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The perils of prescription

If a person has a legal right, the law decrees that if he does not exercise it within a stipulated time, he loses the right permanently. This is called “extinctive prescription” and the detailed rules are laid down in the Prescription Act, 1969.

In relation to most claims, the prescriptive period is three years from the date on which the debt became due for payment. This is an alarmingly short time, particularly since a substantial part of that period may be taken up with investigating the facts of what may be a contentious and complicated commercial transaction.

Few things can be more infuriating than having a perfectly valid claim against someone – for example, a debt owing to you – and then finding that there is absolutely nothing you can do to enforce it because the claim has prescribed.

In terms of the Prescription Act, a claim which has become prescribed is not merely dormant – it has been completely extinguished, except that if the debtor thereafter pays the debt, he cannot demand his money back.

It is thus vital that, if you have a legal claim, you institute legal proceedings to enforce the claim before the prescriptive period has come to an end.

It is not necessary to actually take judgment within the prescriptive period, because service of your summons interrupts the running of prescription; in other words, the clock stops ticking at that point. In addition, once you have a judgment in your favour, that judgment debt only prescribes after 30 years; in other words, you have 30 years within which to enforce that judgment before your rights under the judgment will prescribe.

The decision of the Transvaal High Court in the recent case of Society of Lloyd’s v Price 2005 (3) SA 549 (T) exposed a little-known pitfall in relation to the prescription (for the purposes of South African law) of a judgment obtained in a foreign country.

The rule that judgments prescribe after 30 years applies only to judgments of a South African court

The rule, noted above, that a judgment prescribes only after 30 years, applies only to judgments of the South African courts. If you obtain a judgment in a foreign court, the South African justice system does not blindly enforce it. You have to use that foreign judgment to obtain a judgment in the South African courts, before you can enforce it in South Africa.

Here is the crunch – you have, not 30 years, but three years to obtain that judgment in the South African courts and if you do not take action to do so within three years, your rights under that foreign judgment will (for the purposes of South African law) prescribe and thus be extinguished.

If your rights under that foreign judgment have prescribed for purposes of South African law, you can, of course, enforce that judgment in the foreign country, but you cannot enforce it in South Africa. Thus, for example, you cannot attach that person's South African assets and have them sold in execution to satisfy your claim.

The lesson to be learned from the judgment in Society of Lloyd's v Price, noted above, is that if you obtain a judgment in your favour in a foreign country and if the debtor has assets in South Africa you should take immediate action to get a judgment in the South African courts so that you can enforce your rights in this country against those assets.

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