Beware Prescription: The Tale Of The “Watertight Case” That Died A Sad And Sudden Death

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prescription“Sad is the day when a party with a watertight case comes to court and he is stopped in his tracks by a sudden death due to a fatal blow from a watertight defence of prescription. The present matter is a classic case of this nature” (extract from judgment below)

Here’s another warning from our courts about the dangers of procrastination when it comes to matters of law.

An employee’s pension fund is unlawfully raided

  • A post office branch manager’s failure to comply with his employer’s “secure mail antifraud system policy” resulted in a posted credit card being given to the wrong person, who promptly took advantage by fraudulently using the card.  The post office suffered loss when it was forced to refund the bank.
  • Having dismissed the employee for misconduct after a disciplinary hearing (an action in the Labour Court to reverse this dismissal is still pending), the employer sought to recover its losses by deducting R159k from the employee’s pension fund.
  • Whilst employers may in certain stipulated circumstances make deductions from an employee’s pension fund, the Court held that on the facts of this case the employer had acted unlawfully.
  • Nevertheless the Court dismissed the employee’s claim, leaving him with only R55k in his pension fund and a liability for his own legal costs.  His only mistake – he issued summons after expiry of the 3 year prescription period.

A prescription for failure

The general rule in our law is that, with a few specific exceptions, any debt becomes unclaimable (“prescribed”) 3 years after it becomes due.

However that 3 year period only starts running when you actually become aware of –

  1. The debt,
  2. The identity of the debtor, and
  3. The “facts from which the debt arises”

Note that you have to act reasonably here – you are deemed to have had the required knowledge if you “could have acquired it by exercising reasonable care”.

Critically, the Court pointed out that “knowledge of the legal conclusions is not required before prescription begins to run”, so it was no help for the employee in this case to claim that he didn’t understand the “legal consequences” of his delay.

In short, it’s up to you to become aware of any possible claim and to seek legal advice on it without delay.