High Court rules on prescription of debtor's claims after death
A legal battle took place at the Pietermaritzburg high court over when debts prescribes, especially after the death of the debtor.
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The issue of when a debtor’s claim prescribes upon the death of that person came under the judicial spotlight in the Pietermaritzburg High Court, as the creditor wanted his money back from the estate of the deceased, but the executor argued that the claim had prescribed.
The applicant, only identified as JP Chetty, wanted amounts paid back to him for loans advanced to his now deceased brother-in-law. He is claiming the money from the deceased’s estate. But Chetty’s sister, who was married to the deceased, forwarded a special plea that the legal right to pursue the claim had lapsed due to the passage of time.
The respondent, Gonasagree Pillay, was married in community of property to the late Mr K Pillay, who died in November 2009. While the deceased was still alive, Chetty had obtained two default judgments against him and the respondent jointly and severally.
Consequently, and as a result of the respondent and her husband being married in community of property, the respondent is jointly liable for the payment of the money obtained by default by the appellant. As these amounts were never paid to Chetty over the years, he lodged a claim with the estate of the deceased.
Pillay, however, is the executrix of her husband's estate, and she forwarded the technical defence of prescription in refusing the estate to pay the money. Chetty subsequently turned to the Chatsworth Magistrate’s Court to get his money back.
That court, however, ruled in favour of Pillay that the judgments earlier obtained against her and her late husband had lapsed.
On appeal, the high court noted that there was no evidence before the lower court as to when the respondent was appointed executrix nor was there evidence in respect of when the appellant's claim was rejected by the respondent.
Without knowledge of when the respondent was appointed as the executrix, it is impossible to establish when prescription commenced to run, the high court said. The court pointed out that it is accepted that prescription of a debt is three years in terms of the Prescription Act.
However, the period of prescription applicable to a judgment debt is 30 years. The three judgments held by Chetty are subject to the 30-year prescription period. But, due to him instituting legal proceedings in respect of the judgments after the rejection of his claim against the estate, that process is considered as a claim against the estate, with a different prescription period applicable, the court said.
It explained that a debt claimed from an estate of a deceased person or where the debtor is deceased and an executor has not yet been appointed, the debt ordinarily prescribes after three years like any other debt.
But the completion of prescription of such debts is delayed by a year from the day an executor is appointed. The running of prescription continues on a debt but is extended only for a year after the date of the appointment of an executor.
The court said with no evidence led before the lower court regarding when the respondent was appointed as the executrix, it is not possible to determine when prescription began to run. It dismissed the special plea of prescription and remitted the matter back to the lower court to decide further on whether the estate must pay Chetty his debt or not.