What is “extinctive prescription” and why is it so important?

In legal proceedings, if a debtor successfully raises the defence of “extinctive prescription”, then the claim against him or her is made permanently unenforceable. This will be the case regardless of whether the claim is legally valid in all respects, or the creditor enforcing the claim has ample or even irrefutable evidence proving his or her claim.

The defence becomes available as a result of a period of time, set out in the law, having passed since the claim came into being. These periods of time are, largely, set out in the Prescription Act.

If a debtor satisfies a claim – for example, repays a debt – despite the fact that the defence of extinctive prescription was available to him or her because of the length of time that had passed since the debt became due, she or he cannot insist on repayment of the money paid. The debtor must raise the defence before satisfying the claim, or will have lost the opportunity. Where the claim is in court, the court is not allowed to raise the matter of prescription of its own accord, thereby potentially depriving a creditor of satisfaction of its claim.

These are the prescription periods set out in the Act:

  • Three years: debts not covered specifically elsewhere in the Act of other legislation;
  • Six years: debts arising from bills of exchange or negotiable instruments (such as cheques or promissory notes), or notarial contracts (with exceptions);
  • Fifteen years: debts to the state arising from sales, leases, loans or advances (with exceptions);
  • Thirty years: debts secured by mortgage bond, debts in respect of which a judgment has been issued, taxation debts (eg income tax, VAT), and debts to the state in respect of profits and royalties.

The prescription period starts to run as soon as the debt becomes legally due. A debt does not become due in law until the creditor is – or ought to be through the exercise of reasonable care – aware of the identity of the debtor and the facts giving rise to the debt. For example, where a person has suffered harm but has not been able to ascertain who caused the harm despite exercising reasonable care, the claim for damages for that harm will not prescribe at once.

Certain events delay the running of prescription, for example the creditor lacking legal competence (due to factors such as youth or a period of mental incapacity).

Prescription can be interrupted by the debtor acknowledging his or her liability, or the creditor serving upon the debtor legal process claiming the debt. If the creditor manages to serve summons on the debtor claiming payment of the debt one day shy of the three year period ending, then the claim will remain valid pending finalisation of the court case.


Disputes with Pension Funds

What can a member or former member of a pension fund do to resolve a dispute with the fund, or with their employer about their participation in the fund?

Four main types of disputes arise:
• The fund may exercise its powers improperly, or do something which it is not entitled to do;
• The fund can be poorly administered, causing you prejudice;
• You and the Fund may disagree on an important fact or matter of law;
• Your employer may not be fulfilling its duties where your membership of the Fund is concerned.

The Pension Funds Act sets out the procedure you may follow in order to have your dispute addressed.

First, you are required to send a written complaint to the Fund (or employer, if applicable). You must keep a copy of your complaint as well as your proof that it was sent. They have 30 days in which to respond to your complaint. If they do not respond, or if their response does not resolve the dispute to your satisfaction, you may take the matter to the Pension Funds Adjudicator (PFA).

The PFA has a simple online form which enables you to submit your complaint to them quickly and easily. It is found on their website at http://www.pfa.org.za. You can only submit a complaint to the PFA once you have first complained to the Fund (or employer) and 30 days have elapsed.

The online form helps ensure that you submit all necessary information. In brief, this includes your personal details, the Fund’s details (or employer’s), your dates of joining and leaving the Fund (or employer), your complaint in detail, the outcome you desire, as well as proof that you first complained to the Fund (or employer). Copies of all relevant documents must be supplied.

The PFA may require a written response from the Fund (or employer) and may also investigate the matter further by phoning the parties or engaging in correspondence. A decision will be made in writing and communicated to the parties, and this decision has the force of a judgment of a court. If the PFA rules that the Fund must make a payment to you of money, then this is enforceable via the sheriff of the Court in the same way as a court order.

The Consumer Commission – off to a poor start

Since the passing into law of the Consumer Protection Act, many consumers, businesses and legal professionals have been waiting for the new Act to be tested in reported cases, to provide practical guidance for the future.

One such case came before the National Consumer Tribunal just a fortnight ago. The case was brought by Kia Motors, against the National Consumer Commission. The Commission had earlier issued a compliance notice against Kia, under the CPA. Kia challenged the lawfulness of the compliance notice on a number of grounds. The Commission failed to defend the challenge, neither filing papers nor appearing at the hearing of the matter.

By way of background, in 2010 a Mrs J brought her two-year old Tata car to Kia for servicing. While her car was at Kia’s premises, another car reversed into it, causing damage to the fender. Kia provided and installed a replacement fender to Mrs J’s vehicle, at its own cost. Several months later, Mrs J indicated that she was not satisfied with these repairs. She was invited to bring in her vehicle to discuss her unhappiness but she elected not to. Instead she approached Commission, and lodged a complaint against Tata, the original retailer of her vehicle. Tata clearly had nothing whatsoever to do with the dispute, and after filing papers indicating as much, the complaint was directed against Kia instead.

After Kia filed its response to the complaint, the Commission went ahead and issued a compliance notice against Kia. Remarkably, that notice required Kia to “replace the vehicle or refund the deposit, all instalments and repair costs”.

Not surprisingly, Kia was unwilling to accept this notice, and challenged it on a number of grounds before the Tribunal. These included that the incident took place before the CPA became law, that there were no grounds on such which a notice could be issued, and there had been no investigation as required by the Act before the notice was issued.

The Tribunal agreed that Kia had genuine cause for complaint. The incident had indeed occurred before the CPA came into effect. The damages were also delictual in nature – arising from a collision of vehicles – which was not the subject-matter of the CPA at all. The Commission had issued the notice without undertaking the necessary investigation. The Commission also lacked the power to order a party to repay amounts received – only the Tribunal enjoyed that power.

In the end, the compliance notice was set aside, however without any order holding Mrs J or the Commission liable for Kia’s costs. Effectively, Kia was compelled to go to great trouble and expense to undo the Commission’s bungling, and restore the original position with no benefit to itself (or Mrs J for that matter).

A review of other reported cases emerging from the Tribunal sitting in review of notices issued by the Commission, suggests that this is not an isolated instance. A number of notices have been issued concerning matters outside the scope of the Commission’s powers, without proper investigation. The Commission is not engaging with the Tribunal’s processes to defend its actions, but is simply allowing hearings to proceed in its absence, with the effect of reversing what it has done. This is a worrying early trend for such a new institution.

A recent Auditor-General’s report had much criticism for the management of the Commission, and an acting Commissioner currently holds the reins pending a new appointment by Trade and Industry.

Consumer website Hellopeter.com is replete with overwhelmingly negative feedback from the public concerning the Commission’s performance thus far.

While the CPA is generally looked upon as a positive and exciting development for consumers, without an effective and credible mechanism for enforcement, the Act will not live up to its promise. It is hoped that new leadership will soon be appointed who will breathe life into the Commission and enable it to fulfil its mandate to the public in an efficient and sensible manner.

Persons wanting to refer complaints under the CPA to the Commission may download the necessary form at their website http://www.nccsa.org.za.

The Role of the Sheriff of the Court

The image of the sheriff is familiar to everyone who grew up on a typical Western diet of American TV shows. In the United States, a sheriff is a law enforcement official, elected at local level for a term of several years, and often a highly influential political figure in the community in which he or she serves. They are generally responsible for patrolling their communities, apprehending violators of the law and serving legal process. They often are responsible for their community’s jail and sometimes even perform autopsies. The Los Angeles Sheriff’s Department is the largest in the United States, with well over 8000 staff.

In South Africa we too have had sheriffs since the 1800s, and they form an integral part of our legal system. However many South Africans will never have encountered a sheriff, and will wonder whether we really have gun-toting, badge-wearing “lawmen” wandering our communities.

In South Africa, our sheriffs play a less high-profile, but still fundamentally important, role. They are not elected officials, but are rather appointed by the Minister of Justice, and may hold office until they reach 65 years of age, after which they can re-apply for appointment in competition with any other contenders. They are also not civil servants, but effectively entrepreneurs who perform state functions under contract to the state.

Our sheriffs’ duties are to formally hand over and carry out into action various documents issued by our courts. They do not administer jails, perform medical duties or carry out general crime-fighting duties. The documents they serve and execute include summonses beginning court cases, court orders, as well as warrants which direct that property should be seized or persons arrested or evicted.

Whilst our sheriffs do not wear badges, they are required to carry identification cards issued by their regulatory body – the Board of Sheriffs – while on duty. If you are visited by someone claiming to be the sheriff of the court, you are entitled to demand to see this identification card, and the sheriff is duty-bound to produce it.

When serving a court document, the sheriff does not (or should not) merely hand it over to you and depart. She or he is required to explain the nature of the document to you as well as, in general, what you should do in response. For example, when serving a summons the sheriff should tell you something along the lines of “this is a document which is starting a court case against you, in which person X is claiming that you owe them R100 000,00 because of a loan, and if you want to defend the case you must complete a notice of intention to defend and get it to the other party’s attorney and the court within ten days”.

Should you consistently leave your premises locked and vacant, however, the sheriff may serve the document on you by simply leaving it at your premises. Avoiding the sheriff is not helpful, as few legal matters require that documents be handed to you personally – an exception is a divorce summons which can only be served personally and cannot be left at your premises or, for example, handed to your domestic worker at home or your colleague at work.

As an officer of the court, the sheriff has quite extraordinary powers. She or he has the right (provided the court has authorised this) to:
Enter your home or office, even if you are not there – including by employing a locksmith to break your locks if necessary;
Open any door, vehicle of item of furniture at your home or office;
Take away from your home or office any property – including cars and furniture, but excluding the most basic items such as your bed – and sell it, and even sell your home or office building, to recover monies owed by you.

Conviction for an offence involving dishonesty, or any offence where imprisonment was ordered without the option of a fine, disqualifies a person from being appointed as a sheriff in the first place.
Because sheriffs may receive monies from debtors, or sell their goods to raise money, on behalf of creditors, there are rules and safeguards in place to prevent them from stealing trust monies, and to provide redress should this nevertheless occur.

They are required to act impartially and maintain confidentiality.

They are also required to perform their duties without unreasonable delay – as the service of summonses or execution of warrants or court orders is usually critically important to the parties concerned. Late service of a summons could mean that a claim prescribes through the passage of time and becomes completely unenforceable in law. Failure to execute a warrant of attachment of property promptly could mean that a debtor is able to hide property and frustrate a creditor from recouping what is owed to them. Tardy execution of a warrant of arrest could allow a defendant to escape the country.

If a member of the public believes that a sheriff has committed any misconduct, they may complain by lodging with the Board of Sheriffs an affidavit detailing the misconduct. A sheriff guilty of misconduct may be disciplined, and may be suspended or removed from office.