debt will have been completed three years after it had become ‘due’ unless, of course, prescription had been interrupted by, for example, an acknowledgement of debt in terms of s 14 of the 1969 Prescription Act or ‘judicial interruption’ in terms of s 15 thereof. Interruption of prescription, by acknowledging liability is one thing, attempting to revive an extinguished debt by acknowledgement is another. It is now trite that the 1969 Prescription Act, unlike its 1943 predecessor, created ‘strong’ prescription. In Oertel v Direkteur van Plaaslike Bestuur,[1] it was said that:
‘Die 1969 Wet maak egter vir slegs sterk verjaring voorsiening. Na verstryking van die voorgeskrewe termyn gaan die skuld as sulks tot niet.’[2]
Once there has been the necessary effluxion of time, the debt is extinguished. Accordingly, even if one accepts, in the appellant’s favour, that Mr Cunningham-Moorat’s email of 25 September 2013, constituted an acknowledgement of liability, it would serve to interrupt prescription only if the three–year period had not completed its run before that date. Otherwise, the debt remains extinguished.
[12] The appellant argued that because the debt was repayable on demand, prescription commenced only once payment of the debt had been demanded (ie on 9 December 2013). One must be careful not to conflate the date when a debt becomes ‘due’ and that upon which repayment thereof is demanded. A debt which is repayable on demand becomes due the moment the money is lent to the debtor – or, to use banking terminology, ‘the advance is made’.[3] The fact that a debtor may be given 30 days within which to repay that which has been demanded does not, in my opinion, alter the principle that the debt became due the moment it was lent and therefore, in terms of s 11(d) of the 1969 Prescription Act, prescription begins to run from that date.
[13] In Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd,[4] this court said (at 532G-I) that for a debt to be ‘due’:
‘. . . there has to be a debt immediately claimable by the creditor or, stated in another way, that there has to be a debt in respect of which the debtor is under an obligation to perform immediately.’
It is easy for confusion to arise. A debt can be immediately claimable even though a demand may be necessary for it to be payable. The distinction between ‘claimability’ and ‘payability’ was one of which this court was keenly aware in Union Share Agency & Investment Ltd v Spain[5] where it said:
‘The distinction between the indebtedness being subject to the happening of an event and the payment being so subject is a vital one and should not be overlooked.’[6]
[14] In any event, clause 2.3 refers to the loan being ‘due and payable’. The very phrase ‘due and payable’, ie both ‘claimable’ and ‘payable’ as at a point in time, indicates that ‘due’ and ‘payable’ are not coextensive with one another. Ever since Attorney-General Transvaal v Additional Magistrate for Johannesburg[7] it has been trite that, when it comes to the interpretation of statutes, they ‘should be construed that, if it can be prevented, no clause, sentence or word shall be superfluous, void or insignificant’.[8] Since Crispette and Candy Co Ltd v Oscar Michaelis NO and Leopold Alexander Michaelis NO[9] it has been clear that, in general, the same principles apply to all written instruments, including wills and contracts.[10]
[15] Moreover, there is clear authority in this court that a creditor cannot, by its own conduct (or lack thereof), postpone the commencement of prescription.[11] Profesor Max Loubser in his Extinctive Prescription[12] contends, without referring to any authority directly, that:
‘On account of the policy consideration that a creditor should not be able to rely on his own failure to demand performance from the debtor in order to delay the running of prescription the courts will require a clear indication that the parties intended demand to be a condition precedent for the debt to become due, in which case prescription will only begin to run from the date of demand.’[13]
[16] A similar view was expressed by Rogers J in De Bruyn v Du Toit.[14] Mr Kaplan, who appeared for the respondent, accepted this as a correct statement of law. For reasons that follow, it is not necessary for this court to express itself finally on the correctness of this proposition by Loubser. The tension between the principle of freedom of contract and the policy considerations of our strict, indeed rigorous, law of prescription is both manifest and palpable. The legal community, including the courts, will benefit from yet further scholarly contributions on the issue. It is far from clear that, in the present case, the parties intended ‘demand to be a condition precedent’ for the debt to become due. This presents the appellant with an insuperable obstacle. In this regard, it is helpful to bear in mind the salutary distinction between a condition, properly so called, and a term of a contract canvassed in Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd.[15] In my opinion, it is obvious that the requirement of demand being given on 30 days’ notice was merely a procedural term of the agreement: in other words, the loan was to be repaid 30 days after written demand was made.
. . . . .
[20] I have had the benefit of reading the minority judgment prepared by Dlodlo AJA. My fundamental difficulty is that clause 2.3 is a standard notice clause appearing in innumerable loan agreements throughout the land. The interpretation placed on this clause by Dlodlo AJA could have far-reaching implications for the running of prescription in all such everyday instances.
[21] There is an inherent contradiction in the minority judgment. Dlodlo AJA describes the demand referred to in clause 2.3 as ‘an essential requirement for the appellant’s cause of action.’ As I have already pointed out, if this is indeed the case, there must be strict compliance therewith: precise fulfilment of such a requirement is imperative. I have also indicated that there was no such fulfilment in forma specifica. The appellant’s failure strictly to comply with the terms of this clause has not been addressed in the minority judgment.