In the recent decision in Stemmet v Mokhethi, the South African Supreme Court of Appeal (“SCA”) considered when the statute of limitations starts to run in cases involving hidden or latent defects in a residential property. The matter concerned the prescription of a claim which the respondents, Mr and Mrs Mokhethi instituted against the appellants, Mr and Mrs Stemmet. The claim arose from latent undisclosed defects which the respondents discovered after purchasing the appellants' home. The primary legal concern was by when the respondents had acquired sufficient information about the defects to initiate their legal claim and when the three-year period specified in the Prescription Act, 1969 started to run.
The facts of this matter are briefly as follows:
- The property was transferred to the respondents in mid-2013, when they took occupation of the property;
- Months after taking occupation, but prior to 24 June 2014, the respondents noticed defects in the property, including structural cracks in the walls and windows and cornices detaching from the walls. The cracks had been patched up, presumably by the appellants to conceal their existence from the respondents;
- After noticing the defects, on 24 June 2014, the respondents lodged a claim with Absa Bank, which financed the bond and insured the property;
- Absa Bank rejected the respondents' claim against their insurance policy on 12 August 2014 because the defects were old and gradual and had been patched up;
- More than three years later, the respondents issued a summons against the appellants for damages in the magistrate's court. The summons was served on the appellants on 27 July 2017;
- The respondents alleged in their summons that the appellants were aware of the defects and had fraudulently concealed the defects and/or fraudulently did not disclose the defects to the respondents, which induced them to purchase the property; and
- In their defence, the appellants raised prescription and asserted that the respondents were aware of the defects by June 2014, at which point prescription had already commenced to run, and hence by the time the summons was served (27 July 2017), their claim had already prescribed.
The magistrate concluded that the claim had not prescribed and went on to find for the respondents on the merits, i.e., that they had fraudulently been induced by the appellants to purchase the property by the non-disclosure/concealment of the defects. The appellants appealed against the dismissal of the special plea of prescription but did not appeal against the magistrate's finding against them on the merits.
On appeal, the Bloemfontein High Court confirmed the magistrate's decision.
The question before the SCA was when the respondents became aware of the existence of the defects and the damages arising from those defects to satisfy section 12(2) of the Prescription Act, 1969. The SCA also considered whether, at that stage, as required in section 12(3) of the Prescription Act, the respondents knew the identity of the person responsible for their damage.
The SCA held that as early as June 2014, the respondents knew that the cracks in the walls had been patched up, which would have led to a reasonable belief that the appellants had fraudulently misrepresented the facts to them. This apprehension was sufficient to complete their cause of action against the appellants. The SCA referred to the decision of the Constitutional Court in Mtokonyna v Minister of Police that prescription begins to run when the creditor has knowledge of the facts from which the debt arises – whether or not the creditor appreciates that this means that they should institute action to interrupt prescription.
This does not mean, as the SCA held in Truter v Deysel, that the creditor has all the facts needed to prove their case such as, for example, expert evidence to support the claim.
The respondents relied on the fact that expert evidence in support of their suspicion that the appellants had concealed the cracks was only obtained on 30 September 2017. The SCA held that by June 2014, the respondents had sufficient knowledge to reasonably apprehend that they had a claim against the appellants, even before the expert evidence was made available to them.
The SCA repeated the warning it sounded in MacLeod v Kweyiya:
“A creditor cannot simply sit back and ‘by supine inaction arbitrarily and at will postpone the commencement of prescription'. What is required is merely the knowledge of the minimum facts that are necessary to institute action and not all the evidence that would ensure the ability of the creditor to prove its case comfortably”.
Hence, the SCA upheld the appeal, finding that the respondent's claim against the appellants had lapsed three years after 24 June 2014. Consequently, when the summons was served on the appellants on 27 July 2017, the claim had already expired.
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