Agreements were signed between 31 March and 1 May 2004 for the sale of erven in a newly established township before the township was proclaimed but with municipal permission. The purchasers claimed that the township developers had failed to incorporate certain amenities in the township. Summons was only issued in August 2008. The defendant claimed that the claims had prescribed three years after the sale agreements were concluded.
According to the Prescription Act 1969, prescription commences to run as soon as the “debt is due.” There is a difference between a debt being due and a debt arising (coming into existence). For instance, a debt may arise when a debtor undertakes to pay at a certain date but the debt will only be due when the date arrives.
The court ruled that the purchase agreements became binding on their conclusion. However, the seller’s principal obligation was to effect transfer of the erven once the township had been proclaimed and the erven registered in the Deeds Registry. Therefore the seller’s obligations only arose on that date which was within the three years before the summons was issued and the claim had consequently not prescribed.
The matter is Kosmos v Leopont.