In accordance with Section 15(1) of the Prescription Act 68 of 1969 (the Act), the running of prescription shall be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt. However, important questions are what the legal position would be, should a plaintiff be incorrectly cited, and whether the court would view the misdescription as a misnomer which would interrupt prescription, or as an introduction of a new party to the action, which would not.Amending pleadings generally

In the normal course of events, a party which has realised the existence of a misdescription would bring an application to amend its pleadings. As held in the case of Four Tower Investments (Pty) Ltd v André's Motors 2005 (3) SA 39 (N), an application for amendment would always be allowed, unless it would cause prejudice to the other party that could not be cured by a costs order or some other suitable order. As pointed out in the case of Devonia Shipping Ltd v MV Luis (Yeoman shipping Co Ltd Intervening) 1994 (2) SA 363 (C) and subsequently applied in Tecmed (Pty) Ltd v Nissho Iwai Corporation (705/08) [2009] ZASCA 143, the risk of prejudice would usually be less in the case where the correct party had been incorrectly cited and the amendment was sought to correct the misnomer, than in the case where it was sought to introduce a new party. Thus, as confirmed in the case of Imperial Bank Ltd v Hendrick Barnard NO (349/12) [2013] ZASCA 42, if a late amendment as sought which had the effect of introducing a new party, this would inevitably cause prejudice to the other party to the action, and would defeat a good defence of prescription.

Case law

In two recent Supreme Court of Appeal (SCA) decisions, Imperial Bank Limited v Hendrick Barnard NO and Solenta Aviation (Pty) Ltd v Aviation @ Work (Pty) Ltd (754/2012) [2013] ZASCA, the SCA interpreted the misdescription of a plaintiff and the effect of this on prescription.

Imperial Bank Ltd v Hendrick Barnard NO

Hendrick Barnard NO and Others (Liquidators) instituted action against Imperial Bank Ltd (Imperial Bank), in their representative capacities as duly appointed liquidators in the estate of Pro Med Construction CC (in liquidation) (Pro Med), claiming payment in terms of a purchase and sale agreement. In its plea Imperial Bank denied that the Liquidators were 'properly cited in compliance with the provisions of Section 386(4) of the Companies Act 61 of 1973' (the Companies Act). This was because the Liquidators were cited in their own names and Section 386(4) of the Companies Act requires liquidators to bring an action 'in the name and on behalf of the company'. Thereafter, the Liquidators brought an application to amend their particulars of claim in order to comply with Section 386(4) of the Companies Act, resulting in them bringing the action 'in the name and on behalf' of Pro Med. Imperial Bank objected to the amendment on the grounds that it was served more than three years after the debt had become due, which meant that Pro Med's claim had prescribed and that they would be prejudiced as Pro Med would be introduced as a new party in place of the Liquidators. The trial court, however, granted the amendment, to which Imperial Bank sought leave to appeal. On appeal to the SCA, Mpati P relied on the principle laid down in Neon and Cold Cathode Illuminations (Pty) Ltd v Ephron 1978 (1) SA 463 (A), and held that the fundamental question that a court should consider when faced with an opposed application for an amendment to a summons in which a party is cited incorrectly, is whether the service of the summons in the previous action interrupted the running of prescription of the creditors' rights against the debtor.

The right sought to be enforced by means of the amendment should be the same or substantially the same right as originally sought to be enforced. The SCA held that the amendment sought and granted by the trial court did not have the effect of introducing a new party. It merely corrected a misnomer in the particulars of claim and, as such, no new cause of action was introduced by the amendment. Ultimately, the claim that was sought to be enforced by the Liquidators in the original summons and particulars of claim remained the same when the amendment was effected, and thus prescription was, indeed, interrupted in terms of Section 15(1) of the Act. As a result the appeal was dismissed.

Solenta Aviation (Pty) Ltd v Aviation @ Work Ltd

This case was an appeal against a judgment of the trial court, which upheld a special plea of prescription raised by Aviation @ Work Ltd (Aviation @ Work) against a claim for damages by Solenta Aviation (Pty) Ltd (Solenta Aviation). Solenta Aviation issued summons in the name of Solenta Aviation Workshops (Pty) Ltd (Solenta Aviation Workshops) against Aviation @ Work, claiming damages resulting from breach of contract. The contract which was relied upon was annexed to the particulars of claim. However, the description of the party to the contract was Solenta Aviation and not Solenta Aviation Workshops. Solenta Aviation brought an application to amend their pleadings, where notice was given that their description in the summons and particulars of claim was incorrect. They did so by deleting the word 'Workshops'. Aviation @ Work objected to the amendment on the grounds that the amendment introduced a new party to the action and any claim that Solenta Aviation had against them had prescribed.

The trial court in the interlocutory proceedings granted the amendment and held that the misdescription of Solenta Aviation amounted to a misnomer and did not introduce a new party to the action. It was further held that the true identity of Solenta Aviation was clear from the particulars of claim and the annexed contact and thus the service of the summons interrupted prescription in terms of Section 15(1) of the Act. After the amendment was granted, Aviation @ Work amended its plea by raising a special plea of prescription to Solenta Aviation's claim. The trial court upheld the special plea of prescription and followed the view of the SCA in Blaauwberg Meat Wholesalers CC v Anglo Dutch Meats (Export) Ltd 2004 (3) SA 160 (SCA), which stated that the test applied was whether, objectively, the summons communicated to the other party the intention of the plaintiff. The trial court held that this case failed to meet the requirements of this test and that the summons thus did not interrupt prescription as required in terms of Section 15(1) of the Act.

On appeal to the SCA, Meyer AJA held that the question that needed to be decided was whether the summons served on Aviation @ Work, and which was instituted in the name of Solenta Aviation Workshops, was a claim by the creditor of the debt, Solenta Aviation, resulting in compliance with Section 15(1) of the Act. Meyer AJA held that the test applicable in determining whether there was compliance with Section 15(1), as set out by the SCA in Blaauwberg Meat Wholesalers CC v Anglo Dutch Meats (Export), was an objective one, in that the legislature intended certainty about when and how prescription would be interrupted. It chose an objective criterion, which did not allow for subjective knowledge which was not reasonably evident from the process itself.

Meyer AJA was of the view that the argument put forward by Solenta Aviation – that by looking at the contents of the contract, Aviation @ Work should have known who the true creditor was – was not decisive to the enquiry needed to determine whether payment of the debt was claimed by the creditor. In applying the objective test, the SCA held that the claim made in the summons, when plainly read, was not the claim of the true creditor and that the service of the summons on Aviation @ Work did not interrupt prescription. The special plea of prescription was upheld. This case raises the question whether the SCA would have had a different view had this claim been delictual in nature, in that the name of the creditor would not have been apparent from a contract.

Conclusion

In the abovementioned cases the SCA was faced with the same question, but with different facts. In the Imperial Bank case the SCA held that the misdescription of the Liquidators was a mere misnomer, that there was no introduction of a new party to the action, and that prescription was thus interrupted. In the Solenta Aviation case the SCA held that an objective test needed to be applied in circumstances where a plaintiff has been incorrectly cited, that the summons introduced a new party to the action, and that prescription was therefore not interrupted.

These decisions are a warning to parties to actions that prescription is not easy to determine, that it is dependent on the facts of each case, and that when instituting summons, plaintiff's need to be mindful when citing themselves.

This article was authored by by Lisa Swaine (Partner) and Jennifer Brown (Candidate Attorney)