South Africa: Constructive Knowledge And The "Reasonable Care" Required In Advancing A Defence Of Prescription

Last Updated: 21 May 2012
Article by Elsa Jordaan Malan

Harold Gunase v Ramesh Anirudh (826/10) [2011] ZASCA 231 (30 November 2011)

The facts which gave rise to the claim may briefly be summarised as follows:

The plaintiff, Ramesh Anirudh (Anirudh) was involved in a motor vehicle accident in July 1992 and, in October 1993, instructed his attorney, the defendant, Harold Gunase (Gunase) to institute a third party claim on his behalf in terms of the Multilateral Motor Vehicle Accident Fund Act, 93 of 1989.

He apparently visited Gunase on a monthly basis to follow up on his claim, but at some stage found that Gunase's offices had been closed and that he had moved to other premises. The offices at the new premises were also found to be closed. In 2000 Gunase's practice was closed down and Anirudh became aware of that fact in 2001.

During the period 2000 to 2004 Anirudh made no attempt to go to Gunase's offices or contact any other person (or attorney) for assistance. In April 2005 he consulted with a new attorney who established in January 2006 that no claim had been lodged with the Road Accident Fund. Anirudh's new attorney eventually instituted action against Gunase's professional indemnity insurers in October 2008.

The trial court found that Anirudh's claim had not prescribed as the earliest he could have been in a position "... where he had every fact necessary for him to prove and support him ..." was in January 2012.

The court did not criticise the trial judge's statement relating to Anirudh requiring knowledge of "every fact necessary" to allow him to institute his claim but in our respectful submission this statement is incorrect. Once a creditor knows, or could reasonably have known, the minimum facts from which the debt arises, prescription begins to run. These facts do not include the conclusions (legal or otherwise), to be drawn from those facts1.

The SCA considered the wording of Section 12(3) of the Prescription Act, 68 of 1969 (the Act) which stipulates that: "A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and the facts from which the debt arises, that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care" (our emphasis).

The impact of Section 12(1) read in conjunction with Section 12(3) is that prescription starts to run as soon as the creditor has, or ought to have, knowledge of the identity of the debtor and the facts from which the debt arises.

With reference to prior case law2 the SCA noted that a creditor cannot "by supine inaction arbitrarily and at will" postpone the commencement of prescription. It has been said that a creditor shall be deemed to have the acquired knowledge "if he could have acquired it by exercising reasonable care", which requirement requires diligence not only in the ascertaining of the facts underlying the debt, but also in relation to the evaluation and significance of those facts.

The creditor is therefore deemed to have the requisite knowledge if a reasonable person in his or her position would have deduced the identity of the debtor and the facts from which the debt arises. The test to be applied is an objective rather than a subjective test and the creditor's conduct should be tested by reference to the steps which a reasonable person in his or her position would have taken to acquire knowledge of the facts.

In this matter Anirudh's conduct was criticised by the SCA and the court held that in applying an objective standard, Anirudh failed to exercise the reasonable care required by Section 12(3) of the Prescription Act. He could have gained knowledge of the facts from which his claim arose during 2001, if he had exercised reasonable care.

Therefore, the SCA held that the evidence revealed that Anirudh's failure to institute action timeously was caused by his inaction and not inability to obtain knowledge of the relevant facts timeously. According to the SCA the trial judge did fail to consider the import of Section 12(3) of the Act and upheld Gunase's special plea of prescription.


1 Minister of Finance & others v Gore NO 2007 (1) SA (SCA) par 17 referring with approval to Van Staden v Fourie 1989 (3) SA 200 (A) and Nedcor Bank Bpk v Regering van die Republiek van Suid-Afrika 2001 (1) SA 987 (SCA)

2 Inter alia, Burley Appliances Ltd v Grobbelaar NO & others (1) SA 602 (C); Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd & another [2005] 4 All SA 517 (C); Uitenhage Municipality v Molloy 1998 (2) SA 735 (SCA); Drennan Maud & Partners v Pennington Town Board 1998 (3) SA 200 (SCA); Leketi v Tladi NO & others [2010] 3 All SA 519 (SCA)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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