According to the Prescription Act 68 of 1969 (Prescription Act) section 11(d) a debt prescribes after three years from the date on which it becomes due. It is settled law that the definition of “debt” for purposes of the Prescription Act is broad enough to encompass any obligation to make restitution, such as a one arising from a contract cancelled by repudiation, noted in Cook v Morrison and another 2019 (5) SA 51 (SCA) (at para 15). However, what remained unclear, until Pretorius v Bedwell [2022] ZASCA 4, was when prescription actually begins to run in a damages claim based on repudiation.

The Supreme Court of Appeal (SCA) in Pretorius v Bedwell (paragraph 10) reiterated that:

“…repudiation of a contract occurs where one party to a contract, without lawful grounds, indicates to the other party, whether by words or conduct, a deliberate and unequivocal intention to no longer be bound by the contract. 1 Then the innocent party will be entitled to either: (i) reject the repudiation and claim specific performance; or (ii) accept the repudiation, cancel the contract and claim damages. If he or she elects to accept the repudiation, the contract comes to an end upon the communication of the acceptance of the repudiation to the party who has repudiated. Only then does a claim for damages arise. Accordingly, prescription commences to run from that date.”

At the back of this notion the SCA sets out what facts must be pleaded in a special plea of prescription in a claim for damages based on repudiation to successfully disclose a defence in law.

In summary, the matter pertained to a dispute which arose in 2007 in terms of which Kenneth Bedwell (Bedwell) seeking financial relief, turned to his brother-in-law Dave Pretorius (Pretorius). It was agreed that Pretorius would purchase a property, by way of mortgage loan and when Bedwell qualified for a mortgage loan of his own he would purchase the property back.

In 2008 the relationship had broken down, and on 8 April 2008 Pretorius instructed Bedwell to leave the property. On the same day Bedwell invited Pretorius to negotiations on a way forward, which was in vain and Bedwell left the property the following day.

In 2010 Bedwell learned that Pretorius sold the property to a third party. On 11 October 2011. Bedwell issued action proceedings (summons) against Pretorius claiming damages resulting from the repudiation of the agreement, to which summons Pretorius raised a special plea of prescription arguing inter alia that Pretorius repudiated the agreement on 8 April 2008, and since the summons was issued on 11 October 2011, the claim had prescribed under section 11 of the Prescription Act.

The SCA stated that prescription begins to run, not when the reneging party repudiates the contract, but rather when the innocent party communicates its acceptance of such repudiation to the repudiating party and elects to cancel the agreement.

Upon communication of the acceptance of the repudiation the innocent party’s claim for damages arises and prescription may begin to run. In this case, the SCA found that Pretorius failed to plead that on 8 April 2008 he repudiated the contract and Bedwell accepted such repudiation. The SCA ruled that the onus was on Pretorius to prove that the claim had prescribed and, the special plea did not set out the relevant facts, that is, that the agreement was repudiated on 8 April 2008 and the repudiation was accepted and acceptance thereof was communicated on that same date (or at a later date but before 10 October 2008). Therefore, the special plea did not disclose a defence in law and failed on the facts. For that reason, the SCA found that the full bench of the High Court had correctly dismissed the special plea and accordingly the SCA dismissed the appeal.

The cause of action for damages emanating from repudiation only comes alive when the innocent party communicates the acceptance of the repudiation. Thus, when replying on prescription, it will not suffice to merely reiterate the provisions of the Prescription Act or to simply state that the claim has prescribed. One must set out, firstly when the repudiation occurred and more importantly when the innocent party communicated the acceptance of the repudiation.