Debt 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. There are, however, situations where prescriptive periods are extended under statute, and very recently the Constitutional Court has done the same, i.e. found that fairness trumps legal certainty.
Some of these exceptions are the following:
1. 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 of the Prescriptions Act 68 0f 1969.
2. 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.
3. 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’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.
4. VAN ZYL N.O. V THE ROAD ACCIDENT FUND
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. 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.
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