When does a claim prescribe?

CM_06_04The issue of the legal nature of a vindicatory claim and whether it gives rise to a debt that is subject to the three year extinctive prescription period has been decided differently by different divisions of the High Court. On 28 May 2015 the Supreme Court of Appeal came to a final decision in Absa Bank v Keet[1] as to whether claims under the actio rei vindicatio prescribe after 3 years or not.

One of the first questions that your attorney will ask you when you consult him is when your cause of action arose so that they can ascertain whether your claim has prescribed. If your claim is prescribed, it means that you no longer have any legal remedies available to you. Claims arising from a debt prescribe after three years and the rules of prescription are set out in the Prescription Act, 1969.

There is one specific claim where the application of the 3 year prescription period was uncertain and this was in regard to claims under the actio rei vindicatio. This is a legal action by which the plaintiff demands that the defendant return a thing that belongs to the plaintiff, and it may only be used when the plaintiff owns the thing and the defendant is impeding the plaintiff’s possession of the thing.

A rei vindicatio action is often used in disputes surrounding instalment sales where ownership only passes on the payment of a last instalment or where instalments are not duly paid. This is mostly coupled with a claim for cancellation. In other words, the seller cancels the sale agreement and claims return of the thing sold.

In the case of Absa Bank v Keet[2] the seller of a motor vehicle attempted to cancel the sale agreement and to claim the return of the vehicle sold. The purchaser of the vehicle responded to this claim with a special plea stating that the claim for the return of the vehicle had prescribed.

The reason for stating that the claim had prescribed was that the agreement on which the seller sued would have come to an end on the date on which he contended the amount outstanding became due and payable, and that it was more than 3 years since that amount became due.

In the case of Staegemann v Langenhoven[3] it was held that a vindicatory claim does not prescribe after three years. The High Court in the Keet case held that this case was wrongly decided because if Staegemann were correct, ‘the Bank could withhold its demand for the tractor for another decade or even longer, and then demand return of the vehicle so that it could calculate its damages’.

The Supreme Court of Appeal (SCA) in the Keet case had to decide whether the High Court was correct in holding that the seller’s claim for the repossession of its vehicle is a ‘debt’, which for the purposes of the Prescription Act prescribes after three years.

The SCA made an important distinction between extinctive prescription and acquisitive prescription to come to its final decision. Extinctive prescription deals with a creditor’s right of action against a debtor, which is a personal right. On the other hand, acquisitive prescription deals with acquiring real rights to property (in terms of the Prescription Act a person can acquire ownership of property after 30 years of uninterrupted possession). Real rights are primarily concerned with the relationship between a person and a thing and personal rights are concerned with a relationship between two persons.

The person who is entitled to a real right over a thing can, by way of vindicatory action, claim that thing from any individual who interferes with his right. Such a right is the right of ownership. If, however, the right is not an absolute, but a relative right to a thing, so that it can only be enforced against a determined individual or a class of individuals, then it is a personal right.[4]

The Supreme Court of Appeal is therefore of the opinion that to consider a vindicatory action as a ‘debt’ which prescribes after three years is contrary to the scheme of the Act and that this would undermine the significance of the distinction which the Prescription Act draws between extinctive prescription and acquisitive prescription. In other words, what the creditor loses as a result of operation of extinctive prescription is his right of action against the debtor, which is a personal right. The creditor does not lose a right to a thing.

The SCA has therefore made it clear that to equate the vindicatory action with a ‘debt’ has the unintended and absurd consequence in that by way of extinctive prescription the debtor acquires ownership of a creditor’s property after three years instead of 30 years. The vindicatory action therefore does not prescribe after three years.

[1] (817/13) [2015]  ZASCA 81 (28 May 2015)

[2] (817/13) [2015] ZASCA 81 (28 May 2015)

[3] Staegemann v Langenhoven & others 2011 (5) SA 648 (WCC).

[4] Wessels Law of Contract in South Africa 2 ed vol 1 p 3-4.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Are there limitations on ownership rights?

property-line-dispute-getty_ebcd9a0e9da5517cbd147ab14f732a5a_3x2_jpg_300x200_q85It is a recognised principle of property law that ownership does not confer absolute and unlimited entitlement on the owner, but that various limitations exist in the interest of the community and for the benefit of other people.

The most important limitation on the owner in the interest of the community as a whole is the payment of taxes to the state in respect of certain movable and immovable property. In the case of immovable property several measures make land available to a larger section of the community, which implies that the restitution of land rights and the provision of land will require measures for expropriation. Furthermore, a number of provisions deal with environmental conservation and physical planning which limit the owner’s entitlement in the interest of the community. Limiting measures in the case of moveable property prohibit the use of such property to the detriment of the community, for instance motor vehicles, fire-arms and dependence-producing substances.

There are also measures which limit the owner’s entitlement, not in the interest of the community, but in the interest of other individuals. The best known example in this case is neighbour law, which implies that the owner may not use his land in such a way that it constitutes an unreasonable burden on his neighbours. The criterion of reasonableness determines that, in these circumstances, the owner of immovable property may exercise his entitlements within reasonable bounds, and that the neighbouring owner or occupier must tolerate the owner’s exercise of his entitlements within reasonable bounds.

Other examples of the application of the criterion of reasonableness in the case of neighbour law are the obligation to lateral and surface support, measures dealing with encroachments, the mutual obligation regarding the natural flow of water and the elimination of danger.

Other people besides the owner may acquire entitlements (for instance use rights) in respect of the moveable or immovable property of the owner. Holders of limited real rights acquire entitlements in respect of the asset, which limits the owner’s ownership (dominium) as they burden the property. It is therefore enforceable against the owner and his successors in title. Certain creditors’ rights may also result in people acquiring entitlements in respect of the owner’s property. These rights are, however, only enforceable against the owner personally and do not burden the property as such, therefore it is not enforceable against successors in title.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)