Prescription is a legal principle in terms of which a debtor’s liability to pay an outstanding debt is extinguished after the passing of a prescribed time period. These periods differ, depending on the nature of the debt. Prescription may be pleaded as defence to a claim for payment, provided that the debtor has not, during such prescribed period, in any way acknowledged their debt by either making a payment against such debt or even by acknowledging liability for the debt. In essence, a debtor can be released from a legal obligation by passage of time as a result of the principle of prescription. Debts arising from contracts are extinguished after three years from the date on which they become due and payable.
There are, however, certain instances in which prescription can be delayed or interrupted in terms of the Prescription Act 68 of 1969. Section 13 of the Act deals with delays in the completion of prescription, section 14 concerns the interruption of prescription by acknowledgement of liability and section 15 deals with the judicial interruption of prescription. For the purposes of this article, we shall focus on section 15.
Section 15(1) of the Prescription Act sets out the circumstances in which the running of prescription will be judicially interrupted and states the following:
The running of prescription shall, subject to the provisions of subsection (2), be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt.
The term ‘process’ is not pertinently defined in the Prescription Act although the definition is implied in section 15(6) of this Act. This section states that for the purposes of section 15, the term ‘process’ shall include a petition and inter alia, a notice of motion and any document whereby legal proceedings are commenced. Thus, a service of a summons upon a debtor shall interrupt prescription in terms of the Prescription Act.
The question then arises: what effect will there be on the principle of prescription should a debtor change his address and fail to notify the creditor accordingly? This is an important issue because prescription is interrupted by service of process, but, how important is it that this notice actually comes to the attention of the consumer?
Section 96(1) of the National Credit Act (NCA) requires notices to be delivered at the address provided by the recipient, being the consumer. Furthermore, section 96(2) of the NCA provides that a party to a credit agreement, also being the consumer, should inform the other party (the credit provider) of any change of address by notifying the other party via registered mail or electronic mail of the new address. A failure to notify the credit provider in accordance with section 96(2) of the NCA will result in the notice of change of address not being deemed sufficient for the purposes of the NCA.
In the relatively recent judgment of Robertson v Firstrand Bank t/a Wesbank (2015) ZAECGHC, the consumer failed to notify the credit provider of his change of address. As a result, the court allowed the credit provider to use the address which the consumer had initially chosen in the agreement for the delivery of notices and summons.
As was stated in the blog by T Roos ‘It falls upon the shoulders of the consumer to inform the credit provider, in writing, by hand or electronic mail, of any changes to his or her designated address in respect of receiving notices and legal processes which defer from the credit agreement, to enable the credit provider to change the consumer’s records. Consequently, if a consumer fails to notify a credit provider of his or her change of address as required by section 96(2) the NCA, the credit provider is entitled to use the consumer's domicilium address chosen by the consumer at the conclusion of the contract for the delivery of notices and service of the summons’ http://blog.troos.me/s129-notice-to-the-consumer-and-delivery
Thus, the impact of non-compliance with section 96 of the NCA on the principle of prescription is that the credit provider should not be prevented from instituting legal proceedings against a consumer who fails to inform the credit provider of his or her change of address. He or she should further not be able to raise prescription in these circumstances.