VIP Consulting Engineers (Pty) Ltd v Ekurhuleni Metropolitan Municipality (A5030/2015) [2016] ZAGPJHC 265 (4 August 2016)

VIP Consulting Engineers (Pty) Ltd v Ekurhuleni Metropolitan Municipality (A5030/2015) [2016] ZAGPJHC 265 (4 August 2016)

The court held that knowledge of a breach of contract does not automatically mean that a debt is due for prescription purposes. The correspondence in August 2010 showed only an awareness of a risk of loss, not an actual loss. The respondent could not have sued for damages at that time because no loss had yet been suffered. The debt only became due when the respondent incurred actual loss, which occurred after subsequent events, including the failure of Niloti to remedy defects and the termination of contracts. The court found that the respondent did not have knowledge of all facts giving rise to the debt in August 2010, and therefore, the claim had not prescribed when summons was issued.

Citation
[2016] ZAGPJHC 265
Parties
Appellant: VIP Consulting Engineers (Pty) Ltd; Respondent: Ekurhuleni Metropolitan Municipality
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
4 August 2016
Case Number
A5030/2015
Procedural Posture
Civil Appeal / Appeal From Special Plea of Prescription Decided Under Rule 33(4)
Outcome
Appeal dismissed with costs.
Judges
Sutherland, Van Oosten, Makume
Legal Topics
Prescription Act, Special Plea of Prescription, Breach of Contract, Damages, Construction Contracts
Civil Procedure Commercial and Corporate Prescription Act Special Plea of Prescription Breach of Contract Damages Construction Contracts

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Parties

VIP Consulting Engineers (Pty) Ltd

Appellant

Ekurhuleni Metropolitan Municipality

Respondent

Procedural Posture

Civil Appeal / Appeal From Special Plea of Prescription Decided Under Rule 33(4)

Legal Issues

  1. 1 Did the respondent have knowledge of all facts giving rise to the debt as contemplated by section 12(3) of the Prescription Act on 23 August 2010?
  2. 2 Was the debt due at the time of the correspondence between the parties in August 2010, or only later when actual loss was incurred?
  3. 3 Does knowledge of breach equate to knowledge of a debt for prescription purposes?

Ratio Decidendi

The court held that knowledge of a breach of contract does not automatically mean that a debt is due for prescription purposes. The correspondence in August 2010 showed only an awareness of a risk of loss, not an actual loss. The respondent could not have sued for damages at that time because no loss had yet been suffered. The debt only became due when the respondent incurred actual loss, which occurred after subsequent events, including the failure of Niloti to remedy defects and the termination of contracts. The court found that the respondent did not have knowledge of all facts giving rise to the debt in August 2010, and therefore, the claim had not prescribed when summons was issued.

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.