In terms of the Prescription Act 68 of 1969 most debts prescribe within three years. It seems obvious that once a matter has prescribed, that is where it ends. The problem starts where the Debtor has no idea the debt has prescribed and continues to make payment or signs an Acknowledgment of Debt and thus effectively reviving the debt.
Section 126B(1)(b) of the National Credit Act 34 of 2005 (hereinafter referred to as the “NCA”)”) seeks to prevent this and states, inter alia, that no person may continue to collect or re-activate a debt under a credit agreement to which the NCA applies:
(i) which has been extinguished by the Prescription Act, No 68 of 1969 (Prescription Act); and
(ii) where the defence of prescription is raised, or would have reasonably been raised, had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.
Kaknis v Absa Bank Limited
In the case of Kaknis v Absa Bank Limited and Another , Kaknis, concluded various agreements with ABSA. However, over time, Kaknis fell into financial difficulties and was not able to make payment in terms of the agreements. On 8 July 2014, the claim against Kaknis prescribed. Nevertheless, on the 3rd of October 2014, Kaknis concluded an Acknowledgement of Debt in favour of ABSA, which in essence purported to revive the debt in terms of the Agreements. In the court a quo, Kaknis averred that the claim prescribed and that Section126B(1)(b) of the NCA, prevented ABSA from collecting the debt.
Considering the fact that Section 126B(1)(b) of the NCA only came into effect on 13 March 2015 and that the debt was revived on 3 October 2014, the High Court held that the Section had no retrospective operation and granted summary judgment in favour of ABSA.