THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1029/2016

In the matter between:

INVESTEC BANK LIMITED
APPELLANT

and

ERF 436 ELANDSPOORT (PTY) LIMITED & OTHERS
RESPONDENT

Neutral citation:
Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd (1029/2016)

[2017] ZASCA 128 (29 September 2017)

Coram:
Cachalia, Majiedt and Petse JJA and Mokgohloa and Gorven AJJA

Heard:

5 September 2017

Delivered:

29 September 2017

Summary: Practice: Civil Procedure: extinctive prescription: claim by bank for payment
of a debt arising from loan agreement: mortgage bond registered over a notarial lease:
lease cancelled and thus security falling away: debt no longer secured: period of
prescription running from date when amount payable under the loan became due as
envisaged in s 12(1) of the Prescription Act 68 of 1969.

_____________________________________________________________________

ORDER
______________________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Molopa-Sethosa J sitting
as court of first instance):
The appeal is dismissed with costs.
_____________________________________________________________________

JUDGMENT
______________________________________________________________________

Petse JA (Cachalia and Majiedt JJA and Mokgohloa and Gorven AJJA
concurring):

[1] This is an appeal against a judgment of the Gauteng Division of the High Court,
Pretoria (Molopa-Sethosa J) which upheld the special plea of prescription raised by the
respondents against the appellant’s claim. I shall, for convenience, hereinafter refer to
the court a quo as the High Court.

[2] The essential facts, which are common cause may be summarised as follows:
the appellant, Investec Bank Limited, which is a commercial bank and company with
limited liability, instituted an action against six defendants for payment of the sum of
R3 979 184.50, together with interest and costs. These were Erf 436 Elandspoort (Pty)
Ltd as first defendant; Cecilia Joubert NO; Erf 1081 Arcadia (Pty) Ltd; V & J Properties
(Pty) Ltd; Remaining Ext 764 Brooklyn (Pty) Ltd and Erf 22 Hillcrest (Pty) Ltd as second,
third, fourth, fifth and sixth defendants respectively.

[3] The first respondent, to which the appellant had lent money, was sued as
principal debtor whilst the remaining defendants were sued in their capacities as
sureties. The action was subsequently withdrawn against the fourth defendant before
the commencement of the trial.

[4] As security for the loan, the first respondent registered a notarial covering
mortgage bond in favour of the appellant over a notarial agreement of lease that it had
earlier concluded with a third party, South African Railway Commuter Corporation
Limited (SARCC). During January 2002, SARCC cancelled the lease agreement. The
cancellation was confirmed by court order in August 2002.

[5] On 10 September 2002, pursuant to the cancellation of the lease, the appellant
addressed a letter to the first respondent, through its attorneys, in terms of which it
advised the latter that it had committed a breach of the loan agreement. Consequently,
the letter demanded payment of the outstanding balance of R5 633 177.42. In
particular, the letter also contained an intimation that failure to pay the aforesaid amount
within seven days would result in action being instituted against the first defendant. As
already indicated, on 18 January 2011 – after a period of some eight years – the
appellant instituted action against the respondents claiming payment of R3 979 184.50,
the amount then owing.

[6] The respondents defended the action, advancing various defences to the claim.
They also raised a special plea of prescription against the claim asserting that the claim
had prescribed by 18 September 2002 at the latest as a result of the amount stipulated
in the appellant’s demand not having been paid. The appellant, in turn, delivered a
replication in terms of which it alleged that the claim had not prescribed as it was
secured by a mortgage bond as contemplated in s 11(a) of the Prescription Act 68 of
1969 (the Prescription Act). In the alternative, it pleaded that the running of prescription
was interrupted between the period 7 May 2003 and 21 May 2007.

[7] At the trial, and despite resistance by the appellant, the High Court directed that
the trial be limited to the respondents’ special plea of prescription only. And more
particularly, to the question whether the period of prescription of the debt in issue was
30 years or three years as provided in s 11(a) or s 11(d) of the Prescription Act
respectively. Accordingly, it ordered a separation of the issues in terms of Uniform Rule
33(4).1 After hearing argument, the High Court upheld the special plea with costs. It
subsequently granted the appellant leave to appeal to this Court.

[8] The crisp issue is whether, in these circumstances, the 30 year prescription
period provided for in s 11(a)(i) of the Prescription Act in respect of any debt secured by
mortgage bond is applicable to the debt. If not, the debt would have become prescribed
3 years after the due date for payment (unless the running of prescription was
interrupted in terms of s 14(1)) in terms of s 11(d).

[9] Thus the only issue debated at the hearing of this appeal was prescription.
Consequently, an analysis of the relevant statutory framework is now apposite.
Section 10(1) of the Prescription Act reads:
‘10(1) . . . a debt shall be extinguished by prescription after the lapse of the period which in
terms of the relevant law applies in respect of prescription of such debt.’
Section 11, in turn provides for periods of prescription of debts which, in material terms,
reads:
’11 The period of prescription of debts shall be the following:
(a) thirty years in respect of –
(i) any debt secured by mortgage bond;
(b) . . .

1 In terms of rule 33(1) of the Uniform Rules of Court, parties to a dispute may agree upon a written
statement of facts in the form of a special case for the adjudication of points of law. This statement sets
out the facts agreed upon and the questions of law in dispute between the parties, as well as their
contentions. Rule 33(3) gives the court the discretion to draw any inference of fact or law from the facts
and documents as if proved at trial. See in this regard: Mighty Solutions t/a Orlando Service Station v
Engen Petroleum Ltd & another [2015] ZACC 34; 2016 (1) SA 621 (CC) para 61, and Bane & others v
D’Ambrosi [2009] ZASCA 98; 2010 (2) SA 539 (SCA) para 7 where this court said that rule 33(1) and (2)
made it clear that the resolution of a stated case proceeds on the basis of a statement of agreed facts,
and is, after all, seen as a means of disposing of a case without the necessity of leading evidence.

(c) . . .
(d) save where an Act of Parliament provides otherwise, three years in respect of any other
debt.’

[10] Section 12(1) provides:
‘. . . prescription shall commence to run as soon as the debt is due.’
As already mentioned, it is common cause that the debt in issue in this appeal fell due
on 18 September 2002.2 What is contested is whether the relevant period is 30 years
(s 11(a)(i) of the Prescription Act) or three years (s 11(a)(d) of the Prescription Act). If
the period is 30 years, prescription will not avail the respondents, but it will if the period
is three years. One of the philosophical justifications for prescription is 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.’3 This consideration assumes significance in this case where the appellant waited for
over eight years before it enforced its right against the respondents.

[11] The resolution of the dispute between the protagonists in this appeal lies in the
proper interpretation of the relevant provisions of the Act set out above (paras 9-10) in
accordance with the well-established canons of construction of documents. This
exercise entails that the following must be considered, namely: the language used; the
context in which the relevant provisions appear; the apparent purpose to which it is
directed; and the material known to those responsible for the production of the
document under consideration.4

[12] Whilst accepting that the debt in issue became due on 18 September 2002,
counsel for the appellant nevertheless contended that the debt had not become
prescribed by the time the appellant’s summons was served on the respondents on

2 See List v Jungers 1979 (3) SA 106 (A) at 121C-D where this Court held that there is a difference
between when a debt comes into existence on the one hand and when it becomes recoverable on the
other hand, although these dates may coincide.
3 Cape Town Municipality v Allie NO 1981 (2) SA 1 (CPD) at 5G-H; Murray & Roberts Construction
(Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A) at 578F-H.
4 See: Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18.

21 January 2011 (some eight years after due date). This was so, so went the argument,
because the debt was secured by a mortgage bond in which event the period of
prescription was 30 years in terms of s 11(a)(i) of the Prescription Act. It was further
argued that the fact that the notarial lease which served as the appellant’s real right
under the mortgage bond was cancelled did not matter. Counsel placed heavy reliance
on Oliff v Minnie 1953 (1) SA 1 (A) in support of his contentions. I shall return to Oliff
later. Suffice to state at this stage that the facts in Oliff are distinguishable from the facts
of this case. Oliff was concerned with the provisions of a statute that were materially
different from those under consideration in this appeal.

[13] In support of the special plea of prescription, counsel for the respondents argued
that the question whether the debt in issue was secured by mortgage bond must be
determined in relation to the time of the service of the summons enforcing the claim.
Consequently, as the cancellation of the lease agreement had the effect of
extinguishing the first respondent’s rights under the lease and terminating the
appellant’s real right under the mortgage bond, the object of the mortgage bond, ie the
first respondent’s rights deriving from the lease agreement, ceased to exist with effect
from 21 August 2002 at the latest. Thus, when prescription commenced to run from the
due date (ie 18 September 2002) the appellant’s debt was not secured by mortgage
bond and s 11(d) of the Prescription Act meant that the debt became prescribed after a
period of three years reckoned from 18 September 2002.

[14] I return to Oliff whose facts are conveniently set out in the headnote of the
judgment as follows. In 1930 the respondent had passed a second mortgage bond in
favour of the appellant as security of a debt payable on 1 September 1931. During
December 1933 the holder of the first mortgage bond caused the mortgaged property to
be sold in execution. The sale did not realise enough to reduce the indebtedness on the
second bond. The property was transferred to the purchaser and without the
encumbrances of the bonds. On 12 February 1931, the appellant gave the respondent
notice to pay the amount due under the bond within three months and upon liability
being repudiated issued provisional sentence summons on 20 September 1951 based

on the bond. The court of first instance refused provisional sentence holding that when
the mortgaged property was transferred free of the bonds the appellant’s mortgage
bond lost its security so that the shorter period of prescription of eight years applied and
not 30 years as would have been the case if its security was still in place. On appeal
this Court, accepting that the running of prescribed commenced only from the date
when the appellant’s right of action accrued, ie 1 September 1931, held that the
mortgage bond did not cease to be such simply because it had become valueless as
security. Provisional sentence was consequently granted. It must be emphasised that in
Oliff the plaintiff sued for provisional sentence, solely relying on the mortgage bond
passed by the mortgagor, ie the defendant in that case. In addition, the statutory
provision under consideration in Oliff was materially different from that with which this
case is concerned.

[15] The decision in Oliff has been commented upon by some academic writers. The
learned authors of The Law of Property,5 inter alia, point out that a mortgage bond will
be extinguished by the mortgagee releasing the property which is the subject of his or
her mortgage bond. And when this happens the security is released but the principal
obligation remains. They go on to say that as the debt in Oliff was no longer secured by
a mortgage bond, prima facie, Oliff is no longer authority for the interpretation of the
[current] Prescription Act, unless a court is prepared to hold that s 11(a)(i) [of the
Prescription Act] ‘means any debt which was initially secured by a mortgage bond and
justify such construction by reference to the ratio decidendi in Oliff ’.6

[16] Professor Loubser7 supports the views expressed in Silberberg and Schoeman’s
The Law of Property referred to in the preceding paragraph and in turn explains the
position as follows:
‘Where the bond is cancelled before payment or performance of the debt, the thirty-year
prescription period will no longer be applicable and if more than the otherwise applicable shorter

5 Badenhorst Pienaar Mostert Sibberberg and Schoeman’s The Law of Property, 5ed (2006) at 378, para
16.4.9(c).
6 Idem at page 379 para 16.4.9(f).
7 M M Loubser: Extinctive Prescription (1996) at 38.

prescription period has elapsed since the due date of the debt, the debt will become prescribed
upon cancellation of the bond when the operation of the thirty year period falls away.’

[17] Similarly, Saner in Prescription in South African Law says the following (at 3-35):
‘In a situation where a mortgage bond is cancelled before payment or performance of the debt
in question and the debt would, but for the registration of the mortgage bond, have prescribed in
the meanwhile, the debt will immediately become prescribed upon cancellation of the bond due
to the falling away of the 30 year period.’
The weight of academic authority therefore supports the view that once the security
ceases to exist, the debt is no longer secured and the prescription period then becomes
3 years as it is with any other debt (s 11(d)).

[18] In this case counsel for the appellant accepted that the appellant’s action was
based, not on the mortgage bond as in Oliff but squarely on the loan agreement. As
already mentioned, he also accepted that prescription commenced to run from
18 September 2002, this being the due date of the debt. In Deloitte Haskins & Sells
Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd [1990] ZASCA 136;
1991 (1) SA 525 (A) this Court said the following in relation to when prescription
commences to run as intended in s 12(1) of the Prescription Act (at 532G-H):
‘. . . This means that 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 the obligation to
perform immediately.’ [Citations omitted]

[19] Apparently emboldened by the rider to what the learned authors of Silberberg
and Schoeman’s The Law of Property say (in para 16.4.9(f) at 379 referred to in para 15
above), counsel for the appellant contended that the phrase ‘any debt secured by
mortgage bond’ in s 11(a)(i) can be interpreted to mean ‘any debt that was at any time’
secured by mortgage bond. (My emphasis.) And that if this were done the period of
prescription would be 30 years, meaning that the claim had not prescribed. In my view
this argument is untenable. The language of s 11(a)(i) of the Prescription Act is clear.
And it is hardly the sort of language that the legislature would have used if the intention
was that the loss of the security or the cancellation of the mortgage bond would have no

effect on the period of prescription. In my view this interpretation accords with the tenets
of purposive and contextualised statutory interpretation and does not result in an
absurdity.8

[20] It was not the appellant’s pleaded case, nor was any evidence adduced to
establish such a case – given the approach adopted in the High Court – that there is a
lacuna in s 11(a)(i) of the Prescription Act rendering it necessary to read in the words
‘that was at any time’ to cure such lacuna.9 Consequently, if this Court were disposed to
uphold the appellant’s counsel’s argument it would thereby ‘cross the divide between
interpretation and legislation’.10 Counsel for the appellant was understandably
constrained to concede as much.

[21] As already alluded to in para 8 above, the only issue adjudicated upon by the
High Court was whether the period of prescription of the debt sought to be enforced by
the appellant was 30 years or three years. The High Court held that the relevant period
of prescription was three years. Since this was the only issue argued in this Court, and
has been determined against the appellant, it follows that the appeal must fail.

[22] In the result the following order is made:
The appeal is dismissed with costs.

_________________
X M Petse
Judge of Appeal

8 Jaga v Dönges NO & another; Bhana v Dönges NO & another 1950 (4) SA 653 (A) at 664E-H; Dadoo
Ltd & others v Krugersdorp Municipal Council 1920 AD 530 at 543; Dengetenge Holdings (Pty) Ltd v
Southern Sphere Mining and Development Company Ltd & others (CCT 39/2013) [2013] ZACC 48; 2014
(5) SA 138 (CC).
9 Phillips & others v National Director of Public Prosecutions [2005] ZACC 15; 2006 (1) SA 505 (CC)
paras 36-38.
10 Endumeni footnote 4 above, para 18.

APPEARANCES:

For Appellant:

F J Erasmus

Instructed by:

V D T Incorporated, Pretoria

Peyper Attorneys, Bloemfontein

For Respondent:

H F Oosthuizen SC

Instructed by:

Nöthling 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

29 September 2017

STATUS

Immediate

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

Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd (1029/2016) [2017] ZASCA 128
(29 September 2017)

The SCA today dismissed an appeal against a judgment of the Gauteng Division of the High Court,
Pretoria. The issue on appeal was whether the appellant’s claim against the respondents had
become prescribed prior to 21 January 2011 when the appellant’s summons was served on the
respondents. The appellant asserted that the claim had not become prescribed because it was
secured by a mortgage bond registered in its favour by the first respondent over a notarial lease.

It was common cause between the parties that the subject of the mortgage bond, which was a
notarial lease that the first respondent had concluded with a third party was cancelled prior to the
service of the appellant’s summons. Upon cancellation of the lease, the appellant’s real right in terms
of the mortgage bond was extinguished.

On 10 September 2002 the appellant addressed a letter of demand to the respondents relying on the
cancellation of the lease as a breach of the loan agreement between the parties, giving the
respondents seven days within which to pay the outstanding balance. The respondents failed to pay
the amount due. The seven day period expired on 18 September 2002. The appellant instituted its
action against the respondents on 18 January 2011 and the summons was served on
21 January 2011, some eight years after 18 September 2002.

It was argued on behalf of the appellant that s 11(a)(i) of the Prescription Act which inter alia provides
that a debt secured by a mortgage bond is subject to a 30 year period of prescription can be
interpreted to mean ‘a debt that was at any time’ secured by mortgage bond. And that if such a
construction is adopted the fact that the debt in issue was no longer secured by mortgage bond once
the lease was cancelled would not matter.

The SCA rejected this argument and held that once the security ceased to exist (as when the
appellant’s real right was extinguished upon cancellation of the lease) the loan agreement was no
longer subject to a 30 year period of prescription but to a three year period of prescription as with any
other debt in terms of s 11(d) of the Prescription Act.

In the result the appeal was dismissed with costs.

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