Prescription: Fairness trumps legal certainty

Prescription of debts is generally absolute in its impact, and can be said to have a “guillotine effect” as a claim for a debt is unenforceable once it has prescribed. The rationale behind prescription is to ensure the lapsing of claims which are not actively pursued by legal process to ensure legal certainty. There are, however, situations where prescriptive periods are extended under statute, and very recently the Constitutional Court has done the same, expressly to avoid unfairness.

20 Jul 2022 3 min read Dispute Resolution Alert Article

At a glance

  • Prescription of debts has an absolute and unenforceable effect once it has occurred, but there are situations where prescriptive periods can be extended to avoid unfairness.
  • In cases involving minors, mental illness, or curatorship, if a creditor is unable to pursue a claim due to these impediments, they have one year from the removal of the impediment to pursue the claim.
  • The Constitutional Court has shown a willingness to prevent the harsh impact of prescription in cases where enforcing time limitations would be unfair and contrary to public policy, particularly when it involves mental impairment and the impossibility of pursuing a claim.

Minority, mental illness, and curatorship

If a creditor cannot litigate without assistance because of an impediment such as being a minor, mentally impaired or under curatorship, it would be unfair for their claim to prescribe, at least until they are able to pursue the claim. Section 13(1) of the Prescription Act 68 of 1969  provides that if a claim prescribes while a creditor is suffering from such a prescribed impediment, the creditor will have one year from the date on which the impediment falls away to pursue the claim.

Arbitrations

Section 8 of the Arbitration Act 42 of 1965 allows a court to extend the time limit for a claim subject to arbitration if a claimant would suffer “undue hardship” where the claimant is precluded from pursuing the claim. Interestingly, a court is allowed to extend the time limit in these circumstances beyond the normal three-year period stipulated by the Prescription Act.

Short-term insurance clauses

In 2007, the Constitutional Court in the matter of Barkhuizen v Napier 2007 (5) SA 323 (CC) had to decide whether the enforcement of a 90-day time limitation clause in an insurance contract conflicted with public policy and was unenforceable on that basis. The insured in this matter had brought an action against his insurance company claiming an indemnity in respect of damages suffered in a car accident. The claim, however, was brought several years after the 90-day time limit prescribed and the policy had run its course. The insurer raised a special defence on the basis of the lapsing of the 90-day time limit which obliged the court on the one hand to consider principles of fairness, and on the other sanctity of contract. The insured’s failure to provide reasons for non-compliance with the time bar, in the opinion of the court, precluded it from deciding whether the enforcement of the insurance clause would be unfair and contrary to public policy. In the circumstances, the court was compelled to decide that the enforcement of the clause was not unfair. Perhaps if the insured had put up cogent reasons for his delay, resulting in the unfair enforcement of the clause, the court would have decided differently.

Van Zyl N.O. v The Road Accident Fund

By contrast, the Constitutional Court’s judgment in Van Zyl N.O. v The Road Accident Fund [2021] ZACC 44 concerned a Mr. Jacobs who suffered mental impairment in a car accident and as a result of his mental impairment was unable to pursue his claim against the Road Accident Fund. A curator was only appointed to litigate against the fund on behalf Jacobs seven years after the accident but claims against the fund prescribe three years after a cause of action arises, the cause of action in this matter being the motor accident. As set out above, Mr Jacobs suffered from one of the impediments stipulated by the Prescription Act, but a 2010 judgment of the Constitutional Court in Road Accident Fund v Mdeyide [2010] ZACC 18 held that section 13(1) of the Prescription Act does not apply to Road Accident Fund claims. The unfairness of the situation is obvious and the Constitutional Court relied on the principle of law that one cannot be compelled to do the impossible. The court interpreted the Road Accident Fund Act 56 of 1996 to extend the prescriptive period for claims where a plaintiff is mentally impaired, irrespective of whether they are detained or under curatorship. The court said that it would be absurd if the Road Accident Fund Act were not to be interpreted in this way as lawmakers should not punish people for failing to do the impossible.

So prescription does operate harshly, as it should if we are to promote legal certainty, but it is gratifying to see that it will not be allowed to operate so harshly that it leads to a gross miscarriage of justice.

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