As in all lawful disputes, extinctive prescription is a vital component to be regarded as when evaluating the merits of the claim and formulating a protection. Construction legislation situations, in many circumstances, require not only complicated contractual relationships, but additionally tricky specialized elements. Determining the date on which prescription starts to operate entails careful factual examination and when the actions of the realistic man or woman are to get factored into your discussion, points could get much more hard.
The 1969 Prescription Act supplies for 4 various basic prescription intervals. The durations are 30, fifteen, 6 and three several years respectively. The majority of the scenarios I’ll be referring to relate to debts that happen to be topic into a three calendar year prescription interval. I’ll also refer briefly to a situation in direction of the conclude from the presentation wherever the thirty calendar year period of time finds application.
When does prescription start to operate?
Area twelve on the Act gives as follows:
12. … (one) … prescription shall begin to operate when the personal debt is because of. (two) … (3) A personal debt shall not be judged to be owing right up until the creditor has knowledge on the identity of your debtor and with the specifics from which the debt arises: … a creditor shall be deemed to get these types of information if he could have acquired it by doing exercises fair treatment.”
When may be the debt owing?
The decision in Martin Harris & Seuns OFS (Pty) Ltd v Qwa-Qwa Regeringsdiens 2000 (three) SA 339 (A) gives an excellent illustration of when a financial debt becomes because of for the purposes of Portion 12(one) of your Act.
The facts of this matter are briefly as follows:
* The building contract provided that the appellant would be paid after a progress certificate was issued by an architect (the principal agent) in respect of work already performed. These types of certificates were issued and the appellant was duly paid.
* Within three several years after completion of your works as a whole, but extra than three a long time after uncertified sections of work was done, the appellant instituted action for an outstanding balance in respect of uncertified work.
* The respondent alleged that the claim had prescribed because the entitlement/debt arose when each segment of work had been completed.
The Court held in the contractor’s favour and I summarise the position as follows:
* The issuing of progress certificates was only a contractual mechanism to place the contractor in a position to finance the continuation of the completion of your works.
* The completion of each specific part from the work did not entitle the appellant to receive payment for the work.
* Only upon completion from the work as a whole would the appellant have these entitlement.
* The appellant’s declare would rest upon a certificate as a separate and self-supporting cause of action, exactly where a certificate had already been issued.
* The would then be for payment from the percentage from the value on the works for which the architect had certified.
* Prescription with the appellant’s claim (for payment for all sections which had not appeared in any certificate) began to operate at the earliest in the event the work as a whole was completed.
The debt had therefore not become due and respondent accordingly failed in its prescription argument.
In LTA Construction v The Minister of Public Works and Land Affairs 1992 (one) SA 837 (C) the court also shed extra light on the same question.
The claimant claimed for losses sustained in consequence with the delay in the commencement in the works. The building contract provided for the completion with the works within 33 months from date of acceptance of your tender. A further term was that the employer would hand over the site within a certain period. The progress on site and completion of the project were adversely affected by:
* The employer’s late handover with the site (7 working days delay).
* Completion delayed due to causes beyond the contractor’s control (320 working days). The defendant then raised a prescription argument and said that the plaintiff’s claim had become prescribed because the credit card debt claimed for became owing 33 months and 10 days (7 working days and 3 non-working days) after acceptance from the tender.
* This argument resulted in 16 July 1986 being calculated as being the date on which the financial debt was to own become because of.
* Summons was served on 5 December 1989.
The defendant’s argument however did not take into proper consideration that a further term of the contract provided for the contract period to get extended in the event of delays due to causes beyond the contractor’s control.
This provision extended the date on which the credit card debt became owing with a further 320 working days. The defendant was unsuccessful.
Awareness and judged information
As we have seen Part 12(3) of the Act supplies that a financial debt is not regarded to generally be owing until finally the creditor has knowledge or is deemed to acquire understanding in the identification on the debtor, as well as on the info from which the financial debt arises.
In Minister of Public Works and Land Affairs v Group Five Building Limited 1999 (4) SA twelve (SCA) counsel for the contractor contended that the employer’s claim had become prescribed in terms of Segment twelve(1) of your Prescription Act.
The employer had allegedly become aware from the relevant info by thirty May 1991. The contract was terminated on 3 December 1991 and the employer’s counter-claim was delivered on 1 December 1994. The contractor had therefore to prove that prescription had begun to run.
In the instant case, the date on which the employer gained understanding of your information from which the personal debt arose (30 May 1991) was irrelevant as this particular contract contained a clause which entitled the employer’s engineer to require the contractor to remedy defective work. The very earliest stage once the employer’s damages could conceivably have become owing was in the event the contractor, who had the duty to remedy the defective work, had the last chance to do so. This was the date on which the contract was cancelled (three December 1991).
The employer’s counter-claim was delivered on one December 1994 and therefore fell within the three calendar year prescriptive period of time. The contractor had accordingly failed to prove that prescription had run.
The sensible person
In Drennan Maud & Partners v Pennington Town Board 1998 (three) SA 200 (SCA), the appellant was a civil engineering consultancy. It designed and recommended the building of the reinforced concrete retaining wall because the Town Board wished to protect certain properties which became threatened by the Umzinto River in Kwa-Zulu Natal. The Town Board accepted design and proceeded to engage a contractor to build the wall.
During September and November 1989 heavy rains fell and the river came into flood. Sinkholes formed in the backfill material behind the wall during this interval. These developed progressively and eventually became very substantial. By January 1990 the river was flowing freely under the whole length from the wall and the Town Board were back to the place they had been before the appellant was consulted and claimed was for the wasted costs of building the wall.
It was alleged by the engineers that by no later than 13 November 1989 the Town Board had know-how in the information from which the alleged declare arose. It was later alleged that the Town Board acquired considered knowledge in the light from the information known to it by the above date. The Town Board should have exercised realistic care.
In his judgement the Honourable Mr Justice Olivier made the following statement: “… a creditor shall be considered to have the required understanding if he could have acquired it by working out acceptable care. In my view, the requirement exercising affordable care required diligence not simply in the specifics underlying the debt, but in addition in relation to the evaluation and significance of those info. This means that the creditor is regarded to own the requisite know-how if a acceptable particular person in his position would have adduced the facts from which the personal debt arises.”
It was clear from the subsidence on the backfill material behind the wall that the design had failed and could not withstand the scouring effect of your passing flood. As being the Town Board’s claim was for the wasted costs of building the wall, the loss claimed for had already occurred when the Town Board acquired regarded know-how that the wall did not serve the purpose for which it was designed and built and that the related costs were wasted.
The consultant’s prescription argument was therefore well founded because the respondent’s summons was issued outside of your 3 12 months prescription period.
Prescription and arbitrations
Arbitration plays a major role in the building industry as alternative dispute mechanism. I would like briefly, and in closing, to discuss one or two significant factors of prescription pertaining to arbitrations.
Portion 13(1)(f) from the Act states that the completion of prescription will be delayed if the debt is the object of a dispute subjected to arbitration.
What is Arbitration?
In Murray & Roberts Building (Cape) (Pty) Ltd v Upington Municipality 1982 three SA 385 (NC) it was held that the referral to an engineer (in terms of the written agreement between the plaintiff and the defendant) was also a dispute subjected to arbitration for purposes of Section 13(one)(f) of your Act. This conclusion was upheld in the Appellant Division. It therefore followed that the completion of prescription was delayed right up until one 12 months after the arbitration proceedings had come to an conclude.
Proceeding with the Arbitration
It should also be noted that the mere existence of an agreement between parties for disputes between them for being referred to and decided by arbitration does not suffice for the purposes of delaying the running of prescription and that the words subjected to arbitration means that the parties are required to refer disputes to arbitration and to actually proceed with the arbitration proceedings.
In Primavera Development SA v Government of Northwest Province & another 2003 (three) SA 579 (BPD) the settlement agreement and the resultant Court Order provided, inter alia, that the award by the arbitrator would operate as an Order of Court.
The arbitrator’s award therefore acquired the status of the judgment credit card debt for purposes of Portion 11(a)(2) on the Prescription Act, which meant that a thirty 12 months prescriptive period of time would be applicable to the award.