THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 410/2019
In the matter between:

INVESTEC BANK LIMITED

Appellant

and

ERF 436 ELANDSPOORT (PTY) LTD

First Respondent

CECILIA JOUBERT NO

Second Respondent

ERF 1081 ARCADIA (PTY) LTD

Third Respondent

REMAINING EXTENT 764 BROOKLYN (PTY) LTD
Fourth Respondent

ERF 22 HILLCREST (PTY) LTD

Fifth Respondent

Neutral citation:
Investec Bank Limited v Erf 436 Elandspoort (Pty) Ltd and Others
(410/2019) [2020] ZASCA 104 (16 September 2020)

Coram:
Petse DP, Saldulker, Dambuza and Plasket JJA and Poyo-Dlwati AJA

Heard:
31 August 2020

Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
09h45 on 16 September 2020.

Summary:
Prescription Act 68 of 1969 – s 14 of the Act – whether series of
payments
in
terms
of
agreement
between
creditor
and
debtor
were
acknowledgements of liability that interrupted prescription.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Fabricius J sitting as
court of first instance):
1. The appeal succeeds with costs, including the costs of two counsel where
employed.
2. The order of the court below is set aside and replaced with the following:
‘1.
It is declared that the debt owed by the defendants to the plaintiff, as formulated
in the particulars of claim, had not prescribed when summons was served on 21
January 2011.
2.
The costs of the hearing of 18 to 21 February 2019 are to be paid by the first,
second, third, fifth and sixth defendants jointly and severally. Those costs shall include
the costs of two counsel.
3.
The action is postponed sine die in respect of the remainder of the issues in
dispute.’

JUDGMENT

Plasket JA (Petse DP, Saldulker and Dambuza JJA and Poyo-Dlwati AJA
concurring)

[1] The issue for decision in this appeal is whether a debtor acknowledged its
liability to a creditor and, in this way, interrupted the running of prescription. In a trial
on this separated issue, Fabricius J, in the Gauteng Division of the High Court,
Pretoria, held that a claim by the appellant, Investec Bank Limited (Investec), against
the first respondent, Erf 436 Elandspoort (Pty) Ltd (Erf 436) as principal debtor, and
the remaining respondents as sureties, had prescribed. Flowing from this finding, he
dismissed Investec’s claim with costs, but granted it leave to appeal to this court.

[2] At the commencement of the appeal, Investec moved an application for
condonation for the late filing of the record and for the re-instatement of the appeal
which had lapsed. The application was not opposed. Condonation was duly granted
and the appeal was re-instated. We then proceeded to hear the appeal.

Background
[3] In February 2000, Investec advanced a loan to Erf 436. It was secured by a
notarial mortgage bond, the subject of which was a notarial lease for a period of 50
years in respect of a commercial property in Pretoria concluded by Erf 436 as lessee
and the South African Rail Commuter Corporation (the SARCC) as lessor. The loan
agreement contained a tripartite agreement between Investec, Erf 436 and the
SARCC in terms of which an option was granted to Investec to replace Erf 436 as
lessee in the event of Erf 436 defaulting on its obligations to the SARCC.

[4] Erf 436 defaulted about two and a half years later. The lease was cancelled by
an order of court on 21 August 2002. This rendered Investec’s security worthless. On
10 September 2002, Investec demanded, as it was entitled to do following Erf 436’s
default, payment by Erf 436 within seven days of the full outstanding balance of the
loan. It is not in dispute that prescription in respect of this debt began to run on 17
September 2002, the date on which payment was due.

[5] Investec then exercised its option and concluded a lease with the SARCC. In
terms of an agreement between Investec and Erf 436, the latter continued to manage
the property and collect rental from sub-tenants. These amounts were credited to Erf
436’s loan account with Investec. This arrangement remained in place until about July
2003. The parties also agreed that they would make efforts to sell Investec’s rights in
terms of the lease with a view to the purchase price being used to settle Erf 436’s loan
obligation.

[6] A second agreement between Investec and Erf 436 was concluded in about
June 2003. In terms of this agreement, Investec took over the function from Erf 436 of
managing the property and collecting rental from sub-tenants. The income collected

by Investec was similarly allocated to the repayment of Erf 436’s loan. This
arrangement remained in place from 1 July 2003 until 1 July 2009 when Investec sold
its rights as lessee to an entity called Johnny Prop (Pty) Ltd (Johnny Prop). After the
sale, an amount of R2 999 459.51 was credited to Erf 436’s loan account.

[7] After this amount had been credited, Erf 436’s liability for the outstanding
balance of the loan was, according to Investec, R3 979 184.50. It claimed this amount
from Erf 436 and the sureties in a summons served on 21 January 2011.

[8] As the passage of time between the issue of summons and this appeal will
attest, the dispute between the parties has raged for a number of years. It has included
a foray to this court on the issue of whether the prescription period in respect of the
disputed debt was 30 years or three years. For present purposes, however, all that
need be said is that the summons was met once again with a special plea of
prescription (as well as a plea over that is not relevant to this appeal).

[9] In its replication, Investec pleaded that, on the basis of the payments made to
reduce Erf 436’s loan and various statements made in letters on behalf of Erf 436, it
made a series of acknowledgments of liability. The result was that ‘insofar as
prescription may have commenced during September 2002, it was interrupted by
express or tacit acknowledgments of liability on the part of [Erf 436] on the dates that
each of the payments . . . were effected and on the dates when each of the letters . .
. was addressed’.

The evidence
[10] The factual background that I have sketched is largely not in dispute. Indeed,
Erf 436 and the sureties closed their case on the separated issue without adducing
any evidence. The only evidence was tendered by four witnesses called by Investec
who testified about the agreements I have referred to, the payments made to reduce
Erf 436’s indebtedness to Investec and certain correspondence between the two.

[11] The evidence of Mr W M Oosthuizen, a banker employed by Investec at the
time, and Mr Carlos Sanchez, an in-house legal advisor employed by Investec, in

particular, establishes the facts that I have set out above. Their evidence confirms that
after Investec stepped into Erf 436’s shoes as a lessee, Erf 436 continued to collect
rental from sub-tenants until mid-2003, but Investec collected the rental itself
thereafter. In both instances, however, in terms of the agreements between Investec
and Erf 436, these amounts were allocated to the repayment of Erf 436’s loan. So, for
instance, during the period from the cancellation of Erf 436’s lease until 30 September
2003, Erf 436 paid a total of R830 896.91 towards its loan repayment from rental
collected from sub-tenants. At the same time, both Investec and Erf 436 made efforts
to find a purchaser for Investec’s rights in the property. The proceeds of the sale were
also to be allocated to the reduction of Erf 436’s loan.

[12] The existence of the agreements between Investec and Erf 436 is confirmed by
a series of letters written by one of Erf 436’s directors, Mr Pierre Joubert. It is evident
that Joubert took an active interest in the management of the property.  He also
attempted to find sub-tenants for the property and a purchaser of Investec’s rights.
Even when Investec took over the management of the property, Joubert continued to
involve himself in the day-to-day running of the property. His reason for doing so was
to protect Erf 436’s interests in respect of the agreement in terms of which rental would
be used to reduce Erf 436’s loan, and to ensure a good purchase price when Investec’s
rights in the property were sold.

[13] So, for example, by letter dated 12 March 2003 addressed to Mr David Hack,
he offered to sell ‘the leasehold properties’ and the duty-free filling station business
that he and his fellow director, Mr Louis Vivier, operated on the property. The purchase
price for both was, he said, R5.6 million, being ‘the outstanding amount of the Investec
Bank Bond’. A copy of this letter was sent to Investec.

[14] In a letter to Investec dated 7 May 2003, Joubert reported on the fact that
negotiations with Hack had come to naught but that his efforts to sell Investec’s rights
continued and that the building was ‘virtually fully let’. He also said that Erf 436
‘continued to manage and operate the premises as a whole and has been honouring
and paying the Investec Bank bond every month’. He proposed that Investec allow Erf
436 to continue managing the property on Investec’s behalf for the next nine months

and that he would ensure certain outcomes, including that ‘the loan repayments to
Investec Bank (account 221162) are paid’.

[15] Despite this offer, Investec decided to continue with its plans to take over the
management of the property, to manage the sub-leases, pay its creditors and credit
what was left to the repayment of Erf 436’s loan. It was agreed between Investec and
Erf 436 that this would happen. Joubert appears to have been rather reluctant to give
up his control over the property and he continued to look for purchasers and sub-
tenants and to involve himself generally in the management of the property. He
appears to have dragged his heels in respect of the hand-over of management to
Investec.

[16] Joubert’s reluctance appears clearly from a letter dated 30 May 2003, in which
he asked Investec to allow Erf 436 to continue with its management of the property.
He said that ‘[w]e would also in any event like to be assured that the monthly rentals
collected will be applied towards the monthly payment of our loan with Investec’.

[17] In a letter to Investec’s attorney dated 13 June 2003, Joubert described
Investec’s decision as ‘very unreasonable’. One of the reasons he gave for wishing to
continue to manage the property was to ensure that rental collected was, indeed,
applied to the repayment of Erf 436’s loan. He confirmed that Erf 436 was ‘diligently
paying our loan commitment to Investec Bank’.

[18] In January 2004, a meeting was held by Oosthuizen and Joubert to discuss the
possible sale of Investec’s rights to a property developer. This sale did not eventuate,
but on 3 February 2004 Joubert wrote a letter to Investec’s attorney in which he
confirmed a proposal additional to two proposals discussed at the meeting. This
proposal involved a sale of Investec’s rights back to Erf 436, with transfer being
delayed until after Erf 436 had repaid its loan. He said:1
‘As far as the repayment/discharge of [Erf 436’s] bond is concerned (R5 300 000), we must
naturally have one or other agreement in place between [Erf 436] (or its nominee) that

1 My translation.

basically stipulates that all income from the property, whether rental income or expropriation
money or [from] a purchase transaction are credited to [Erf 436].’

[19] Joubert had attached to the letter what appear to be notes made in preparation
for his meeting with Oosthuizen. Two other possible proposals were contained in the
notes. What stands out in respect of all three proposals is that, for Erf 436, they all
involved mechanisms for the repayment of its loan, which Joubert admitted was about
R5.3 million at that stage.

[20] In a letter dated 2 November 2005, written by Joubert to Investec in respect of
the sale of property belonging to another of his entities, Erf 225 Edenburg, (Pty) Ltd,
he proposed that some of the proceeds be allocated to the repayment of Erf 436’s
loan. Oosthuizen testified that Investec gave its approval to the proposal, the
transaction proceeded and, on 29 March 2006, an amount of R1 350 000 was credited
to Erf 436’s loan.

[21] Oosthuizen and Sanchez testified about the eventual sale of Investec’s rights
to Johnny Prop. Because of various difficulties, the sale was delayed and it was only
in 2009 that payments were made to reduce Erf 436’s loan. An amount of R430 000
was paid on 30 June 2009 and R2 569 459.61 was paid on 1 July 2009. That left a
balance owing on the latter date, according to Sanchez, of R3 523 036.

[22] Oosthuizen’s evidence was that Investec and Erf 436 had a difficult relationship
at times but they had worked together to find a solution to their common problem of
how Erf 436 was going to repay its loan. While Investec could simply have issued
summons, taken judgment and executed on it, he explained that Investec decided that
it would be in the best interests of both parties to try to manage the situation as they
did. During the entire process, Joubert never once denied Erf 436’s liability to Investec.
On the contrary, he admitted that liability on a number of occasions.

[23] Joubert died during the second half of 2009. Various meetings with his wife,
who had been appointed the executrix of his estate, produced no agreement as to how

Erf 436 would pay the outstanding balance. As a result, summons was issued on 21
January 2011.

The Prescription Act 68 of 1969
[24] In terms of s 10(1) of the Prescription Act, ‘a debt shall be extinguished by
prescription after the lapse of the period which in terms of the relevant law applies in
respect of the prescription of such debt’. Section 10(2) provides that when a principal
debt is extinguished by prescription, so are any subsidiary debts, such as suretyships.
Section 11 lists the periods of prescription – ranging from 30 to three years – for a
variety of types of debts. The parties have agreed that the period of prescription in this
case is three years, and not 30 years, that issue having been decided by this court in
Investec Bank v Erf 436 Elandspoort (Pty) Ltd and Others.2

[25] Subject to exceptions, s 12(1) provides that prescription begins to run ‘as soon
as the debt is due’. Section 13 sets out a number of circumstances – such as when a
creditor is a minor or a debtor is out of the country – that delay the running of
prescription.

[26] Section 14 of the Prescription Act, which is of application in this case, allows
for the interruption of prescription. It provides:
‘(1) The running of prescription shall be interrupted by an express or tacit acknowledgement
of liability by the debtor.
(2) If the running of prescription is interrupted as contemplated in subsection (1), prescription
shall commence to run afresh from the day on which the interruption takes place or, if at the
time of the interruption or at any time thereafter the parties postpone the due date of the debt
from the date upon which the debt again becomes due.’
The interruption of prescription against a principal debtor automatically interrupts
prescription against a surety.3

2 Investec Bank v Erf 436 Elandspoort (Pty) Ltd and Others [2017] ZASCA 128. See too Botha v
Standard Bank of South Africa Ltd [2019] ZASCA 108; 2019 (6) SA 388 (SCA) paras 26-28.
3 Jans v Nedcor Bank Ltd [2003] ZASCA 15; 2003 (6) SA 646 (SCA) para 32.

[27] The reason for rules relating to prescription was discussed by Marais AJ in
Cape Town Municipality v Allie NO.4 He said:
‘Over the years the Courts and the writers on the law have sought to provide a rationale for
the doctrine of prescription or the limitation of actions. It is unnecessary to burden this
judgment with a discussion of the plausibility of the explanations which have been suggested.
Whatever the true rationale may be, it cannot be denied that society is intolerant of stale
claims. The consequence is that a creditor is required to be vigilant in enforcing his rights. If
he fails to enforce them timeously, he may not enforce them at all. But that does not mean
that the law positively encourages precipitate and needless law suits. It is quite plain that both
at common law, and in terms of the Prescription Acts of 1943 and 1969, a creditor may safely
forebear to institute action against his debtor if the debtor has acknowledged liability for the
debt. Lubbers and Canisius v Lazarus 1907 TS 901; De Beer v Gedye and Gedye 1916 WLD
133. And it seems right that it should be so. Why should the law compel a creditor to sue a
debtor who does not dispute, but acknowledges, his liability?’

[28] The policy underlying prescription in general, as well as the exception that is
created by s 14, were explained in Murray & Roberts Construction (Cape) (Pty) Ltd v
Upington Municipality:5
‘Although many philosophical explanations have been suggested for the principles of
extinctive prescription . . . its main practical purpose is to promote certainty in the ordinary
affairs of people. Where a creditor lays claim to a debt which has been due for a long period,
doubts may exist as to whether a valid debt ever arose, or, if it did, whether it has been
discharged . . . The alleged debtor may have come to assume that no claim would be made,
witnesses may have died, memories would have faded, documents or receipts may have been
lost, etc. These sources of uncertainty are reduced by imposing a time limit on the existence
of a debt, and the relevant time limits reflect, to some extent, the degree of uncertainty to
which a particular type of debt is ordinarily subject (s 11 of the Act).
The same considerations which provide a justification for extinctive prescription also
suggest that the time limits should not be immutable. Where the creditor takes judicial steps
to recover the debt, and thereby to remove all uncertainty about its existence, prescription
should obviously not continue running while the law takes its course (s 15 of the Act).
Moreover, s 14 of the Act provides that the running of prescription is interrupted by an express

4 Cape Town Municipality v Allie NO 1981 (2) SA 1 (C) at 5G-H.
5 Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A) at 578F-
579B. See too KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd [2017] ZASCA 98; 2017
(6) SA 55 (SCA) paras 13-17; Bradford & Bingley PLC v Rashid [2006] UKHL 37 para 3.

or tacit acknowledgement of liability by the debtor. The reason is clear – if the debtor
acknowledges liability there is no uncertainty about the debt. No purpose would accordingly
be served by requiring the creditor to interrupt prescription by instituting legal proceedings for
the recovery of the debt.’

[29] Cape Town Municipality v Allie NO6 concerned whether the Cape Town
Municipality had acknowledged liability and so had interrupted prescription in terms of
s 14 of the Act in relation to Ms Allie’s claim. In dealing with s 14(1) of the Act, Marais
AJ identified what he described as a number of self-evident aspects of the section.
They were:7
‘Firstly, I do not think the acknowledgment of liability need amount to a fresh undertaking to
discharge the debt. "I admit I owe you R100" is manifestly an acknowledgment of a liability to
pay R100 but it is not a fresh or new undertaking to pay it . . .
Secondly, full weight must be given to the Legislature's use of the word "tacit" in s 14(1)
of the Act. In other words, one must have regard not only to the debtor's words, but also to his
conduct, in one's quest for an acknowledgment of liability. That, in turn, opens the door to
various possibilities. One may have a case in which the act of the debtor which is said to be
an acknowledgment of liability, is plain and unambiguous. His prior conduct would then be
academic. On the other hand, one may have a case where the particular act or conduct which
is said to be an acknowledgment of liability is not as plain and unambiguous. In that event, I
see no reason why it should be regarded in vacuo and without taking into account the conduct
of the debtor which preceded it. If the preceding conduct throws light upon the interpretation
which should be accorded to the later act or conduct which is said to be an acknowledgment
of liability, it would be wrong to insist upon the later act or conduct being viewed in isolation.
In the end, of course, one must also be able to say when the acknowledgment of liability was
made, for otherwise it would not be possible to say from what day prescription commenced to
run afresh . . .
Thirdly, the test is objective. What did the debtor's conduct convey outwardly? I think
that this must be so because the concept of a tacit acknowledgment of liability is irreconcilable
with the debtor being permitted to negate or nullify the impression which his outward conduct
conveyed, by claiming ex post facto to have had a subjective intent which is at odds with his
outward conduct . . .

6 Note 4.
7 At 7B-8G. See too Agnew v Union and South West Africa Insurance Company Ltd 1977 (1) SA 617
(A) at 622H-623C; Petzer v Radford (Pty) Ltd 1953 (4) SA 314 (N) at 317H-318B; Benson and Another
v Walters and Others 1984 (1) SA73 (A) at 86H-87B; Standard Bank of South Africa Ltd v Oneanate
Investments (Pty) Ltd 1995 (4) SA 510 (C) at 556E-557D.

Fourthly, while silence or mere passivity on the part of the debtor will not ordinarily
amount to an acknowledgment of liability, this will not always be so. If the circumstances create
a duty to speak and the debtor remains silent, I think that a tacit acknowledgment of liability
may rightly be said to arise . . .
Fifthly, the acknowledgement must not be of a liability which existed in the past, but of
a liability which still subsists.’

[30] Pentz v Government of the Republic of South Africa8 concerned whether an
admission made by a person to a policeman constituted an acknowledgement of
liability for purposes of interrupting prescription in respect of a claim by a government
department. The court found, in the first place, that the person had not acknowledged
liability. Secondly, the court held that, in any event, for an acknowledgement of liability
to interrupt prescription, it had to have been given by a debtor to a creditor or the
creditor’s agent; and the policeman was not the agent of the government department
concerned.9

[31] Unsurprisingly, the converse also holds true. The acknowledgement of liability,
in order to effectively interrupt prescription, can be made by either the debtor or his or
her agent. In First Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd
and Another10 payments were made by a third party to the creditor to reduce what was
owed by the debtor concerned as well as other creditors of the third party. It had been
assumed that the third party had acted as the debtor’s agent but, as Goldstone J found,
there was no evidence to establish that agency. Indeed, the only evidence was that of
the second defendant who said that he had had no knowledge of the payments and
that no arrangement was in place to the effect that the third party would pay on behalf
of the debtor. That being so, the creditor had failed to discharge the onus to prove that
the payments constituted an acknowledgement of liability by the debtor, with the result
that prescription had not been interrupted.11

Has Investec’s claim prescribed?

8 Pentz v Government of the Republic of South Africa 1983 (3) SA 584 (A).
9 At 594A-E.
10 First Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd and Another 1981 (4) SA 380
(W).
11 At 383F-384E.

[32] In determining whether Erf 436 acknowledged liability either expressly or tacitly,
and when, it is necessary to consider not only what Joubert said but also what he did.
His words and conduct must be viewed holistically and in their proper context. That, it
seems to me, is particularly so in respect of the monthly payments of the rental of sub-
tenants towards the loan and the payment of the purchase price for Investec’s rights
by Johnny Prop. Viewed in isolation they tell one nothing but viewed in their broader
context, with particular reference to the two agreements between Investec and Erf
436, a picture emerges.

[33] When Erf 436 was responsible for the collection of the sub-tenants’ rental, its
payments of those amounts towards the repayment of its loan constituted a series of
tacit acknowledgements of liability. This period ended with a payment on 30
September 2003. Furthermore, during this period, Joubert, on behalf of Erf 436, wrote
two letters, dated 7 May 2003 and 13 June 2003, in which he expressly acknowledged
liability. The effect of the payments and the letters was that prescription was
interrupted on the date of each payment and the date of each letter and commenced
running again from those dates. As the last payment during this first period was made
on 30 September 2003, the running of prescription was extended to 30 September
2006, with the last day for serving the summons being 29 September 2006.

[34] It is clear from the evidence and from his letters that Joubert was unhappy with
Investec’s decision to take over the management of the property, but he agreed to it
nonetheless. That agreement had two important components that give context to
everything that followed. First, it was agreed that Investec would collect rental from
sub-tenants and allocate those amounts to the repayment of Erf 436’s loan. Secondly,
it was agreed that endeavours would be made to find a purchaser for Investec’s rights
in the property and that the purchase price would be credited to Erf 436’s loan.

[35] During the period between Investec taking over the management of the
property and the final payment of the purchase price for Investec’s rights into Erf 436’s
account, Joubert, in a series of letters, consistently acknowledged Erf 436’s liability to
Investec. A theme that runs through these letters is that irrespective of who was, in his
view, to manage the property, the rental collected from the sub-tenants and the

purchase price in respect of the sale of Investec’s rights in the property would be
allocated towards the repayment of Erf 436’s loan.

[36] One payment requires specific mention. On 29 March 2006, before the claim
had prescribed, an amount of R1 350 000 was credited to Erf 436’s account. That
payment was made by Erf 225 Edenburg (Pty) Ltd, an entity of which Joubert was a
director. In a letter to Investec dated 2 November 2005, he had informed Investec of
a transaction involving Erf 225 and said that ‘[w]e have analysed and refined the
transaction regarding the actual surplus available to be deposited into the bond
account (number 221162) of [Erf 436] and calculate that an amount of R1.35 million
would be a more accurate amount’. The evidence of Oosthuizen was that Investec
had agreed with Joubert that Erf 225 would pay the surplus of a sale of property
towards Erf 436’s indebtedness to Investec. As Joubert was a director of both entities,
knowledge of, and agreement to, the payment must be imputed to Erf 436. The
inference that Erf 225 acted as Erf 436’s agent is irresistible. That payment was a tacit
acknowledgement of liability by Erf 436, with the effect that the running of prescription
was extended to 29 March 2009.

[37] On 21 May 2007, another tacit acknowledgement of liability was made by Erf
436 when Joubert queried the mechanics of the monthly payments into Erf 436’s
account. This was a tacit acknowledgement of liability because the very basis of the
query was an acceptance by Erf 436 of a liability towards Investec (that it had never
denied and had acknowledged consistently); and it discloses knowledge on the part
of Erf 436 that payments of rental collected from sub-tenants by Investec had (since
mid-2003) been paid towards reducing Erf 436’s loan liability. Far from protesting that
Erf 436 was not liable to Investec, Joubert sought details of how the VAT component
of the rentals was dealt with. The effect of this letter was to extend the life of Investec’s
claim for a further three years from the date of the letter – until 21 May 2010.

[38] The letter of 21 May 2007 also answers the question as to the effect of
Investec’s monthly payments to reduce Erf 436’s indebtedness to it. It does so by
confirming Erf 436’s agreement to the arrangement made in 2003 in terms of which
the payments were made. In fairness to Joubert, although he was unhappy with the

arrangement, he never once denied the agreement or Erf 436’s liability to Investec.
Erf 436’s agreement to the arrangement and, to put it at its lowest, the complete
absence of any words or conduct on its part that could be construed as a denial of
liability – its failure, in other words, to speak out if it denied liability – carry with it a tacit
acknowledgement of liability every month when its account was credited: it knew and
accepted that these payments were made monthly in order to reduce its admitted and
current indebtedness to Investec in accordance with a process to which it had agreed.

[39] The last monthly payment was made on 17 July 2008. Prescription was
interrupted on that day and immediately began to run again. The effect was that the
life of Investec’s claim was extended, and it was required to serve its summons by 16
July 2011 at the latest. As the various acknowledgements of liability that I have
identified kept the claim alive and summons was issued on 21 January 2011, well
before 16 July 2011, that appears to be the end of the matter. For the sake of
completeness, however, I shall deal with the effect of the sale of Investec’s rights in
the property.

[40] From the outset, it was agreed that Investec’s rights in the property would be
sold and the proceeds allocated towards the payment of Erf 436’s loan. From
Oosthuizen’s evidence and from Joubert’s letters, it is evident that Joubert was
particularly active in trying to find a purchaser. That is nowhere clearer than in his letter
to Investec of 12 October 2006 when he expressed shock on learning that Investec
had ‘sold’ the property without reference to him, and for a price that he considered to
be unreasonably low. He spoke of Erf 436’s ‘vested interest’ in the purchase price
because ‘it has a direct influence on our bond account No. 221161’. He also referred
to potential purchasers who were prepared to pay more.

[41] What is clear from this letter – and this is consistent with Joubert’s position
throughout – is that he was aware that the purchase price would be used to reduce
Erf 436’s indebtedness to Investec, as agreed between them in 2003. Viewed in this
context, his knowledge of that fact and his acceptance without demur of the payments
made on 29 June 2009 and 1 July 2009 were tacit acknowledgements of liability on
the part of Erf 436. Once again, his failure to query them is telling and is consistent

with Erf 436’s position throughout – its acceptance that it was liable to Investec in
respect of the loan. The result of these tacit acknowledgements of liability is that
prescription was yet again interrupted on the dates of payment. Summons had to be
served by 30 June 2012 at the latest but was served well within time on 21 January
2011.

[42] It is necessary to say something of the finding of Fabricius J that the payments
of rental after September 2003 and of the purchase price of Investec’s rights in the
property were not tacit acknowledgements of liability. His reasoning was that Erf 436
cannot be said to have acknowledged liability because neither the sub-tenants whose
rental was credited to Erf 436’s account or Johnny Prop who bought Investec’s rights
were Erf 436’s agents. In my view, questions of agency do not arise, save in the case
of Erf 225’s payment on behalf of Erf 436, referred to above.

[43] The difficulty I have with the reasoning is that it ignores the context in which the
payments were made. That context was an agreement between Investec and Erf 436
that Investec would collect rental from sub-tenants and credit Erf 436 with the nett
amounts so collected every month; and that when Investec’s rights were sold, the
purchase price would likewise be credited to Erf 436’s account. The basis for the
acknowledgements of liability in respect of each of these payments does not rest on
agency, but on the agreement entered into by the parties as to how the loan would be
repaid. The First Consolidated Leasing Corporation case12 is thus not of application.

[44] There is no merit in an argument advanced on behalf of Erf 436 that any
acknowledgements by Erf 436 were not acknowledgements of a present liability but of
a past or, perhaps, a conditional liability. Reliance was placed on Benson and Another
v Walters and Others.13 This argument fails on two counts.

[45] First, the facts of Benson differ markedly from this matter. In Benson, a person’s
attorney had written to his ex-attorney to say that the client had paid R5 000 in respect
of the former attorney’s fees and disbursements and undertook ‘payment of whatever

12 Note 10.
13 Note 7 at 86H-87B.

shortfall you are able to establish on taxation’. Van Heerden JA held that the letter
contained ‘a conditional undertaking to pay’ but was not ‘an admission of existing
liability’.14 What the writer intended to convey was the fact that ‘he did not know
whether an amount of more than R5 000 would be taxed and therefore did not know
whether Benson was liable to make a payment to Walters, but that, if a liability did
exist, his firm would pay the amount thereof’.15 This was not an acknowledgement of
liability that could interrupt prescription. In the present matter, there has been no
suggestion that the amount owed to Investec by Erf 436 was anything but a current
debt and there was likewise no suggestion of any conditions attaching to its payment
or its quantification. At all times in his correspondence, Joubert accepted that Erf 436
owed money to Investec, even quantifying the amount in some of his letters.

[46] Secondly, it was argued that Joubert may have believed that the debt had been
discharged. That runs counter to the evidence. There was never any doubt that when
the last tacit acknowledgement of liability was made, Erf 436 was still indebted to
Investec. Joubert, the inveterate letter-writer, never once in any of his many missives
suggested that the debt had been paid or was anything but a current debt.

[47] The result is that Investec’s claim has not prescribed. The appeal must
consequently succeed.

The order
[48] I make the following order:
1. The appeal succeeds with costs, including the costs of two counsel where
employed.
2. The order of the court below is set aside and replaced with the following:
‘1.
It is declared that the debt owed by the defendants to the plaintiff, as formulated
in the particulars of claim, had not prescribed when summons was served on 21
January 2011.

14At 87C-D.
15 At 87F.

2.
The costs of the hearing of 18 to 21 February 2019 are to be paid by the first,
second, third, fifth and sixth defendants jointly and severally. Those costs shall include
the costs of two counsel.
3.
The action is postponed sine die in respect of the remainder of the issues in
dispute.’

______________________
C Plasket
Judge of Appeal

APPEARANCES

For the appellant:

F J Erasmus SC
Instructed by:
VDT Attorneys, Pretoria
Peyper Attorneys, Bloemfontein

For the respondents:

H F Oosthuizen SC
Instructed by:
Nothling Attorneys, Pretoria
De Villiers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

16 September 2020

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Investec Bank Limited v Erf 436 Elandspoort (Pty) Ltd and Others (410/2019) [2020]
ZASCA 104 (16 September 2020)

MEDIA STATEMENT

The Supreme Court of Appeal (SCA) today upheld the appeal of Investec Bank Limited
(Investec) against Erf 436 Elandspoort (Pty) Ltd (Erf 436) and four other respondents.

The central issue in the appeal was whether a debt in relation to which Investec had
issued summons against Erf 436, as principal debtor, and the remaining respondents, as
sureties, had prescribed. The court found that the debt had not prescribed because
prescription had been interrupted by a series of payments and a number of letters in which Erf
436’s liability had been acknowledged.

Investec had lent money to Erf 436 to enable it to enter into a notarial lease with the
South African Rail Commuter Corporation (the SARCC) in respect of a commercial property
in Pretoria. Erf 436 had defaulted, the SARCC had cancelled the lease and Investec had
demanded payment of the full amount outstanding in respect of the loan. Thereafter, Investec
had, in terms of a tripartite agreement entered into with the SARCC and Erf 436 stepped into
Erf 436’s shoes as lessee of the property. The purpose was to ensure that Erf 436’s loan could
be repaid from rental paid by sub-tenants and eventually by the sale of Investec’s rights in the
property to a third party.

It was agreed between Investec and Erf 436 that initially Erf 436 would continue to
manage the property and that rental paid by sub-tenants would be allocated to the payment
of its loan. It was later agreed that Investec would take over the management of the property
and similarly allocate rental payments to the repayment of Erf 436’s loan. Mr Pierre Joubert,
a director of Erf 436 wrote a number of letters to Investec in which he acknowledged the liability
of Erf 436 to Investec. Eventually, Investec’s rights in the property were sold to a third party
and the purchase price was allocated towards the repayment of Erf 436’s loan. Investec then
sued for the balance but their summons was met with a special plea of prescription. Investec
pleaded in its replication that the payments of the sub-tenants’ rental and the purchase price,
as well as the letters written by Joubert constituted express or tacit acknowledgements of
liability that, in terms of s 14 of the Prescription Act 68 of 1969, had interrupted the running of
prescription.

The court held that the letters written by Joubert were express acknowledgements of
liability that had the effect of interrupting prescription. It held that the payments, made with the
knowledge of Erf 436 in terms of an agreement between it and Investec in order to pay its loan
were tacit acknowledgements of liability that likewise interrupted the running of prescription.
The result was that the debt had not prescribed.