What to Do When You Receive a Call from a Debt Collector for a Prescribed Debt

Dealing with Prescribed Debt: Your Rights and What to Do

What is the Prescription of Debt?

Prescription of debt refers to the legal timeframe within which a debt can be enforced through legal means. In South Africa, the Prescription Act stipulates that the basic period of prescription is 30 years for a judgment of debt and 3 years for any other debt. After the prescribed period has passed, the debt is considered extinguished, and you cannot be forced to pay it.

Prescribed Debt vs. Debt Written Off:

It's important not to confuse prescribed debt with "debt written off." Credit providers may choose to write off a debt, but this does not eliminate their legal right to collect it. Prescribed debt, on the other hand, is completely extinguished and does not require payment.

Dealing with calls from debt collectors

If you receive a call from a debt collector claiming you owe a debt that has prescribed, it's important to know your rights. Read this article to understand what to do when faced with such a situation and how to protect yourself.

Receiving a phone call from a debt collector can be unsettling, especially when they demand payment for a debt you have no recollection of. In some cases, this could be an attempt by debt collectors to collect on a prescribed debt, using tactics to pressure you into making payments. Understanding your rights and knowing how to respond is crucial. This article will explain what prescription of debt means, how it affects you, and what steps to take if you receive such a call.

Tactics Used by Debt Collectors:

Debt collectors often employ deceptive tactics to collect prescribed debt. One common strategy is to request a small payment, such as R20.00, to "settle" the debt. However, any payment made, regardless of the amount, can restart the prescription period, making you liable for the full debt again. Similarly, any written acknowledgement of the debt also interrupts the prescription period.

What to Do When Contacted by a Debt Collector:

·         Stay calm and don't confirm or acknowledge the debt: If you believe the debt is older than 3 years and you haven't made any payments or signed an acknowledgement in the last 3 years, avoid confirming or acknowledging anything over the phone.

 

·         Refrain from making any payments: Making a payment, no matter how small, can restart the prescription period, reviving the debt and obligating you to pay it in full.

 

·         Seek professional advice: If you're unsure about the status of the debt or how to respond, it's wise to consult with a legal expert or debt advisor before taking any action.

 

Courts' Discretion in Enforcing Contracts: Understanding the Impact on Public Policy

 

Introduction:

The recent case of Ethekwini Municipality v Cooperativa Muratori & Cementisti - CMC di Ravenna Societa Cooperativa [2023] ZASCA 95 (12 June 2023) marks a significant shift in contract law, emphasizing the principle of pacta sunt servanda (contracts must be honoured). In this article, we explore the implications of this case on the courts' discretion to refuse the enforcement of contractual terms based on public policy grounds.

Case Background:

In 2015, the Ethekwini Municipality entered into an R300 million construction contract with a local subsidiary of an Italian construction company. Following a dispute, the parties sought adjudication in August 2019. The adjudicator ruled in favour of the contractor, ordering the municipality to pay the awarded sums along with interest as stipulated in the contract.

The Municipality's Argument:

When the municipality failed to make the payment, the contractor sought a court order to enforce the debt. The municipality argued that the high court had the discretion to deny the order on two grounds: (i) specific performance would be requested, and (ii) enforcing the adjudication would be against public policy due to the contractor's distressed financial position.

The Supreme Court of Appeal's Decision:

The Supreme Court of Appeal (SCA) rejected the municipality's arguments and clarified the legal position. Regarding public policy, the SCA affirmed that it is for the court to determine if enforcing the obligation would contravene public policy. However, in this case, since it involved the payment of a presently due, unconditional debt, there was no room for judicial discretion based on public policy grounds.

Regarding specific performance, the municipality claimed that it should be refused if it caused undue hardship to either party. The SCA disagreed, explaining that payment of a debt is distinct from specific performance, as the latter allows for alternative remedies like damages. In this scenario, where damages were not a viable option, the court upheld the contract and ordered payment.

Closing Thoughts:

By upholding the principle of pacta sunt servanda and rejecting the notion that enforcement depends on judicial discretion, the SCA highlighted the importance of consistency and fairness in enforcing contractual terms. It clarified its position in contrast to the Constitutional Court's ruling in Beadica 231 CC and Others v Trustees of the Oregon Trust and Others [2020] ZACC 13, which allowed for discretion in cases where a contractual term is deemed unjust and contrary to public policy. The SCA's stance sets the stage for potential conflict and future clarification by the Constitutional Court.

Understanding Restraint of Trade Agreements and 'Full and Final' Settlements

 

Introduction:

In a recent case, Wheelwright v CP de Leeuw Johannesburg (Pty) Ltd, the Labour Appeal Court had to determine whether a Restraint of Trade Agreement could be enforced despite a 'Full and Final' Settlement Agreement reached between the parties.

Background:

The parties involved in the case had a dispute over unfair dismissal and severance pay. They reached a settlement agreement at the CCMA, consisting of a standard form and an additional document called Annexure A.

Full and Final Settlement:

The standard form agreement stated that it was a full and final settlement of the dispute and all statutory payments. Annexure A further emphasized that it was a full and final settlement of all claims between the parties.

Restraint of Trade Agreements:

The employee had given restraint undertakings to the employer during their employment. After the settlement agreement, the employee breached these undertakings, and the former employer sought to enforce them.

Interpretation of the Settlement Agreement:

The question before the court was whether the settlement agreement included future breaches of the restraint undertakings. The employee argued that Annexure A indicated an intention to settle all disputes, not just those referred to the CCMA.

Court's Interpretation:

The court emphasized the importance of carefully examining the wording of the agreement. It found that clause 5 in Annexure A extended beyond the CCMA dispute, covering all claims between the parties. Since the former employer was aware of the restraint undertakings, the court concluded that these were also settled.

Lesson Learned:

Parties should be cautious when entering into 'full and final settlement' agreements. It's crucial to clearly specify what is being settled and what rights or causes of action are not intended to be settled. When presented with a standard form agreement, it is important to read and understand its terms.

Conclusion:

The Wheelwright v CP de Leeuw Johannesburg (Pty) Ltd case highlighted the need for caution when entering into settlement agreements. Parties must be clear about what is being settled and what is not. Carefully reading and understanding the terms of any standard form agreement is also crucial.

Understanding Fraudulent Non-disclosure of Defects in Property

 

Introduction:

This article discusses the case of Le Roux v Zietsman and Another that involved the fraudulent non-disclosure of a latent defect in a property. The case examines whether the seller intentionally failed to disclose a leaking roof to the buyers, aiming to induce the sale.

Fraudulent Non-disclosure and Aedilitian Action

Fraudulent non-disclosure of latent defects in a property can lead to a successful claim for damages under the aedilitian action.

The action provides relief for buyers who discover undisclosed defects known to the seller, which influenced their decision to purchase the property.

Requirements for a Claim Based on Fraudulent Misrepresentation

To succeed with a claim based on fraudulent misrepresentation, a buyer must show that:

a) The seller was aware of the defect at the time of the sale.

b) The seller intentionally failed to disclose the defect.

c) The intent was to induce the buyer to conclude the sale.

Latent defects are not visible or discoverable upon ordinary inspection by the buyer.

Case Background

In July 2011, the respondents purchased a guesthouse in Tzaneen, Limpopo, for their business. Shortly after taking ownership, heavy rain revealed extensive roof leakage, causing damage and financial loss. The respondents claimed that the seller knew about the defect but intentionally failed to disclose it. They argued that the non-disclosure was fraudulent and led to financial hardships.

Appellant's Defence and Court Findings

The seller denied fraudulently withholding information and argued that the defect was disclosed.

The court found that the seller had fraudulently misrepresented the roof's condition and intentionally concealed the defect. The non-disclosure played a crucial role in the buyers' decision to purchase the property. The court upheld the high court's decision, dismissing the seller's appeal.

Conclusion:

Fraudulent non-disclosure of defects in a property can result in legal claims for damages. In this case, the seller's intentional failure to disclose a leaking roof constituted fraud.

The court's ruling highlights the importance of honesty and transparency in property transactions.

Understanding Marriages Subject to Accrual: A Guide for Everyone

Marriage is a significant milestone in one's life, and understanding the legal aspects that govern it is crucial. One type of marriage arrangement is known as a marriage subject to accrual. In this article, we will explore the concept of marriages subject to accrual, highlighting its legal implications and how it affects the distribution of assets.

Marriage Out of Community of Property and Profit/Loss:

A marriage subject to the accrual system is a specific type of marriage arrangement governed by the Matrimonial Property Act 88 of 1984. It differs from the traditional community of property and profit/loss arrangements. Under the accrual system, each spouse maintains ownership and control over their individual estates. This means that neither spouse has any rights or claims to the assets owned by the other spouse during the marriage [Reeder v Softline Ltd & Another 2001 (2) SA 844 (W)].

Asset Distribution on Dissolution:

Upon the dissolution of a marriage subject to accrual, either through a divorce or the death of one or both spouses, the Matrimonial Property Act outlines the rules regarding the distribution of assets. Section 3(1) of the Act explicitly states that:

"At the dissolution of a marriage subject to the accrual system, by divorce or by the death of one or both of the spouses, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, or his estate if he is deceased, acquires a claim against the other spouse or his estate for an amount equal to half of the difference between the accrual of the respective estates of the spouses."

In simple terms, this means that the spouse whose estate has not grown or has shown a smaller growth compared to the other spouse's estate is entitled to a monetary claim against the other spouse's estate. This claim amounts to half of the difference between the respective accruals of the spouses. However, it's important to note that this claim only arises upon the dissolution of the marriage, and during the marriage, spouses do not have the right to claim each other's assets.

Accrual and Sharing of Estates:

While the accrual claim only arises when the marriage is dissolved, the right to share in the accrual of each other's estates begins when the spouses enter into the marriage. Throughout the marriage, both spouses have a legal right to share in the growth of each other's estates. This means that if one spouse's estate grows significantly more than the other's, there will be a potential accrual claim when the marriage ends.

Conclusion:

Understanding the concept of marriages subject to accrual is vital for individuals entering into such arrangements. This legal framework allows spouses to maintain their individual estates while still benefiting from the growth in each other's assets during the marriage. Upon dissolution, the spouse with a smaller or no accrual has a monetary claim against the other spouse's estate. By grasping the implications of this system, individuals can make informed decisions and ensure a fair distribution of assets in the event of divorce or the passing of a spouse.

Defamation on social media: A Case Study of Hartland v APC Marketing

Explore a notable case of defamation on social media as the Western Cape High Court intervenes, prohibiting a roofing contractor from making defamatory statements and requiring the removal of social media posts. Learn about the court's orders and the impact on the involved parties.

In a recent court case, known as Hartland v APC Marketing, the Western Cape High Court addressed a situation where a roofing contractor, Dakman, defamed a construction company on social media after being removed from a project. The court intervened and issued an interdict, prohibiting Dakman from making further defamatory statements and requiring the removal of the posts from social media.

Let's set the context: Hartland is a property development company that focuses on the construction of the Hartland Lifestyle Estate Development in Mosselbay. Dalmar is responsible for building the homes within this development.

Dalmar had appointed Dakman as a sub-contractor for roofing work during specific phases of the project. However, Dalmar terminated its contract with Dakman due to disputes regarding the quality of Dakman's workmanship and productivity.

Feeling aggrieved, Dakman took to social media platforms to air their grievances. They posted a public notice/corrective statement on a WhatsApp group with around 300 members in the Herolds Bay area. Additionally, they made statements on Facebook, claiming that the developers were compromising safety by cutting corners in the development process.

As a response, Hartland and Dalmar (referred to as the Applicants) urgently approached the court seeking specific relief:

·        An interdict to prevent the respondents (Dakman) from making any further allegations against the applicants through any form of statement, including social media posts.

 

·        A directive for the respondents to remove the defamatory publications.

 

·        A directive for the respondents to issue a retraction and apology to the applicants for defaming them, causing harm to their reputation and dignity, on the platforms where the offending statements were published.

 

The applicants argued that Dakman's publications constituted defamation, warranting the relief sought. The court agreed with the applicants' contentions, stating that Dakman had made baseless claims on social media regarding the quality of work at the Hartland Lifestyle Estate Development with the intention of pressuring the applicants to pay their outstanding invoices.

In conclusion, this case highlights the legal consequences of defamatory actions on social media. The court's decision to issue an interdict, remove offending publications, and demand a retraction and apology serves as a deterrent for similar behaviour in the future.