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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

FLYNOTES: CIVIL PROCEDURE – Prescription – When debt becomes due – Contractual damages – Court a quo found cause of action only arose when appellant refused to repair structural damage – Correctness of finding – Cause of action existed for respondent to act against appellant – Had minimum facts required to institute claim – Prescription was not interrupted and claim became prescribed – Special plea of prescription should have been upheld – Prescription Act 68 of 1969, s 12.

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NUMBER: CIV APP FB 8/2024

CASE NO: 2319/2020

Reportable: YES/NO

Circulate to Judges: YES/NO

Circulate to Magistrates: YES/NO

Circulate to Regional Magistrates: YES/NO

In the matter between:

WJB STIEGER KONSTRUKSIE (PTY)LTD                              Appellant

AND

RUAN JANSE VAN VUUREN                                                   Respondent

CIVIL APPEAL

CORUM: HENDRICKS JP, DJAJE DJP & PETERSEN J

ORDER

The following order is made:

1. The appeal is upheld.

2. The order of the court a quo is set aside and replaced with the following order:

“The defendant’s special plea of prescription is upheld with costs;”

3. The respondent is ordered to pay the costs of the appeal inclusive of the costs of the application for leave to appeal which costs shall include costs of counsel on scale C.

JUDGMENT

DJAJE DJP

[1] In this appeal the appellant’s special plea of prescription was dismissed by the Court a quo with an order of costs against the appellant. This appeal is against that order.

[2] The respondent instituted an action for damages against the appellant for contractual damages as a result of structural defects in a house built by the appellant. Mr W Stiegler on behalf of the appellant entered into an agreement with the respondent in September 2015 for the construction of a house for the respondent by the appellant. The construction commenced on 7 September 2015 and the respondent took occupation of the house on 31 October 2016. In December 2016 the respondent observed cracks on the walls and that the floor in the bar area was starting to sink. The appellant was informed of this and there were repairs done.

[3] The appellant on 6 December 2017 sent a civil construction engineer to inspect the respondent’s house. The engineer confirmed that there were cracks on the structure, and they had to be fixed with barbed wire and plaster. The appellant testified that he was not aware if the respondent did take any steps to correct or repair the cracks. The respondent acted on 1 June 2018 by having a letter of demand sent to the appellant to make an undertaking to repair the structural defects on the building. The complaint to the National Home Builders Registration Council (NHBRC) was made on 8 June 2021 by the respondent after the summons were already issued against the appellant on 20 January 2021.

[4] The respondent in the particulars of claim alleged as follows:

“4. During or about September 2015 and at Rustenburg, the plaintiff, representing himself, and the defendant, represented by Mr W Stieger alternatively a duly authorised representative, entered into a partly written and partly oral agreement with the following relevant express, alternatively tacit, alternatively implied terms:

4.1 The defendant would as a home builders as defined in Act 95 of 1998 construct a residential home for the plaintiff at Stand 2[…], S[…] Estate, Rustenburg;

4.2 The building of the home will be as per the approved building plans and will be completed in terms of all relevant building regulations and legislation;

4.3 Construction would commence by 7 September 2015 and will be completed by 30 August 2016;

4.4 Plaintiff will affect payment to the defendant in a total amount of R4’162’318.00 (Vat included) for the construction of the home and progress payment will be made upon request from the defendant;

4.5 The defendant provides warranties enforceable by the plaintiff against the defendant in any court, that:

4.5.1 The home is or shall be constructed in a workmanlike manner;

4.5.2 The home is or shall be fit for habitation;

4.5.3 The home is or shall be constructed in accordance with:

4.5.3.1 The NHBRC Technical Requirements to the extent applicable to the home at the date of enrolment of the home; and

4.5.3.2 The terms, plans and specifications of the agreement;

4.5.4 The defendant shall at the cost of the defendant and upon demand by the plaintiff, rectify major structural defects in the home caused by the noncompliance with the NHBRC Technical Requirements and occurring within a period of not less than five years as from the occupation date, and notified to the defendant by the plaintiff within that period.

5. Copies of the written parts of the agreement are annexed hereto marked Annexure “POC1(a) – POC1 (c)” and plaintiff requests that the contents thereto be incorporated herein as if repeated.

6. Plaintiff complied with all his obligations in terms of the agreement by paying the full agreed contract price to the defendant.

7. Plaintiff took occupation of the home on or about 31 October 2016.

8. The defendant breached the terms of the agreement by:

8.1 Failing to construct the home in a workmanlike manner;

8.2 Failing to construct the home in accordance with the NHBRC Technical Requirements;

8.3 Failing to construct the home in accordance with the terms, plans and specifications of the agreement;

8.4 Failing to construct a home that remained fir for habitation.

[5] The appellant raised a special plea of prescription as follows:

“3. The construction of the plaintiff’s residence would commence by 7 September 2015 and will be completed by 30 August 2016.

4. The plaintiff alleges in paragraph 7 of his particulars of claim that he took occupation of the plaintiff’s residence on or about 31 October 2016.

5. The plaintiff alleges further that the defendant breached the terms of the agreement by inter alia failing to construct the plaintiff’s residence in a workmanlike manner.

6. On Wednesday, 6 December 2017 the consulting civil and structural engineer, Mr A K H van der Walt of Infra Struct Design CC to the knowledge of the plaintiff conducted an inspection and site visit regarding cracks in the structure of the house.

7. The plaintiff had knowledge of the alleged debt, the identity of the debtor and of the facts giving rise to the debt by no later than 6 December 2017, alternatively, that the plaintiff could have acquired knowledge by exercising reasonable care and he is deemed to have had such knowledge.

8. In the premises the plaintiff’s claim prescribed against the defendant in accordance with the provisions of section 12 of the Prescription Act (Act 68 of 1969).”

[6] The appellant argued before the court a quo that the cause of action arose during December 2017 when the respondent became aware of all the major structural defects and that is when prescription commenced. As a result, the summons commencing action should have been issued on or before December 2020 which would fall within the three year period stipulated in the Prescription Act 68 of 1969.

[7] The respondent contended that the appellant had to be given an opportunity to effect the repairs to the building first before instituting action. The respondent argued that the cause of action only arose when the appellant refused to repair the defects and that was in October 2018. As a result the claim would have prescribed in October 2021.

[8] In dismissing the special plea of prescription the court a quo held that:

“Application for legal position to the facts

[32] The above caselaw emphasises that a reasonable person is expected to institute a claim within a period of three (3) years after becoming aware of the claim, or within three (3) years from the date that the claim or debt arose. The plaintiff claims that the defendant has brought him under the impression, by virtue of his actions, that the defendant will repair the structural damages up and until the last attempt of the defendant to repair such structural damages on 5 October 2018.

[33] This is not unreasonable inference to make. I agree with the argument Mr Esterhuize on behalf of the plaintiff that any action that was instituted prior to 5 October 2018 would be premature. At that stage, in October 2018, all objective factors indicated that the defendant has the intention to repair such structural damages.

[34] On the defendant’s version, should the claim of the plaintiff commenced to run in December 2017 when he became aware of the extent of the damage, the plaintiff had the duty to institute legal proceedings within three (3) years from December 2017, thus prior to December 2020. However, when regard is had to the facts of this matter, it is common cause that the defendant attempted to correct the structural damages on 5 October 2018. To my mind, the actions of the defendant did not amount to an admission of liability, but would cause the plaintiff to reasonably expect that the defendant will cure the defects up and until 5 October 2018.

[35] The defence raised by the defendant is that the company engineer is liable as the engineer is the appropriate party which periodically “signed off” on the bulking works. The engineer thus gave its approval that the structure of the house is in accordance with engineering standards and the defendant proceeded on the basis of such approval. This is a defence that the defendant can raise in the main action, and has no application on the question whether the claim has become prescribed or not.

[36] In application of section 12 (3) of the Prescription Act, the plaintiff’s debt became due when the plaintiff had knowledge of the identity of the defendant and the facts from which the debt arose, provided that the plaintiff would be deemed to have such knowledge if he could have acquired it by exercising reasonable care. The date when plaintiff had become reasonably aware of the facts from which the debt arose, which in this instance is the failure to repair the structural damage, in the exercising of reasonable care is 5 October 2018. Any date prior to 5 October 2018, the plaintiff could not have been aware thereof that the defendant is not in a position to repair the structural defects of the house.

[37] It follows that the special plea is bound to be dismissed.”

[9] The court a quo agreed with the submission by the respondent that the cause of action only arose when the appellant refused to repair the structural damage.

[10] In the main, the issue to be determined before this court is whether the finding of the court a quo that the cause of action arose when the appellant refused to repair the defects, is correct.

[11] In its submission before this court, the appellant argued that the respondent had knowledge of the debt, the identity of the debt and the facts giving rise to the debt on 6 December 2017. Therefore, prescription commenced to run December 2017. It was the appellant’s case that prescription was not interrupted as there was no undertaking by the appellant to repair the defects.

[12] The respondent contended that the necessary and relevant facts to be aware of before instituting action, was not the existence of major structural defects to the house, but refusal by the appellant to repair the defects. In the main, the respondent argued that the cause of action is based on damages sustained as a result of the appellant's breach of the statutory warranty in terms of section 13(2)(b)(i) of the Housing Consumer Protection Measures Act 95 of 1998.The said section deals with a warranty to be enforced by a consumer against a home builder and provides that:

“Conclusion of agreements and implied terms

13. (2) The agreement between a home builder and a housing consumer for the construction or sale of a home shall be deemed to include warranties enforceable by the housing consumer against the home builder in any court, that—

(b) the home builder shall—

(i) subject to the limitations and exclusions that may be prescribed by the Minister, at the cost of the home builder and upon demand by the housing & consumer, rectify major structural defects in the home caused by the non-compliance with the NHBRC Technical Requirements and occurring within a period which shall be set out in the agreement and which shall not be less than five years as from the occupation date, and notified to the home builder by the housing consumer within that period;”

[13] The respondent relied on the case of Links v Member of Executive Council, Department of health, Northern Cape 2016 (4) SA 414 (CC) that if there are no reasonable grounds to believe that there is a fault to cause the plaintiff to seek advice, there can be no knowledge of the facts from which the debt arises. This implies that the claimant should acquire the complete cause of action before instituting any action. The respondent submitted herein that the complete cause of action was acquired when the appellant refused to repair the defects.

[14] Section 11(d) of the Prescription Act 68 of 1969 provides that :

“11. The periods of prescription of debts shall be the following:

(d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.”

[15] Section 12 of the Prescription Act deals with the commencement of the period of prescription as follows:

“12. (1) Subject to the provisions of subsections (2) and (3), prescription shall commence to run as soon as the debt is due.

(2) If the debtor wilfully prevents the creditor from coming to know of the existence of the debt, prescription shall not commence to run until the creditor becomes aware of the existence of the debt.

(3) A debt which does not arise from contract shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.”

[16] The Constitutional Court in Links supra in relation to the provisions of section 12 of the Prescription Act noted that:

“the provisions of section 12 seek to strike a fair balance between, on the other hand, the need for a cut-off point beyond which a person who has a claim to pursue against another may not do so after the lapse of a certain period of time if he or she has failed to act diligently and on the other the need to ensure fairness in those cases in which a rigid application of prescription legislation would result in injustice. As already stated, in interpreting section 12 (3) the injunction in section 39(2) of the Constitution must be borne in mind. In this matter focus is on the right entrenched in section 34 of the Constitution.”

[17] The argument by the respondent is that the debt only became due when the appellant refused to repair the defects. The Supreme Court of Appeal dealt with the meaning of debt due in Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) at par 15 and 16 as follows:

“15. I am of the view that the High Court erred in this finding. For the purposes of the Act, the term ‘debt due’ means a debt, including a delictual debt, which is owing and payable. A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim.

16. In a delictual claim, the requirements of fault and unlawfulness do not constitute factual ingredients of the cause of action, but are legal conclusions to be drawn from the facts:

‘A cause of action means the combination of facts that are material for the plaintiff to prove in order to succeed with his action. Such facts must enable a court to arrive at certain legal conclusions regarding unlawfulness and fault, the constituent elements of a delictual cause of action being a combination of factual and legal conclusions, namely a causative act, harm, unlawfulness and culpability or fault.”

[18] In Mtokonya v Minister of Police [2017] ZACC 13; 2017 (11) BCLR 1443 (CC); 2018 (5) SA 22 (CC) it was stated that:

“Section 12(3) does not require the creditor to have knowledge of any right to sue the debtor nor does it require him or her to have knowledge of legal conclusions that may be drawn from “the facts from which the debt arises”. Case law is to the effect that the facts from which the debt arises are the facts which a creditor would need to prove in order to establish the liability of the debtor.”

[19] In emphasising the time that prescription begins to run the Supreme Court of Appeal in Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA); 2007 (1) SA 111 (SCA) stated as follows:

“This Court has in a series of decisions emphasised that time begins to run against the creditor when it has the minimum facts that are necessary to institute action. The running of prescription is not postponed until the creditor becomes aware of the full extent of its legal rights.”

[20] In this matter, bearing in mind what is stated in the cases above, there was the issue is whether a cause of action in December 2017 for the respondent to pursue a claim against the appellant. As at that time, in December 2017, it is common cause that there were major structural defects, and the respondent was aware thereof. There was a breach of the agreement between the parties and a cause of action existed for the respondent to act against the appellant. The respondent had the minimum facts required to institute a claim against the appellant.

[21] During argument the parties were requested to consider the provisions of section 16 of the Prescription Act, whether it is applicable in this matter.

[22] Section 16 of the Prescription Act provides that:

“16.(1) The provisions of this Chapter shall, save in so far as they are inconsistent with the provisions of any Act of Parliament which prescribes a specified period within which a claim is to be made or an action is to be instituted in respect of a debt or imposes conditions on the institution of an action for the recovery of a debt, apply to any debt arising after the commencement of this Act,

(2) The provisions of any law which immediately before the commencement of this Act applied to the prescription of a debt which arose before such commencement, shall continue to apply to the prescription of such a debt in all respects as if this Act had not come into operation.”

[23] The respondent contended that the appellant was in breach of the statutory warranty contained in section 13(2)(b)(i) of the Housing Consumer Protection Measures Act 95 of 1998.

[24] The issue is whether the warranty referred to above is included as an act of Parliament as intended in section 16 of the Prescription Act. Section 3 of Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 is an example of legislation that prescribes a specific period within which a claim or an action is to be made in respect of a debt. The section provides that:

“Notice of intended legal proceedings to be given to organ of state

3. (1) No legal proceedings for the recovery of a debt may be instituted against an 40 organ of state unless-

(a) the creditor has given the organ of state in question notice in writing of his or

(b) the organ of state in question has consented in writing to the institution of that her or its intention to institute the legal proceedings in question; or legal proceedings-

(i) without such notice; or

(ii) upon receipt of a notice which does not comply with all the requirements set out in subsection (2).

(2) A notice must-

(a) within six months from the date on which the debt became due, be served on the organ of state in accordance with section 4(1); and

(b) briefly set out-

(i) the facts giving rise to the debt; and

(ii) such particulars of such debt as are within the knowledge of the creditor.

(3) For purposes of subsection (2) (a)-

(a) a debt may not be regarded as being due until the creditor has knowledge of the identity of the organ of state and of the facts giving rise to the debt, but a creditor must be regarded as having acquired such knowledge as soon as he or she or it could have acquired it by exercising reasonable care, unless the organ of state wilfully prevented him or her or it from acquiring such knowledge; and

(b) a debt referred to in section 2(2)(a), must be regarded as having become due on the fixed date.

(4) (a) If an organ of state relies on a creditor’s failure to serve a notice in terms of subsection (2)(a), the creditor may apply to a court having jurisdiction for condonation of such failure.

(b) The court may grant an application referred to in paragraph (a) if it is satisfied that-

(i) the debt has not been extinguished by prescription;

(ii) good cause exists for the failure by the creditor; and

(iii) the organ of state was not unreasonably prejudiced by the failure.

(c) If an application is granted in terms of paragraph (b), the court may grant leave to institute the legal proceedings in question, on such conditions regarding notice to the organ of state as the court may deem appropriate.”

[25] Section 3 clearly provides conditions before there can be institution of legal proceedings and it is an act of Parliament as contemplated in section 16 of the Prescription Act. The warranty in section 13 of the Housing Consumer Protection Act on the other hand makes no reference to any conditions or period before instituting action against the debtor. What the warranty refers to is that the home builder should rectify major structural defects within the period of five years from the date of occupation. As such, reliance on the warranty by the respondent is misplaced because nothing prevented the institution of action against the appellant as of December 2017. The warranty referred to in section 13 of the Housing Consumer Protection Act did not interrupt the running of prescription either.

[26] The respondent’s claim became prescribed in December 2020 against the appellant in terms of section 12 of the Prescription Act and the prescription was not interrupted. The special plea by the appellant of prescription should have been upheld. It is trite that costs should follow the result and I see no reason why this Court should find otherwise.

Order

[27] Consequently, the following order is made:

1. The appeal is upheld.

2. The order of the court a quo is set aside and replaced with the following order:

“The defendant’s special plea of prescription is upheld with costs;”

3. The respondent is ordered to pay the costs of the appeal inclusive of the costs of the application for leave to appeal which costs shall include costs of counsel on scale C.

J T DJAJE

DEPUTY JUDGE PRESIDENT OF THE HIGH COURT

NORTH WEST DIVISION, MAHIKENG

I agree

R D HENDRICKS

JUDGE PRESIDENT OF THE HIGH COURT

NORTH WEST DIVISION, MAHIKENG

I agree

A H PETERSEN

JUDGE OF THE HIGH COURT

NORTH WEST DIVISION, MAHIKENG

APPEARANCES
DATE OF HEARING	: 10 MAY 2024
DATE OF JUDGMENT	: 8 AUGUST 2024
COUNSEL FOR THE APPELLANT	: ADV VAN DER BERG SC
COUNSEL FOR THE RESPONDENT	: MR N J ESTERHUYSE

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