Lutzkie NO and Another v Zenith Concessions Ltd (386/2002) [2003] ZASCA 97; 2003 (6) SA 643 (SCA) (26 September 2003)

Lutzkie NO and Another v Zenith Concessions Ltd (386/2002) [2003] ZASCA 97; 2003 (6) SA 643 (SCA) (26 September 2003)

The Supreme Court of Appeal held that the debt arising from the cheque is governed by section 11(c) of the Prescription Act, which prescribes a six-year period for debts arising from bills of exchange. The underlying contractual debt prescribed after three years, but the debt on the cheque, being a separate obligation, had not prescribed when the summons was served. The legislature intended for debts arising from cheques to be subject to a different prescription period than the underlying debt. Therefore, the defence of prescription raised by the respondent should have failed, and the High Court's order was incorrect.

Citation
[2003] ZASCA 97
Parties
Appellant: F W A Lutzkie NO; Appellant: S C Lutzkie NO; Respondent: Zenith Concessions Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
26 September 2003
Case Number
386/2002
Procedural Posture
Civil Appeal / Appeal Against High Court Order Dismissing Claim on Grounds of Prescription
Outcome
Appeal upheld; High Court order set aside; defence of prescription dismissed; matter remitted for determination of remaining issues.
Judges
Mpati, Nugent, Van Heerden
Legal Topics
Prescription Act, Cheque Liability, Underlying Debt, Bill of Exchange, Provisional Sentence
Civil Procedure Commercial and Corporate Prescription Act Cheque Liability Underlying Debt Bill of Exchange Provisional Sentence

Case Brief

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Parties

F W A Lutzkie NO

Appellant

S C Lutzkie NO

Appellant

Zenith Concessions Limited

Respondent

Procedural Posture

Civil Appeal / Appeal Against High Court Order Dismissing Claim on Grounds of Prescription

Legal Issues

  1. 1 Whether the debt arising from a cheque prescribes simultaneously with the underlying debt.
  2. 2 Whether section 11(c) of the Prescription Act applies to a debt arising from a cheque independently of the underlying contract.

Ratio Decidendi

The Supreme Court of Appeal held that the debt arising from the cheque is governed by section 11(c) of the Prescription Act, which prescribes a six-year period for debts arising from bills of exchange. The underlying contractual debt prescribed after three years, but the debt on the cheque, being a separate obligation, had not prescribed when the summons was served. The legislature intended for debts arising from cheques to be subject to a different prescription period than the underlying debt. Therefore, the defence of prescription raised by the respondent should have failed, and the High Court's order was incorrect.

Court Disposition

Appeal upheld; High Court order set aside; defence of prescription dismissed; matter remitted for determination of remaining issues.

Orders

  • The appeal is upheld with costs, including costs for two counsel.
  • The order of the court a quo is set aside and substituted with: 'The defence of prescription is dismissed with costs.'