A lender relied on a 30 year extinctive prescription period applicable to ‘any debts secured by a mortgage bond’ under section 11(a)(i) of the Prescription Action 1969 but failed because the mortgage bond was not valid at the time summons was issued.
The lender sued the principal debtor and a number of sureties based on a loan secured by a notarial covering mortgage bond over a notarial agreement of lease concluded with a third party.
During January 2002 the third party cancelled the notarial lease agreement. On 10 September 2002 the lender demanded payment of the debt arising from the breach of the loan agreement because the loan was no longer secured.
Eight years later the lender sued for payment of the balance of the amount owing. The lender contended that section 11(a)(i) should be interpreted to mean ‘a debt that was at any time secured by a mortgage bond’.
The court found this an untenable argument. The language of section 11(a)(i) is plain and the additional words cannot be imported. The claim failed because it had prescribed after three years from the date it became due when payment was demanded.
[The case is Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd]