As in all legal disputes, extinctive prescription is a crucial factor to be considered when evaluating the merits of the claim and formulating a defense. Building legislation instances, in many circumstances, require not just complex contractual relationships, and also hard specialized features. Determining the date on which prescription starts to run consists of thorough factual examination and once the steps on the fair man or woman are to get factored in the discussion, important things could get a lot more difficult.
Prescription
The 1969 Prescription Act provides for 4 distinct fundamental prescription intervals. The periods are thirty, 15, 6 and three years respectively. The majority of the situations I will be referring to relate to debts that are issue to a three yr. prescription time period. I'll also refer briefly to some scenario in the direction of the finish of the presentation where the 30 12 months time period finds application.
When does prescription start to run?
Segment 12 with the Act supplies as follows:
twelve. ... (1) ... prescription shall commence to operate as soon as the financial debt is due. (2) ... (three) A debt shall not be considered to get because of right until the creditor has information on the identity of your debtor and of the details from which the personal debt arises: ... a creditor shall be considered to obtain this kind of expertise if he might have acquired it by doing exercises reasonable treatment."
When is the personal debt because of?
The decision in Martin Harris & Seuns OFS (Pty) Ltd v Qwa-Qwa Regeringsdiens 2000 (three) SA 339 (A) gives you an excellent illustration of when a debt becomes due for the purposes of Section twelve(1) of the Act.
The info of this matter are briefly as follows:
* The building contract provided that the appellant would be paid after a progress certificate was issued by an architect (the principal agent) in respect of work already performed. These certificates were issued and the appellant was duly paid.
* Within three ages after completion on the works as a whole, but more than three several years after uncertified sections of work was done, the appellant instituted action for an outstanding balance in respect of uncertified work.
* The respondent alleged that the claim had prescribed because the entitlement/debt arose when each portion of work had been completed.
The Court held in the contractor's favour and I summarise the position as follows:
* The issuing of progress certificates was only a contractual mechanism to place the contractor in a position to finance the continuation of your completion from the works.
* The completion of each specific part of the work did not entitle the appellant to receive payment for the work.
* Only upon completion of the work as a whole would the appellant have these types of entitlement.
* The appellant's declaration would rest upon a certificate as a separate and self-supporting cause of action, wherever a certificate had already been issued.
* The prescription would then be for payment in the percentage on the value of the works for which the architect had certified.
* Prescription in the appellant's declaration (for payment for all sections which had not appeared in any certificate) began to run at the earliest if the work as a whole was completed.
The credit card debt had therefore not become because of and respondent accordingly failed in its prescription argument.
In LTA Development v The Minister of Public Works and Land Affairs 1992 (one) SA 837 (C) the court also shed far more light on the same question.
Prescription
The 1969 Prescription Act provides for 4 distinct fundamental prescription intervals. The periods are thirty, 15, 6 and three years respectively. The majority of the situations I will be referring to relate to debts that are issue to a three yr. prescription time period. I'll also refer briefly to some scenario in the direction of the finish of the presentation where the 30 12 months time period finds application.
When does prescription start to run?
Segment 12 with the Act supplies as follows:
twelve. ... (1) ... prescription shall commence to operate as soon as the financial debt is due. (2) ... (three) A debt shall not be considered to get because of right until the creditor has information on the identity of your debtor and of the details from which the personal debt arises: ... a creditor shall be considered to obtain this kind of expertise if he might have acquired it by doing exercises reasonable treatment."
When is the personal debt because of?
The decision in Martin Harris & Seuns OFS (Pty) Ltd v Qwa-Qwa Regeringsdiens 2000 (three) SA 339 (A) gives you an excellent illustration of when a debt becomes due for the purposes of Section twelve(1) of the Act.
The info of this matter are briefly as follows:
* The building contract provided that the appellant would be paid after a progress certificate was issued by an architect (the principal agent) in respect of work already performed. These certificates were issued and the appellant was duly paid.
* Within three ages after completion on the works as a whole, but more than three several years after uncertified sections of work was done, the appellant instituted action for an outstanding balance in respect of uncertified work.
* The respondent alleged that the claim had prescribed because the entitlement/debt arose when each portion of work had been completed.
The Court held in the contractor's favour and I summarise the position as follows:
* The issuing of progress certificates was only a contractual mechanism to place the contractor in a position to finance the continuation of your completion from the works.
* The completion of each specific part of the work did not entitle the appellant to receive payment for the work.
* Only upon completion of the work as a whole would the appellant have these types of entitlement.
* The appellant's declaration would rest upon a certificate as a separate and self-supporting cause of action, wherever a certificate had already been issued.
* The prescription would then be for payment in the percentage on the value of the works for which the architect had certified.
* Prescription in the appellant's declaration (for payment for all sections which had not appeared in any certificate) began to run at the earliest if the work as a whole was completed.
The credit card debt had therefore not become because of and respondent accordingly failed in its prescription argument.
In LTA Development v The Minister of Public Works and Land Affairs 1992 (one) SA 837 (C) the court also shed far more light on the same question.
The claimant claimed for losses sustained in consequence from the delay in the commencement of your works. The building contract provided for the completion of your works within 33 months from date of acceptance of the tender. A further term was that the employer would hand over the site within a certain period of time. The progress on site and completion in the project were adversely affected by:
* The employer's late handover of the site (7 working days delay).
* Completion delayed owing to causes beyond the contractor's control (320 working days). The defendant then raised a prescription argument and said that the plaintiff's claim had become prescribed because the debt claimed for became because of 33 months and 10 days (7 working days and three non-working days) after acceptance from the tender.
* This argument resulted in 16 July 1986 being calculated as being the date on which the financial debt was to acquire become due.
* Summons was served on 5 December 1989.
The defendant's argument however did not take into proper consideration that a further term from the contract provided for the contract period of time to generally be extended in the event of delays owing to causes beyond the contractor's control.
This provision extended the date on which the credit card debt became owing with a further 320 working days. The defendant was unsuccessful.
Understanding and deemed information
As we have seen Part twelve(three) in the Act supplies that a financial debt is not regarded to become owing right up until the creditor has awareness or is considered to obtain expertise from the id of the debtor, as well as of the facts from which the financial debt arises.
In Minister of Public Works and Land Affairs v Group Five Building Limited 1999 (4) SA 12 (SCA) counsel for the contractor contended that the employer's claim had become prescribed in terms of Part twelve(1) in the Prescription Act.
The employer had allegedly become aware from the relevant facts by thirty May 1991. The contract was terminated on 3 December 1991 and the employer's counter-claim was delivered on 1 December 1994. The contractor had therefore to prove that prescription had begun to run.
In the instant case, the date on which the employer gained understanding from the info from which the credit card debt arose (30 May 1991) was irrelevant as this particular contract contained a clause which entitled the employer's engineer to require the contractor to remedy defective work. The very earliest stage if the employer's damages could conceivably have become due was once the contractor, who had the duty to remedy the defective work, had the last chance to do so. This was the date on which the contract was cancelled (3 December 1991).
The employer's counter-claim was delivered on 1 December 1994 and therefore fell within the three 12 months prescriptive period. The contractor had accordingly failed to prove that prescription had operate.
The acceptable human being
In Drennan Maud & Partners v Pennington Town Board 1998 (three) SA 200 (SCA), the appellant was a civil engineering consultancy. It designed and recommended the construction of a reinforced concrete retaining wall because the Town Board wished to protect certain properties which became threatened by the Umzinto River in Kwa-Zulu Natal. The Town Board accepted design and proceeded to engage a contractor to build the wall.
During September and November 1989 heavy rains fell and the river came into flood. Sinkholes formed in the backfill material behind the wall during this period. These developed progressively and eventually became very substantial. By January 1990 the river was flowing freely under the whole length with the wall and the Town Board were back to where by they had been before the appellant was consulted and claimed was for the wasted costs of building the wall.
It was alleged by the engineers that by no later than 13 November 1989 the Town Board had awareness of your information from which the alleged claim arose. It was later alleged that the Town Board acquired judged knowledge in the light with the details known to it by the above date. The Town Board should have exercised realistic treatment.
In his judgement the Honourable Mr Justice Olivier made the following statement: "... a creditor shall be considered to own the required expertise if he might have acquired it by exercising realistic care. In my view, the requirement exercising affordable care required diligence not just in the specifics underlying the personal debt, but in addition in relation to the evaluation and significance of those details. This means that the creditor is judged to get the requisite knowledge if a acceptable particular person in his position would have adduced the details from which the personal debt arises."
It was clear from the subsidence of the backfill material behind the wall that the design had failed and could not withstand the scouring effect of the passing flood. For the reason that Town Board's declaration was for the wasted costs of building the wall, the loss claimed for had already occurred if the Town Board acquired judged know-how that the wall did not serve the purpose for which it was designed and built and that the related costs were wasted.
The consultant's prescription argument was therefore well founded because respondent's summons was issued outside with the 3 yr. prescription time period.
Prescription and arbitrations
Arbitration plays a major role in the building industry as alternative dispute mechanism. I would like briefly, and in closing, to discuss one or two vital areas of prescription pertaining to arbitrations.
Segment 13(one)(f) with the Act states that the completion of prescription might be delayed if the financial debt will be the object of the dispute subjected to arbitration.
What is Arbitration?
In Murray & Roberts Development (Cape) (Pty) Ltd v Upington Municipality 1982 three SA 385 (NC) it was held that the referral to an engineer (in terms of the written a
* The employer's late handover of the site (7 working days delay).
* Completion delayed owing to causes beyond the contractor's control (320 working days). The defendant then raised a prescription argument and said that the plaintiff's claim had become prescribed because the debt claimed for became because of 33 months and 10 days (7 working days and three non-working days) after acceptance from the tender.
* This argument resulted in 16 July 1986 being calculated as being the date on which the financial debt was to acquire become due.
* Summons was served on 5 December 1989.
The defendant's argument however did not take into proper consideration that a further term from the contract provided for the contract period of time to generally be extended in the event of delays owing to causes beyond the contractor's control.
This provision extended the date on which the credit card debt became owing with a further 320 working days. The defendant was unsuccessful.
Understanding and deemed information
As we have seen Part twelve(three) in the Act supplies that a financial debt is not regarded to become owing right up until the creditor has awareness or is considered to obtain expertise from the id of the debtor, as well as of the facts from which the financial debt arises.
In Minister of Public Works and Land Affairs v Group Five Building Limited 1999 (4) SA 12 (SCA) counsel for the contractor contended that the employer's claim had become prescribed in terms of Part twelve(1) in the Prescription Act.
The employer had allegedly become aware from the relevant facts by thirty May 1991. The contract was terminated on 3 December 1991 and the employer's counter-claim was delivered on 1 December 1994. The contractor had therefore to prove that prescription had begun to run.
In the instant case, the date on which the employer gained understanding from the info from which the credit card debt arose (30 May 1991) was irrelevant as this particular contract contained a clause which entitled the employer's engineer to require the contractor to remedy defective work. The very earliest stage if the employer's damages could conceivably have become due was once the contractor, who had the duty to remedy the defective work, had the last chance to do so. This was the date on which the contract was cancelled (3 December 1991).
The employer's counter-claim was delivered on 1 December 1994 and therefore fell within the three 12 months prescriptive period. The contractor had accordingly failed to prove that prescription had operate.
The acceptable human being
In Drennan Maud & Partners v Pennington Town Board 1998 (three) SA 200 (SCA), the appellant was a civil engineering consultancy. It designed and recommended the construction of a reinforced concrete retaining wall because the Town Board wished to protect certain properties which became threatened by the Umzinto River in Kwa-Zulu Natal. The Town Board accepted design and proceeded to engage a contractor to build the wall.
During September and November 1989 heavy rains fell and the river came into flood. Sinkholes formed in the backfill material behind the wall during this period. These developed progressively and eventually became very substantial. By January 1990 the river was flowing freely under the whole length with the wall and the Town Board were back to where by they had been before the appellant was consulted and claimed was for the wasted costs of building the wall.
It was alleged by the engineers that by no later than 13 November 1989 the Town Board had awareness of your information from which the alleged claim arose. It was later alleged that the Town Board acquired judged knowledge in the light with the details known to it by the above date. The Town Board should have exercised realistic treatment.
In his judgement the Honourable Mr Justice Olivier made the following statement: "... a creditor shall be considered to own the required expertise if he might have acquired it by exercising realistic care. In my view, the requirement exercising affordable care required diligence not just in the specifics underlying the personal debt, but in addition in relation to the evaluation and significance of those details. This means that the creditor is judged to get the requisite knowledge if a acceptable particular person in his position would have adduced the details from which the personal debt arises."
It was clear from the subsidence of the backfill material behind the wall that the design had failed and could not withstand the scouring effect of the passing flood. For the reason that Town Board's declaration was for the wasted costs of building the wall, the loss claimed for had already occurred if the Town Board acquired judged know-how that the wall did not serve the purpose for which it was designed and built and that the related costs were wasted.
The consultant's prescription argument was therefore well founded because respondent's summons was issued outside with the 3 yr. prescription time period.
Prescription and arbitrations
Arbitration plays a major role in the building industry as alternative dispute mechanism. I would like briefly, and in closing, to discuss one or two vital areas of prescription pertaining to arbitrations.
Segment 13(one)(f) with the Act states that the completion of prescription might be delayed if the financial debt will be the object of the dispute subjected to arbitration.
What is Arbitration?
In Murray & Roberts Development (Cape) (Pty) Ltd v Upington Municipality 1982 three SA 385 (NC) it was held that the referral to an engineer (in terms of the written a
In the instant case, the date on which the employer gained understanding from the info from which the credit card debt arose (30 May 1991) was irrelevant as this particular contract contained a clause which entitled the employer's engineer to require the contractor to remedy defective work. The very earliest stage if the employer's damages could conceivably have become due was once the contractor, who had the duty to remedy the defective work, had the last chance to do so. This was the date on which the contract was cancelled (3 December 1991).
The employer's counter-claim was delivered on 1 December 1994 and therefore fell within the three 12 months prescriptive period. The contractor had accordingly failed to prove that prescription had operate.
The acceptable human being
In Drennan Maud & Partners v Pennington Town Board 1998 (three) SA 200 (SCA), the appellant was a civil engineering consultancy. It designed and recommended the construction of a reinforced concrete retaining wall because the Town Board wished to protect certain properties which became threatened by the Umzinto River in Kwa-Zulu Natal. The Town Board accepted design and proceeded to engage a contractor to build the wall.
During September and November 1989 heavy rains fell and the river came into flood. Sinkholes formed in the backfill material behind the wall during this period. These developed progressively and eventually became very substantial. By January 1990 the river was flowing freely under the whole length with the wall and the Town Board were back to where by they had been before the appellant was consulted and claimed was for the wasted costs of building the wall.
It was alleged by the engineers that by no later than 13 November 1989 the Town Board had awareness of your information from which the alleged claim arose. It was later alleged that the Town Board acquired judged knowledge in the light with the details known to it by the above date. The Town Board should have exercised realistic treatment.
In his judgement the Honourable Mr Justice Olivier made the following statement: "... a creditor shall be considered to own the required expertise if he might have acquired it by exercising realistic care. In my view, the requirement exercising affordable care required diligence not just in the specifics underlying the personal debt, but in addition in relation to the evaluation and significance of those details. This means that the creditor is judged to get the requisite knowledge if a acceptable particular person in his position would have adduced the details from which the personal debt arises."
It was clear from the subsidence of the backfill material behind the wall that the design had failed and could not withstand the scouring effect of the passing flood. For the reason that Town Board's declaration was for the wasted costs of building the wall, the loss claimed for had already occurred if the Town Board acquired judged know-how that the wall did not serve the purpose for which it was designed and built and that the related costs were wasted.
The consultant's prescription argument was therefore well founded because respondent's summons was issued outside with the 3 yr. prescription time period.
Prescription and arbitrations
Arbitration plays a major role in the building industry as alternative dispute mechanism. I would like briefly, and in closing, to discuss one or two vital areas of prescription pertaining to arbitrations.
Segment 13(one)(f) with the Act states that the completion of prescription might be delayed if the financial debt will be the object of the dispute subjected to arbitration.
What is Arbitration?
In Murray & Roberts Development (Cape) (Pty) Ltd v Upington Municipality 1982 three SA 385 (NC) it was held that the referral to an engineer (in terms of the written agreement between the plaintiff and the defendant) was also a dispute subjected to arbitration for purposes of Area 13(one)(f) in the Act. This final decision was upheld in the Appellant Division. It therefore followed that the completion of prescription was delayed right until one yr. after the arbitration proceedings had come to an end.
Proceeding with the Arbitration
It should also be noted that the mere existence of an agreement between parties for disputes between them to be referred to and decided by arbitration does not suffice for the purposes of delaying the running of prescription and that the words subjected to arbitration means that the parties are required to refer disputes to arbitration and to actually proceed with the arbitration proceedings.
Judgement Financial debt
In Primavera Development SA v Government of Northwest Province & another 2003 (three) SA 579 (BPD) the settlement agreement and the resultant Court Order provided, inter alia, that the award by the arbitrator would operate as an Order of Court.
The arbitrator's award therefore acquired the status of a judgment credit card debt for purposes of Area 11(a)(two) with the Prescription Act, which meant that a thirty yr. prescriptive period would be applicable to the award.
About the Author:
The employer's counter-claim was delivered on 1 December 1994 and therefore fell within the three 12 months prescriptive period. The contractor had accordingly failed to prove that prescription had operate.
The acceptable human being
In Drennan Maud & Partners v Pennington Town Board 1998 (three) SA 200 (SCA), the appellant was a civil engineering consultancy. It designed and recommended the construction of a reinforced concrete retaining wall because the Town Board wished to protect certain properties which became threatened by the Umzinto River in Kwa-Zulu Natal. The Town Board accepted design and proceeded to engage a contractor to build the wall.
During September and November 1989 heavy rains fell and the river came into flood. Sinkholes formed in the backfill material behind the wall during this period. These developed progressively and eventually became very substantial. By January 1990 the river was flowing freely under the whole length with the wall and the Town Board were back to where by they had been before the appellant was consulted and claimed was for the wasted costs of building the wall.
It was alleged by the engineers that by no later than 13 November 1989 the Town Board had awareness of your information from which the alleged claim arose. It was later alleged that the Town Board acquired judged knowledge in the light with the details known to it by the above date. The Town Board should have exercised realistic treatment.
In his judgement the Honourable Mr Justice Olivier made the following statement: "... a creditor shall be considered to own the required expertise if he might have acquired it by exercising realistic care. In my view, the requirement exercising affordable care required diligence not just in the specifics underlying the personal debt, but in addition in relation to the evaluation and significance of those details. This means that the creditor is judged to get the requisite knowledge if a acceptable particular person in his position would have adduced the details from which the personal debt arises."
It was clear from the subsidence of the backfill material behind the wall that the design had failed and could not withstand the scouring effect of the passing flood. For the reason that Town Board's declaration was for the wasted costs of building the wall, the loss claimed for had already occurred if the Town Board acquired judged know-how that the wall did not serve the purpose for which it was designed and built and that the related costs were wasted.
The consultant's prescription argument was therefore well founded because respondent's summons was issued outside with the 3 yr. prescription time period.
Prescription and arbitrations
Arbitration plays a major role in the building industry as alternative dispute mechanism. I would like briefly, and in closing, to discuss one or two vital areas of prescription pertaining to arbitrations.
Segment 13(one)(f) with the Act states that the completion of prescription might be delayed if the financial debt will be the object of the dispute subjected to arbitration.
What is Arbitration?
In Murray & Roberts Development (Cape) (Pty) Ltd v Upington Municipality 1982 three SA 385 (NC) it was held that the referral to an engineer (in terms of the written agreement between the plaintiff and the defendant) was also a dispute subjected to arbitration for purposes of Area 13(one)(f) in the Act. This final decision was upheld in the Appellant Division. It therefore followed that the completion of prescription was delayed right until one yr. after the arbitration proceedings had come to an end.
Proceeding with the Arbitration
It should also be noted that the mere existence of an agreement between parties for disputes between them to be referred to and decided by arbitration does not suffice for the purposes of delaying the running of prescription and that the words subjected to arbitration means that the parties are required to refer disputes to arbitration and to actually proceed with the arbitration proceedings.
Judgement Financial debt
In Primavera Development SA v Government of Northwest Province & another 2003 (three) SA 579 (BPD) the settlement agreement and the resultant Court Order provided, inter alia, that the award by the arbitrator would operate as an Order of Court.
The arbitrator's award therefore acquired the status of a judgment credit card debt for purposes of Area 11(a)(two) with the Prescription Act, which meant that a thirty yr. prescriptive period would be applicable to the award.
About the Author:
Dirk is an experienced attorney in managing construction disputes using the full range of dispute settlement processes including litigation, arbitration, adjudication, mediation and negotiation. He also specialises in engineering law, insurance law, property law, medical law and product liability law.