Simply put, prescription is the law surrounding the life of a debt, how long one can legally collect on a debt and is subject to a number of rules.
The Constitutional Court in Road Accident and Another v Mdeyide 2011 (2) SA 26 (CC) described the reason for prescription:
“ In the interests of social certainty and the quality of adjudication, it is important, though, that legal disputes be finalised timeously. The realities of time and human fallibility require that disputes be brought before a court as soon as reasonably possible. Claims thus lapse, or prescribe, after a certain period of time. If a claim is not instituted within a fixed time, a litigant may be barred from having a dispute decided by a court. This has been recognised in our legal system – and others – for centuries.”
The primary law governing prescription in South Africa is the Prescription Act No. 68 of 1969.
Some of the important principles of prescription from this Act and the case law include:
- A debt is extinguished by prescription after the lapse of the prescriptive period applicable to that specific type of debt
- Once prescribed, the debt cannot be revived, not even by an acknowledgement of liability, unless the acknowledgement amounts to a new undertaking.
- Prescription can be interrupted by various events, which means that the prescription period begins to restart from the time of these various events
- Acknowledgement of a debt, whether by part payment or even any informal means of acknowledging the debt, will interrupt prescription (Section 14)
- Service of a summons interrupts the running of prescription (Section 15(1))
- The defence of prescription has to be raised by the debtor, and a court on its own cannot raise it (Section 17(1))
- Payment of a prescribed debt is valid payment and can not be reclaimed
One of the areas of confusion is how long public school fee debts take to prescribe? The standard time is that set out in Section 11(d) is 3 years.
The full Section 11 of the Prescription Act states:
“The periods of prescription of debts shall be the following:
(a) thirty years in respect of—
(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
iv) any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances;
(b) fifteen years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of paragraph (a);
c) six years in respect of a debt arising from a bill of exchange or other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph a) or (b);
(d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.”
So the next important question is, can public school fees be fitted into Section 11(a)(iii), thereby extending its life from the usual 3 years to 30 years?
Unfortunately, we believe not, as although public school fees are a statutory obligation for the parents in terms of the SA Schools Act, it is not a tax. The courts in South Africa have defined tax very narrowly, so narrowly that in Eskom v Bonjanala Platinum District Municipality and Another (560/2003) [2004] ZASCA 118; [2005] 3 All SA 108 (SCA) (30 November 2004) the Supreme Court of Appeal held that municipal service levies were not a tax as defined in terms of Section 11(a)(iii). We are not alone in this interpretation and others that have interpreted the prescription period for public school fees to be 3 years, include Prof. Carnelley in her 2011 paper, Liability for the payment of public school fees.
Unfortunately, the Department of Trade and Industry attempted to regulate prescription by introducing amendments to the National Credit Act in 2015, instead of requesting the Department of Justice and Constitutional Development to amend the Prescription Act.
The intention of this amendment was to prohibit the sale of prescribed debts, as well as making the continuing collection of prescribed debts illegal. But by inserting the amendments in the National Credit Act and not the Prescription Act it that:
- It can only govern credit agreements and public-school fees are not credit agreements; and
- there are many conflicts between this NCA amendment and the current Prescription Act.
As a result of the issues caused by the NCA amendment and other motivations, a new Prescription Bill was published in early 2018 for comment and the SA Law Reform Commission is consulting widely on the proposed amendments but at this stage, it is not in final form, let alone operative.
The bottom line is that public school fees prescribe after 3 years from when they are due unless this prescription is interrupted and not acting quick enough to enforce payment can result in lost income if a school does not act timeously on their outstanding debts.