THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Reportable

CASE  NO: 386/2002

In the matter between :

F W A LUTZKIE NO
First Appellant

S C LUTZKIE NO
Second Appellant

and

ZENITH CONCESSIONS LIMITED
Respondent

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Before:
MPATI, NUGENT JJA & VAN HEERDEN AJA
Heard:
16 SEPTEMBER 2003
Delivered:
26 SEPTEMBER 2003
Summary:

Cheque – period of prescription

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J U D G M E N T
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NUGENT  JA

NUGENT JA:
[1] Section 11(c) of the Prescription Act 68 of 1969 (‘the Act’) provides
that the period of prescription in respect of a 'debt arising from a bill of
exchange' (except in certain cases that are not relevant to this appeal) is six
years.  In this case an action founded upon a cheque, commenced within
that period, was dismissed by the High Court at Pretoria on the grounds
that the debt had prescribed when the underlying debt prescribed (the
prescription period of the underlying debt was three years in terms of
s 11(d) of the Act).  The unsuccessful plaintiff now appeals against that
order with leave granted by this Court.
[2] The cheque was drawn by the respondent in favour of the appellant
in payment of part of the purchase price of the shares in a company that
were sold by the appellant to the respondent on 25 September 1997.  The
purchase price of R7 450 000 was payable in tranches.  The first tranche of
R4 029 666.49 was payable upon signature of the agreement and the
remaining tranches (in varying amounts) were payable upon the occurrence
of certain future events.
[3] The respondent paid the sum of R1 029 666.49 to the appellant on 21
October 1997.  On 26 November 1997 the cheque that is now in issue, for
R2 million, was issued by the respondent in reduction of the balance of the
first tranche that was then outstanding.  The cheque was presented for
payment, and dishonoured, two days later.

[4] The appellant sued the respondent for provisional sentence on the
cheque.  The summons was served on the respondent on 20 March 2001
(more than three years after the underlying debt became due).  The
respondent raised various defences to the claim.  It alleged that the cheque
was handed over on condition that it would not be banked until the
respondent had given ‘the go-ahead’ to do so, that the person who
purported to act for the respondent in concluding the agreement of sale had
not been authorised to do so, that the agreement was void from the outset
for failure of an underlying assumption or for mistake, and that the
respondent was induced to conclude the agreement by various
misrepresentations.  It also alleged that because the underlying debt had
prescribed so too had the debt arising from the cheque.
[5] The court a quo was asked by the parties to deal with the defence of
prescription at the outset because it was potentially decisive of the claim.
On that issue the learned judge reasoned that, because the underlying debt
(the debt that arose from the agreement of sale) had prescribed, the debt
arising from the cheque had also prescribed.  To hold otherwise, said the
learned judge –
‘… druis in teen die erkende beginsel van onderliggende skuldoorsaak soos neergelê in
Froman v Robertson en die tjek is nie die rede waarom die eiser hof toe kom om die
geld te vorder nie.  Die eiser kom hof toe om die verdere of die gedeeltelike betaling
van die koopprys te vorder …’

[6] A cheque that has been properly drawn and issued constitutes a
contract in writing (with the special characteristic of negotiability) and as
such it must be founded upon justa causa debendi, or reasonable cause, in
order to be valid and enforceable (Froman v Robertson 1971 (1) SA 115
(A) at 120F-G).   Conversely a claim by the payee for enforcement of that
contract will be defeated if it is shown that the requisite justa causa was
lacking or has failed (Froman v Robertson, supra, at 121G-122C), for
example, where the underlying contract was voidable, or illegal, or there
has been a failure to perform (Malan on Bills of Exchange, Cheques and
Promissory Notes in South African Law 4th ed para 65).
[3] To that extent the obligation that arises on a cheque is dependent
upon the validity of the underlying obligation but it does not follow that
they are extinguished simultaneously by the operation of prescription.
Debts are extinguished by prescription through the operation of the Act and
the terms of the Act will determine the extent to which it has had that
effect.  Clearly the legislature intended that a debt arising from a cheque
would not prescribe when the underlying debt prescribed for it provided
expressly for a different period of prescription to apply in relation to that
debt (cf Malan, supra, paras 14 and 185).  In the case of the underlying
debt in this case the prescription period was three years, but in the case of a
‘debt arising from a bill of exchange’ (by which is meant a debt which has
its source or origin in a bill of exchange: Pentz v Government of the

Republic of South Africa 1983 (3) SA 584 (A) at 593B) which is what was
sued upon in this case, the prescription period is six years.  That period had
not elapsed at the time the provisional sentence summons was served and
the defence of prescription should have failed.
[9] 1.
The appeal is upheld with costs including the costs occasioned
by the employment of two counsel.

2.
The order of the court a quo is set aside and the following
order is substituted:
“The defence of prescription is dismissed with costs.”
3.
The action is remitted to the court a quo for the remaining
issues to be determined.

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NUGENT JA

MPATI DP)
VAN HEERDEN AJA)
CONCUR