Debt: How to claim prescription in practice and how to enter a special plea

[Citizen X]

Post 10
8.3 Debt review and extinctive prescription
Qualitative research in the form of preparing, signing , serving an extinctive prescription claim on a creditor and arguing disputes around extinctive prescription will inevitably reveal difference in opinion and poorly formulated opinion. It does not necessarily mean that corporate retail apparel providers have a thorough understanding of extinctive prescription.
Miss E, had a clothing account with a major retailer. She entered debt review process in early 2006, never seen the process through to completion, never allowed the debt counsellor to make any payment on her behalf and paid the debt counsellor nothing. The last payment made to the creditor was on or about August 2005. The debt became eligible for extinctive prescription on or about August 2008. Payment demands were made on or about April 2012.
In early August 2012, I claimed extinctive prescription on her behalf from the creditor. This is the official response I received from the head of the legal department of that major retailer.


“Dear Mr Naick,

I wish to confirm with you whether your client advised you that this account was stagnant, and therefore moved into the prescribed time environment, due to the fact that it had been held over as a Debt Review account?


In terms of the NCA an account that is under Debt Review may not be collected or acted upon by the credit grantor.”




I naturally had an immediate rebuttal. I responded as follows:-
“Dear Madam



1. I refer to the above matter

2. I deem it necessary to respond as follows:
2.1 The written power of attorney authorises us to argue disputes surrounding the extinctive prescription claim
2.2 It’s common cause that the NCA has impacted the Magistrates Court and creditors;
2.3 Judicial process: Only judicial process by way of suing out summons can interrupt prescription. A debt counsellor is meant to pay the creditor all be it in small payments. It cannot be said that Judicial process has interrupted prescription in this individual case;
2.4 We submit that the prescription period should be calculated when the debt counsellor made the last payment to ……, i.e. when was this last payment made
2.5 We further submit that section 86(10) of the NCA requires you to provide notice of termination of debt review especially when payments were not been received. It reads as follows:-(10) If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may give notice to terminate the review in the prescribed manner to(a) the consumer;(b) the debt counsellor; and (c) the National Credit Regulator, at any time at least 60 business days after the date on which the consumer applied for the debt review.”
2.6 I submit that the rationale of point 2.5 is to prevent a situation such as the one we are currently in!
2.7 I therefore submit that the fact of Miss E, having once been under debt review does not preclude her from claiming extinctive prescription from …….; In your summons you could have indicated that the time periods in terms of section 130 NCA has lapsed!
2.8 The central idea of extinctive prescription is that a creditor should sue out summons at the earliest opportunity, in my opinion, this earliest opportunity is ideally within 3 months of the debtor not paying, the further brain child of extinctive prescription is that it’s there to promote certainty, finality and closure. It’s unfair for a debtor to have the possibility of summons hanging over his/her head for the rest of their lives.
2.9 I therefore submit that despite the fact of debt review, Miss Fraser’s extinctive prescription claim should be processed. We further submit that Miss Fraser was listed on ITC; the listing was automatically expunged after its lawful listing period. This was sufficient punishment for the lack of a better phrase.
Kindly revert”
My position can be reconciled with the always as I always look to the Supreme Court of Appeals for guidance in formulation of legal opinion.


In Sally Ann Collett v First Rand Bank Limited & Another. 766/2010.SCA; the court provided, that when the time period stipulated in section 86(10), the creditor may give notice to terminate the debt review process. This time limit is 60 days of continued default i.e. no payments received



The response to my submission was actually one that I had anticipated! It was as follows:-


“Dear Mr Naick

Kindly accept the attached e-mails, on which I had confirmed the account to have been moved into a prescribed status on our system, as the full and final communication confirming that it has indeed been prescribed. There is no further intention of performing collections activities on this account and it is permanently closed.



At the very bottom of the e-mail audit trail is the …… disclaimer, identifying the source of the e-mail.”^[1]

According to Loubser(1996:127), legally effective service of process on the debtor is required for interruption of prescription: Mere issue of such process out of court is not sufficient. The service of process on the debtor must furthermore commence proceedings against the debtor in a legally effective manner.








[1] Should SALRC require these actual emails to prove integrity of research, they will gladly be made available!

[Citizen X]

Post 11
9. A parallel between public law and private law
At the outset I submit that there is no valid comparison between public law and private law. I will however draw a parallel and demonstrate that the private law relationship is not always equal alternatively on equal grounds.

Public law is concerned with the exercise of authority by the government and deals with relationships where one of the parties is always the state as bearer of state authority. The public-law relationship is a vertical relationship, and therefore a relationship between someone in authority the subordinate (lower-ranking) individual whereas Private law is concerned with relationships between individuals who are on an equal footing.^[1]
Corporate South Africa in the form of Banks, financial Institutions and Major retailers that offer goods and/or services on credit are not on equal footing with a potential debtor. If one assesses all these organisations Income Statements and Balance Sheets, one will have to conclude that the vast majority of them are in a sound financial position. Their profitability is on a constant year by year increase. The potential debtor however has a future which is less certain as he/she may be in sound financial position today by virtue of income from a good job. This current positive state of affairs need not necessarily be a permanent one. A debtor may lose his/her job or become ill to a point where he/she can no longer work. When the creditor/debtor relationship commences, it’s on the terms and conditions of the creditor and not the debtor. The debtor doesn’t have the real opportunity of bringing his own terms and conditions along with him when he signs the contract for a personal loan. The debtor doesn’t even get an opportunity to raise concerns about a creditor’s terms and conditions. In fact if the debtor doesn’t accept the creditor’s terms and conditions by signing the contract, he/she will not even be considered for finance. Many debtors don’t even read the terms and conditions of the creditor before signing. In many cases they consent to the jurisdiction of a court which is not even in his/her Province. The creditor has resources to engage in litigation whereas many debtors are unemployed as at the time summons is sued out against them. If ones weigh things on this basis, then one would have to conclude that creditors should be compelled to sue out summons within 3 years of the date of the debt becoming due failing which a debtor becomes eligible for extinctive prescription. When a debtor claims extinctive prescription from the creditor, the creditor should process such extinctive prescription claim and finalize abandoning their claim in writing on a signed letterhead.
According to SALRC(2011:11) Creditors (claimants) and debtors (defendants) have competing interests. It is unfair that a debtor should be subject to an indefinite threat of being sued. It is in the interest of creditors to have as long as possible to institute a claim.
In principle this is exactly right, that being said, a creditor has far more resources in terms of financial and human resources and established infrastructure to collect a debt by lawful demand before a debt becomes eligible for extinctive prescription or to sue out summons.
Quantitative research clearly demonstrated 90% of the respondents were unemployed when they were contacted and further that 96% were contacted regarding a debt in which more than four years had elapsed from the date of that debt becoming due.

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[1] Administrative Law study Guide. Muckleneuk, Pretoria.UNISA.2008. Page 25(taken verbatim)

[Citizen X]

Post 12
10. Professional Ethics and an attorney providing a debt collector function

Mr B lost his job in late 2007. He did not default on payment to his creditors for dishonest, malicious or culpable reasons(The full and further particulars of Mr B have been made available to the SALRC). He defaulted on payment because he no longer had the means to pay his account. He stops paying all his accounts in early 2008. Despite consistent telephonic and written demands for payments from these creditors and/or their attorneys he made no payment whatsoever and never acknowledged debt in writing or tacitly. In fact, he requested my assistance, for claiming extinctive prescription, such assistance subsequently was provided to him and extinctive prescription was successfully claimed for five accounts. In early April 2011, however, a debt collector or attorney contacted Mr B and threatened him with warrant of arrest should he not make payment. This person identified himself as an attorney and said, ‘If you don’t make a payment of a Hundred Rand (R100), a warrant of arrest will be issued and you will be arrested at your place of work in front of your employer and colleagues or at your home in front of your family.’ Mr B is a layperson to the law. He believed the representation which turned out to be a misrepresentation and made a payment of a Hundred Rand (R100) at the end of May 2011. He continued to believe this misrepresentation until March 2012 when he happened upon my internet posts on extinctive prescription. This debt was eligible for an extinctive prescription claim in early 2011. Section 10(3) of the 1969 Act provides that notwithstanding the provisions of subsections (1) and (2), payment by the debtor of a debt after it has been extinguished by prescription in terms of either of the said subsections, shall be regarded as payment of a debt. In the quantitative research I’ve conducted 1745 respondents out 3086(56%) answered ‘Yes,’ to the question: ‘I have been threatened with ‘warrant of arrest,’ unless I make payment.’ (Refer to page for complete findings and analysis) This is a textbook example of unethical behaviour by a legal practitioner. Mr B effectively altered his own legal position to his detriment by acting on the strength of a representation which is a misrepresentation. The legal question is should section 10(3) of the Act be disregarded under these circumstances? I submit that it should indeed be disregarded and his extinctive prescription claim should be processed as if no payments had been made. In this instance I submit that Mr B should escalate the matter to the Banking Ombudsman and do two things1: raising alternatively pleading estoppel short of going to court 2: Claiming extinctive prescription despite section 10(3).

10.1 Estoppel
Estoppel is a doctrine which operates in the following circumstance: where one person(call center agent calling under the auspices of an attorney) represents to another person(Mr B) that a certain set of facts exist(if you don’t pay you will be arrested) and the other person(Mr B) alters his legal position to his detriment on the strength of the representation(The debt was prescribed or near to prescription, Mr B altered his legal position to her detriment by making a payment on 26 May 2011, the person making the representation is precluded alternatively estopped from asserting that a different set of facts actually exist. Mr B pleads estoppel against the agent who represented himself to be an attorney and threatened Mr B to make a payment on an account that he knew was prescribed with the threat of warrant of arrest. Mr B acted on the strength of a representation which was a misrepresentation. He feared being arrested at his place of work and made a payment on an account that he knew was prescribed to prevent himself from being arrested. He made the payment under duress and threat. It was always Mr B’s intention to claim extinctive prescription which he done telephonically, A threat of arrest which is a misrepresentation caused him to alter his legal position to her detriment. Mr B should be placed in the position he would have been in had no misrepresentation been made; the position that he would have been in had no misrepresentation would be that the debt would be prescribed and his extinctive prescription claim should be considered as if no payment was made on 26 May 2011 and as such Mr B’s extinctive prescription claim should be processed without further delay.^[1]

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[1] Confer Unjustified Enrichment, Liability and Estoppel Study Guide 2.(2011). Muckleneuk, Pretoria.UNISA. Page 4

[Citizen X]

Post 13

10.2 Law and a crisis of an ethical natureLaw is an honourable profession that dates back centuries. Law practitioners should conduct themselves in a manner that is respectful of the law. Honesty, integrity, credibility and high moral and ethical standards are key attributes for a legal practitioner. I accept the following assumptions^[1]:


(1) The legal profession is in a crisis and this crisis is of an ethical nature.

(2) The crisis in the legal profession cannot be addressed successfully by expecting lawyers to follow the rules of an ethical code or by teaching prospective legal
practitioners the rules of professional conduct.
Indeed, the traditional, legalistic pre-occupation with rules may, ironically enough, be one of the factors contributing to the crisis in the legal profession.
(3) The crisis in the legal profession can be addressed only if:
(i) a more philosophical and critical approach to the ethics and ethical conduct of legal practitioners is followed, as was traditionally the case;
(ii) the professional nature of the legal profession is again critically scrutinized and reconstructed; and
(iii) a virtue-oriented approach is followed.^[2]

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[1] Vide Professional Ethics Study Guide(2012) Muckleneuk, Pretoria.UNISA. Page vi(taken verbatim)

[2] Vide Professional Ethics Study Guide(2012) Muckleneuk, Pretoria.UNISA. Page vi(taken verbatim)

[Citizen X]

Post 14

11. Choice of research frameworkI opted to use an integrated approach, i.e., both quantitative and qualitative research. Quantitative research in the form of a questionnaire and qualitative research in the form of the actual extinctive prescription claims of four subjects was used for this study.
11.1 Research Design and Methods
A researcher’s task actually begins before the actual research itself is carried out. It starts with a problem statement. I had six such problem statements. Research design is the master plan that the researcher has formulated in order to lend credibility to his/her problem statements. A research design is a researcher’s compass as it will direct the planning, organising and actual implementation of the entire research process. All research has some value, once a researcher has properly formulated assumptions; it is these assumptions that will guide all thinking and activities involved in the research process.^[1] Gilmore S (2011:1) states that research in law requires one to use a great many information sources.
Prof Denscombe (2002:25) articulates research objectives must be clear and concise. Research objectives can only meet these requirements if they are realistic, attainable and measurable.^[2]
According to van der Walt and Nienaber(2007:238), Quantitative studies in human sciences usually emulate the methods of the natural sciences by using, among others, questionnaires, surveys and statistics. Such studies are cross-disciplinary both in terms of the methods used and the sources from which data are obtained. Qualitative studies depend on structured and unstructured group and individual interviews and on observation studies. Such a study is cross-disciplinary because the student should have a sound grounding in linguistics and knowledge of all the languages and qualitative research methods concerned.
According to Kok et al(2008:42) research does not only entail the location and analysis of material, but also the presentation of research results in a relevant format that professes academic integrity.








When one conducts a litmus test of a present situation, this can be seen as a descriptive type of research. When one employs this technique the objective is simply reporting on a situation as it current exists.^[3]

It is against this framework that I embarked on both quantitative and qualitative research with the objective of presenting my finding in a manner that professes academic integrity.^[4]
11.2 Quantitative research
A questionnaire which is essentially a survey research technique, was utilised to gain an understanding into the perceptions of respondents regarding debt, debt collecting and extinctive prescription(Kerlinger 1988: 377). Respondents were solicited from the internet on a popular South African business and information forum: The Forum SA(TFSA remains the internet site where I solicited the vast majority of my respondents; 3086 processed; 2598 unprocessed). The brainchild was that there were no actual costs, only individuals affected by debt would visit that particular thread. My actual target audience was reached in a very scientific manner in that respondents who had no interest alternatively immediate information need would not have visited that thread and would also not have heeded the call to request the questionnaire via email, complete the questionnaire, save it and return the finished product via electronic mail.
Three Thousand and eighty six respondents (3086) respondents heeded my call to take part in a questionnaire. I solicited them at : http://www.theforumsa.co.za/blogs/entry.php/35-Debt-How-to-claim-prescription-in-practice-and-how-to-enter-a-special-plea; http://www.theforumsa.co.za/forums/showthread.php/10369-Debt-Legally-cancelling-a-debt-over-3-years-old; http://www.theforumsa.co.za/forums/showthread.php/11094-Summons-what-you-need-to-do? & http://www.theforumsa.co.za/forums/showthread.php/11428-Summons-notice-of-intention-to-defend-and-plea-in-practice?highlight=

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[1] Confer Botes A.The Operationalisation of a Research Model in Qualitative Methodology. 1995. Page 6

[2] Vide Denscombe M. Ground research for Good Research: A 10 Point Guide for Social Researchers. Open University Press. 2002. Page 25(my interpretation)

[3] Confer Creswell J W. Research design: Qualitative and Quantitative Approaches. 1994

[4] Confer Kok et al. Skills workbook for law students. Juta & Co. ltd. Cape Town. 2008. Page 42.

[Citizen X]

11.3 Post Mortem Questionnaire
The results and analysis are includes in one table for ease of reference. In the results section, where findings alternatively conclusions were forged they were given reference under the heading ‘conclusions.’ The following are the results, analysis and conclusions of such quantitative research.

[Citizen X]

Post Mortem Questionnaire Three Thousand and eighty six(3086) people responded Number of respondent’s example 1. Yes 2800 Respondents 91 % of a total of 3086; No 286 respondents 9 % of a total of 3086 respondents
Question/Statement	Question/Statement type	Results
1. I have more than one debt Yes. No.	Single select Yes/No	Yes 2800 91 % No 286 9%
2. How did you find out about extinctive prescription? a. Internet b. Attorney/Legal advisor c. Other	Single select Multiple Choice	Internet 2653 86% Attorney/Legal advisor 167 5% Other 266 9% Conclusion: Most South Africans are unaware of extinctive prescription
3. Are you employed? Yes. No.	Single select Yes/No	Yes 2041 66% No 1045 34%
4. This debt is more than 3 years old(No payment was made on my account for 3 years from the date of the last payment) Yes. No. NA	Single select Yes/No/NA	Yes 2 936 95% No 150 5% Conclusion: Creditors do pursue old debts in the hope that debtors will be ignorant of extinctive prescription and make a payment or acknowledge debt
5. This debt is more than 4 years old(No payment was made on my account for 3 years from the date of the last payment) Yes. No. NA	Single select Yes/No/NA	Yes 2936 95% No 150 5% Conclusion: Creditors do pursue old debts in the hope that debtors will be ignorant of extinctive prescription and make a payment or acknowledge debt
6. This debt is very old(No payment was made on my account for many years: Between 5 years and 10 years) Yes. No. NA	Single select Yes/No/NA	Yes 2356 76% No 580 19% NA 150 5% Conclusion: Creditors do pursue old debts in the hope that debtors will be ignorant of extinctive prescription and make a payment or acknowledge debt
7. What was your reason for not paying your account a. Unemployed b. Retrenched c. Other	Single select Multiple Choice	a. Unemployed 1762 57% b. Retrenched 754 24% c. Other 570 19%
8. Have you received a letter from the creditor demanding money? Yes. No. NA	Single select Yes/No/NA	Yes 653 21% No 1860 NA 573 18% Conclusion: Creditors do pursue old debts in the hope that debtors will be ignorant of extinctive prescription and make a payment or acknowledge debt
9. Have you received a summons? Yes. No. NA.	Single select Yes/No/NA	Yes 212 7% No 2874 93% NA 0
10. I am aware that where that I have a defence that I can use in court in the following circumstance: The amount claimed is for a personal loan. An uninterrupted period of 3 years has passed by from the date of the last payment. In this period, I have made no payments, I have not acknowledged debt in writing or telephonically and I have not been overseas during this 3 year period. 1.Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree :2567 83% 2. Agree : 58 2% 3. Disagree : 73 2% 4. Strongly agree : 388 Conclusion: Most South Africans are unaware that despite the fact of summons on a prescribed debt, they can successfully raise a special plea of extinctive prescription in court
11. I am aware that a judgement debt is listed on credit bureaus for 5 years before it is automatically expunged Yes. No.	Single select Yes/No	Yes 1380 45 % No 1706 55%
Question/Statement	Question/Statement type	Results
12. I am aware that a default listing remains on ITC for 2 years before it is automatically expunged Yes. No.	Single select Yes/No	Yes 2800 91 % No 286 9%
13. I am aware that a poor payment profile reflects on ITC for 5 years Yes. No.	Single select Yes/No	Yes 2800 91% No 286 9%
14. I have been contacted by the creditor/debt collector or attorney who demanded payment for an account or debt that is more than 4 years old(This account was not paid at all for a period of 4 years and in these 4 years I have not been contacted at all until fairly recently) Yes. No.	Single select Yes/No	Yes 2976 96% No 110 4% Conclusion: Creditors do pursue old debts in the hope that debtors will be ignorant of extinctive prescription and make a payment or acknowledge debt
15. I have been threatened with ‘warrant of execution,’ unless I make payment Yes. No.	Single select Yes/No	Yes 435 14% No 2651 86%
16. I have been threatened with ‘warrant of arrest,’ unless I make payment Yes. No.	Single select Yes/No	Yes 1745 56% No 1341 44 % Conclusion: Certain Creditors do use unethical means to cause prescription to run afresh
17. I understand the difference between a warrant of arrest and a warrant of execution Yes. No.	Single select Yes/No	Yes 348 11% No 2738 89% Conclusion: Many South Africans believe everything the debt collector tells them
18. I am unemployed and informed the individual demanding payment of this. The individual demanding payment asked me to complete and affidavit and send it to them either by post, email or fax Yes. No.	Single select Yes/No	Yes 1603 52% No 1483 48% Conclusion: Many Debtors act to their own prejudice by causing prescription to run a-fresh from the date of acknowledgement of debt
19. I am unemployed and informed the individual demanding payment of this. The individual demanding payment asked if anyone in my family could help me make small monthly payments Yes. No.	Single select Yes/No	Yes 2763 90% No 323 10% Conclusion: Many Debtors act to their own prejudice by causing prescription to run a-fresh from the date of acknowledgement of debt

[Citizen X]

19. I am unemployed and informed the individual demanding payment of this. The individual demanding payment asked if anyone in my family could help me make small monthly payments Yes. No.	Single select Yes/No	Yes 2763 90% No 323 10% Conclusion: Many Debtors act to their own prejudice by causing prescription to run a-fresh from the date of acknowledgement of debt
20. I am unemployed and informed the individual demanding payment of this. The individual demanding payment asked if I could manage to pay any amount of money between R10 – R150 per month Yes. No.	Single select Yes/No	Yes 2763 90% No 323 10% Conclusion: Many Debtors act to their own prejudice by causing prescription to run a-fresh from the date of acknowledgement of debt
Question/Statement	Question/Statement type	Results
21. After the fact of making arrangements to pay, even a small amount, acknowledging debt in writing or having an affidavit commissioned and sent to the creditor/attorney or debt collector, I now realise that I have changed my legal position to my own prejudice by causing prescription to run afresh from the date that I made the payment, the date I sent the affidavit to the creditor or the date that acknowledged debt Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree :120 45% 2. Agree :437 14% 3. Disagree :231 7% 4. Strongly agree :788 25% Conclusion: After making payment or acknowledging debt debtors made a concerted effort via the internet to find out about their rights
22. I feel robbed now that I’m aware that had it not been for my payment or acknowledgement of debt, I could have claimed extinctive prescription and the debt would have been completely written off Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 73 2% 2. Agree : 3. Disagree : 4. Strongly agree :3013 98% Conclusion: After making payment or acknowledging debt debtors made a concerted effort via the internet to find out about their rights
23. The creditor/debt collector or attorney used unethical means and methods to get me to make a payment or acknowledge debt Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree :120 5% 2. Agree :1065 34% 3. Disagree :231 7% 4. Strongly agree :1670 54% Conclusion: Certain Creditors do use unethical means to cause prescription to run afresh
24. Extinctive prescription can only be claimed in a court of law Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 446 14 % 2. Agree : 3. Disagree : 4. Strongly agree : 2640 86% Conclusion: Most South Africans are unaware of extinctive prescription
25. Extinctive prescription can be claimed directly from the creditor Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 2640 86% 2. Agree : 3. Disagree : 4. Strongly agree : 446 14 % Conclusion: Most South Africans are unaware of extinctive prescription
26. After having studied the posts on extinctive prescription on TheForumSa I feel confident that I do have other debts that I can have extinguished by invoking the Prescription Act Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 126 4% 2. Agree : 3. Disagree : 4. Strongly agree : 2960 96% Conclusion: The internet in particular online forums, especially The Forum Sa, is a powerful tool for helping people in real time
27. I have used your precedent/template and covering letter(that you have made freely available on TFSA) and served this on the creditor and/or his attorney by email and registered mail or by email and personal service Yes. No.	Single select Yes/No	Yes 2543 82% No 543 18% Conclusion: The internet in particular online forums, especially The Forum Sa, is a powerful tool for helping people in real time
28. The individual I dealt with at the bank, financial institution or creditor understood the nature of my claim, processed my claim and confirmed this on a signed letterhead Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 1341 44% 2. Agree : 3. Disagree : 4. Strongly agree : 1745 56% Conclusion: Many financial institutions and major retailers don’t have rules, regulations, policy and procedure in place to process extinctive prescription claims

[Citizen X]

29. What do you understand by the following(please select one option, a, b, or c) “Extinction of debts by prescription a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt. The periods of prescription of debts shall be the following:save where an Act of Parliament provides otherwise, three years in respect of any other debt.” a. Extinctive prescription takes place automatically b. I have to claim extinctive prescription from the creditor c. I can only raise prescription as a defence in a court of law	Single select Multiple-choice	a.Extinctive prescription takes place automatically 54 2% b.I have to claim extinctive prescription from the creditor 1800 58% c.I can only raise prescription as a defence in a court of law 1232 40% Conclusion: Despite the strong effect of extinctive prescription creditors are not precluded lawfully from collecting the debt, the only real way a debtor can get legal certainty is to invoke extinctive prescription
30. There should be laws in place which force creditors to have policy documents on extinctive prescription claims Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 126 4% 2. Agree : 3. Disagree : 4. Strongly agree : 2960 96%
The following statements apply to a debt which you have. You are now aware that this debt is eligible for extinctive prescription. This type of debt becomes eligible for extinctive prescription after an uninterrupted period of 3 years has elapsed from the date of your last payment on this account. These debts include: Credit card debts, personal loan debts, vehicle finance debts, clothing account debts, furniture account debts. The creditors are banks, financial institutions and major creditors that sell goods on credit or offer finance. To agree with the following statements, this must not be a judgement debt, you must not have made any payment for a full 3 years from the date of the last payment and you must not have acknowledged debt in writing or telephonically
31. I have a debt that is eligible for extinctive prescription with a bank Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 766 25% 2. Agree : 3. Disagree : 4. Strongly agree : 2320 75%
32. I have a debt that is eligible for extinctive prescription with a major retailer Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 2506 81% 2. Agree : 3. Disagree : 4. Strongly agree : 580 19%
33. I have a debt that is eligible for extinctive prescription with a major telecom or cell phone provider Strongly disagree 2. Agree 3. Disagree 4. Strongly agree	Rate items on a scale	1.Strongly disagree : 1890 61% 2. Agree : 3. Disagree : 4. Strongly agree : 1196 39%

[Quintus]

hi can you please sent me you email, need some urgent advise
Q

[Citizen X]

Post 14

Qualitative researchBackgroundConfidentiality between an attorney and client will always be held in high regard. Confidentiality is vital but so is the integrity of research. Mr A, B, C, D and Miss E are actual persons. Their full and further particulars including the accounts for which I successfully claimed extinctive prescription for has been are not for publication! Aliases are utilized throughout this work in reference to an actual person who had one or more debts eligible for extinctive prescription and were contacted either by the creditor, the creditor’s attorney performing a debt collection function or a debt collector. They were contacted after a considerable period had elapsed from the date that the debt became eligible for extinctive prescription. They sought some form of legal remedy. They chose the internet as a medium of information. They were not looking for general advice; they were looking for very specific answers. They happened upon a business and information online forum called The Forum SA.^[1] I consider myselfprivileged to have made even one post on The Forum Sa. I too had learned a great deal from members on this business and information online forum.Mr A, B, C, D and Miss came across my posts on extinctive prescription. My posts were, and still is a living work as the idea is not only to provide a sound legal explanation, but in essence to assist people in real time as soon as possible after they posted a question, query, concern or dispute. The further idea is to equip fellow members to such an extent that they too can answer any question on extinctive prescription and assist whoever may happen upon such posts. This is the ultimate challenge! My posts includes usable attachments an extinctive prescription claim precedent or template (to be served on the creditor and/or their attorney), a covering letter for the creditor and/or their attorney, an affidavit (to be used where the debtor claimed extinctive prescription), insight into litigation surrounding a scenario where a creditor still sues out summons after the fact of an extinctive prescription claim, an example of a special plea and an example of a potential summons that they may receive regarding such a debt. I made it clear that my advice was not to substitute for the services of an attorney should the matter indeed proceed to court, but much rather, that should they follow my directives there would be no reasonable justification for a creditor failing to process their extinctive prescription claim and confirming the same in writing on a signed letterhead. I stated on a public forum that their extinctive prescription claim would be processed by the creditor should my directive be followed. This is where we separate theory from practice. Quantitative research revealed that 82% of the respondents have follow up on my directives and used my precedent with success. There were however a few individuals who were not successful and sought my individual intervention. This reinforced a simple notion in me: The law is inaccessible to the vast majority of South Africans1 You may have such a problem today, you need assistance now and not in four months time!This was an opportunity to get practical insight into extinctive prescription claims in South Africa. I was equal to the task. A limited power of attorney was prepared and Mr A, B, C, D and Miss E empowered me as agent.The predetermined approach
My work is a live work in that the posts that I made on the internet are still active as at today’s date and still receives visitors. Throughout this work, even before I analysed the results of the quantitative research I was assisting people from all over South Africa with responses to their questions and resolutions to the practical problems their individual cases presented. I concluded early on that many creditor’s don’t have systems in place to process extinctive prescription claims, that many creditor’s don’t appreciate the distinctive between an extinctive prescription claim and a special plea of prescription and further they believe that a debtor can only raise prescription as a defence in a court; despite the fact that they pursuing the debt short of going to court.
I was presumptuous; I wanted a successful result in a maximum of two weeks from the date of serving the extinctive prescription claim. The result I was determined to obtain was complete legal certainty that the debt is prescribed as per the extinctive prescription claim. I wanted a signed letterhead in which the creditor and or their attorney confirmed in writing that the debtor claimed extinctive prescription; that the claim was processed; that the creditor acknowledges that the debt is prescribed, that the creditor has/will update all credit bureaus accordingly and that the creditor has abandoned their claim.
I therefore postulated a covering letter as well as several attachments including the extinctive prescription claim. I was intent on avoiding unnecessary delay due to a lack of understanding of extinctive prescription on the part of a creditor.

To be continued...

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[1] Vide http://www.theforumsa.co.za

[Citizen X]

The Financial Services Board Levy?

It’s apparent that this work on extinctive prescription claims in South Africa is a live one in that South Africans keep coming forward with new problem areas in their extinctive prescription claims.
1. I submit that the Financial Services Board Levy(FSB Levy) is not a government tax subject to a 30 year prescription period but rather it’s your typical debt subject to the 3 year prescription period;
2. Someone out there please prove me wrong!

My personal intervention was requested for a demand being made on a Financial Service Board Levy. The last payment was made on or about 2007. This debt therefore became eligible for extinctive prescription in early 2010.

The initial letter of demand my client received is as follows:


“Dear Sir / Madam,

RE: OUTSTANDING ACCOUNT - FINANCIAL SERVICES BOARD

1. We hereby confirm that we act on behalf of FINANCIAL SERVICES BOARD.

2. You have been handed over to us due to your failure to pay your outstanding account with our client.

3. Our instructions are that you are indebted to our client in the amount of R.,…. An immediate payment of no less than R…… is required to avoid further action.

4. Additional costs and/or penalties may have accumulated on your outstanding account, for which you are liable for. Contact us urgently in order to set up an affordable repayment agreement.

5. Should you fail to adhere to the above, the following may occur:
Further legal costs/penalties may accumulate on your account;

Legal action may be initiated;

Details of the non-payment of the account may be reported to the CREDIT BUREAUS by our client, which can adversely affect your credit rating”

Comment: The usual was done: Power of attorney drawn up and extinctive prescription claimed.

I was somewhat surprised by the response of the attorney of instruction:


“Dear Mr Naik,
1. Your correspondence dated .. November 2012 has reference.

2. Section 11(a)(iii) of the Prescription Act, No. 68 of 1969 provides that “the periods of prescription of debts shall be thirty years in respect of any debt in respect of any taxation imposed or levied by or under any law”.
3. The FSB imposes levies on financial institutions in terms of section 15A of the Financial Services Board Act, No. 97 of 1990 (the FSB Act) which provides that: “The board may impose by notice in the Gazette levies on financial institutions and may, subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice”.
4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.
5. Having regard to the aforementioned your client’s prescription claim has been decline and is thus still liable for the outstanding balance on this account.
6. Enclosed please find an updated statement with banking details for ease of reference.
7. We await your client’s urgent confirmation of payment.
Kind Regards”
Comment: I simply could not accept this state of affairs, I responded as follows:-

Continues next page.....

[Citizen X]

Dear Madam,

1. I refer to your electronic mail dated ..November 2012, the contents of which have been duly noted;
2. I have written power of attorney to act on this matter and am therefore duly authorised to respond hereto;
2.1 Though in civil matters the benchmark measure is always balance of preponderance also known as balance of probability, I’m confident that by the last averment herein I will have proved Cecil James case beyond reasonable doubt. Let’s use the criminal benchmark measure, shall we?
3. I would firstly like to vest your attention on what section 11(a)(iii) states before I clarify my client’s position and instructions:
3.1. The periods of prescription of debts shall be the followingthirty years in respect of any debt in respect of any taxation imposed or levied by or under any law;
3.2 The context is really quite clear any taxation that is either imposed or any taxation that is levied. Let’s look at this enacted text, alternatively Statute alternatively Act of Parliament in a different way. The main idea in paragraph iii is taxation; so the idea is that such taxation can be imposed or levied by or under any law. The inference is clear: another law such as the Customs Act can levy or impose this tax to be paid to the state as just that tax. The point of departure is the noun taxation. This taxation can be imposed or levied. I will turn to the Interpretation Act and the Income Tax Act in due course. I firstly would like to direct your attention to the ordinary dictionary meaning of taxation. Taxation is defined as money that has to be paid as taxes.[1]
3.3. I now would like to vest your attention on ‘taxes,’ tax is a noun: money that you have to pay to the government so that it can pay for public services.[2]
3.4 I now direct your attention to section 1 of The Income Tax Act 58 of 1962(as amended), entitled interpretation:'tax' or 'the tax' or 'taxation'means any levy or tax leviable under this Act; and for the purposes of Part IV of Chapter III includes any levy or tax leviable under any previous Income Tax Act;[Definition of 'tax' or 'the tax' or 'taxation' amended by s. 1 (c) of Act 6 of 1963 and substituted by s. 19 (1)(m) of Act 30 of 1998.]
3.5 I now vest your attention to the Interpretation Act 33 of 1957(as amended) section 2[definitions]: “law” means any law, proclamation, ordinance, Act of Parliament or other enactment having
the force of law. The point will become apparent when we refer to your averments 2,3 and 4 in which you imply that the levy in [this] case is taxation leviable by any law and section 15A of the Financial Services Board Act 97 of 1990 finds reference in your averment .
“2. Section 11(a)(iii) of the Prescription Act, No. 68 of 1969 provides that “the periods of prescription of debts shall be thirty years in respect of any debt in respect of any taxation imposed or levied by or under any law”.
3. The FSB imposes levies on financial institutions in terms of section 15A of the Financial Services Board Act, No. 97 of 1990 (the FSB Act) which provides that: “The board may impose by notice in the Gazette levies on financial institutions and may, subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice”.
4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.”
5. I now choose to do the unexpected by firstly turning to a common sense example:
Even ‘Body Corporates,’ i.e. the management of Town House Complex,’ charge levies, they sometimes simply refer to this as levy. In this context this levy they charge is for repairs and maintenance, cleaning the pool, paying the security guards etc. It is not a levy that will manifest in taxation that would ultimately go to the State as tax!
continues next page...

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[1] Vide: Oxford Dictionary. Oxford University Press. Page 1530

[2] Op Cit para 17

[Citizen X]

6. The same actually holds true for section 15A of the Statute that you cite, this money, alternatively this levy will not find its way to SARS in terms of taxation for redistribution for many things such as our infrastructure etc.
7. I’m acutely aware that academic text are not an authoritative source of law, they nonetheless do have persuasive value: Let’s turn to the leading authority on extinctive prescription in South Africa MM Loubser and his book ‘Extinctive prescription;
8. According to Loubser, a tax which may be so called or referred to by a similar term such as ‘levy,’ or ‘duty,’ constitutes a pecuniary charge imposed by a public authority upon persons or property for public purposes. A charge by a public authority for the rendering of services or performing its functions is often referred to as a ‘fee,’ and in deciding whether a charge constitutes a fee or a tax the fact that services are rendered in exchange for payment is an important factor characterizing such a charge as a fee rather than a tax.[1]
9. The point Loubser makes so clearly is that with typical tax, the Government simply takes tax to which it sometimes also refers to as levy, in its correct context of course, This is the 30 year prescription period, now a fee, just like the Body Corporate fee is in exchange for something very specific, the Body Corporate Town house fee or levy is for garden services, pool cleaning, repairs and maintenance: This is the service the render in exchange for a fee or for a levy, this fee or this levy doesn’t go to SARS, it goes straight to the coffers of the town house complex Body Corporate;
10. I now direct your attention to section15A of the Financial Services Board Act, No. 97 of 1990(as amended):-
“15A. Levies
(1) The board may impose by notice in the Gazette levies on financial institutions and may,
subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice.
(1A)
(a) Before imposing levies referred to in subsection (1), the board must publish the proposed levies in such manner as it considers appropriate in order to bring the proposed levies to the attention of the financial institutions in question and the users of financial services rendered by these institutions, together with a statement that representations about the proposed levies may be made to the board within a
specified time.
(b) Before imposing levies the board must have regard to any representations made in pursuance of the statement referred to in paragraph (a).
(c) Paragraphs (a) and (b) do not apply where the board, with the approval of the
Minister, is of the opinion that the delay involved in complying with those
paragraphs would be prejudicial to the functions of the board in terms of section 3
(a) and (c).
(2)
(a) The board shall in any such notice determine -
(i) the amounts of the levies or the bases or manners of calculation or
determination of the amounts;
(ii) the periods in respect of which levies are imposed, the dates on which levies
or the periods within which they are payable, and the manners of payment;
(iii) the rates of interest and manner of calculation of interest contemplated in
subsection (3);
(iv) the manner in which applications for exemptions contemplated in
subsection (4) shall be made; and
(v) the manner in which a notice contemplated in subsection (4) (b) (ii) shall be
served.
(b) The board may in any such notice -
(i) impose different levies referred to in subsection (1); and
(ii) determine different amounts, bases or manners of calculation or determination, periods, dates, manners of payment, rates of interest and manners of calculation of interest, manners of making application or of service referred to in paragraph (a), in respect of different financial institutions, different categories of financial institutions and different sub-categories of a specific type of financial institution.
(3)
(a) A financial institution which is under such notice liable for payment of a levy, and
which fails to pay the levy in full within the period for payment as determined in
the notice or on the date so determined, shall, at the rate and calculated in the
manner determined in the notice, pay interest on the balance of the levy
outstanding and on the interest so payable but unpaid.
(b) A levy imposed by any such notice, and interest owed in respect thereof, shall be
deemed to be a debt due to the board and may be recovered by the board by way of
judicial process in a competent court.
(4)
(a) The board may upon the application of a financial institution, and if the board is of
the opinion that there are sound reasons therefor, grant exemption to the financial
institution from a provision of the notice to the extent and subject to the conditions
determined by the board.
(b) An exemption contemplated in paragraph (a) shall lapse when -
(i) the board on the ground of facts and information at its disposal finds that the
financial institution concerned has contravened a provision of a condition
imposed as contemplated in paragraph (a), or has failed to comply therewith,
or has otherwise acted contrary to the exemption; and
(ii) the board has served a written notice to that effect in accordance with the
provisions of a notice referred to in subsection (1) on the institution.
(c) The board shall before taking a decision contemplated in paragraph (b) (i), grant
the financial institution concerned the opportunity deemed fit by the board to be
heard.”
10.1 One can clearly see that the levy referred to in section 15 of the aforesaid Act is not a tax or taxation or taxes that go to the government for tax purposes.The Board and not the government will use it for whatever legitimate purpose they have, sending members brochures, rendering information just to name a few;
10.2 In Peter Davis v SARS. CASE NO: 14551/2009, Local Division, we se the context of section 11(a)(ii) very, very clearly, this is how the 30 year prescription argument goes in that case:
“Regarding the issue of prescription the respondent averred that the debt of the applicant
fell into the category of “a debt in respect of any taxation imposed or levied by or under
any law” in terms of the provisions of section 11(a) (iii) of the Prescription Act and as
such the aforesaid debt in terms of section 11 (a) of the Prescription Act, would prescribe
after 30 years.
A good starting point is to set out paragraph 28 (1) (a) and (b) of the fourth schedule of
the Act the relevance will become apparent later in the judgment.
“28(1) (a) and (b)-
28(1) There shall be set off against the liability of the taxpayer in respect of any taxes (as
defined in subparagraph (8) due by the taxpayer, the amounts of employees tax deducted
or withheld by the taxpayer’s employer during any year of assessment for which the
taxpayer’s liability for normal tax has been assessed by the Commissioner and the
amount of provisional tax paid by the taxpayer in respect of any such year, and if-
(a) The sum of the said amounts of employ tax and provisional tax exceeds the
amount of the taxpayer’s total liability for the said taxes, the excess amount shall
be refunded to the taxpayer; or
(b) The taxpayer’s total liability for the aforesaid taxes exceeds the sum of the said
amounts of employees tax and provisional tax, the amount of the excess shall be
payable by the taxpayer to the Commissioner.”
The crisp issue in this matter, is to establish whether the amount owed by the applicant
amounts to a tax debt or an ordinary debt.
The starting point therefore is to establish if the amount owed falls within that defined in
paragraph 28 above. If it does fall within paragraph 28, the respondent may invoke
paragraph 28 (7) to recover from the applicant the amount owed. Obviously if the
amount owed falls within that defined in paragraph 28, the amounts can only be regarded
as a tax debt that is ‘a debt in respect of any taxation imposed or levied by or under any
law’ and therefore as such, the applicant’s indebtedness to the respondent would not have
prescribed. However, if the amount owed is an ordinary debt then the respondents claim
against the applicant would indeed have prescribed.
I set out paragraph 28(7) below for easy reference:
Section 28(7) reads as follows:
“If the Commissioner, purporting to act under the provisions of this paragraph, pays to
any person by way of a refund any amount which was not properly payable to that person
under those provisions or which was in excess of the amount due to such a person by way
of a refund under those provisions, such amount or the excess, as the case may be, shall
forthwith be repaid by the person concerned to the Commissioner and shall be
recoverable by the Commissioner under this Act as if it were a tax.” [My emphasis in
italics]
On analysing the evidence it is important to establish what meaning is given to the word
purport [ing] as a verb. In the Oxford Shorter Dictionary the word purport denotes:
“1.trans...; to convey to the mind; to mean, imply. b. Const. inf.: to profess or to claim by
its tenor ...”
Turning to deal with the various affidavits filed, it is noted that as at paragraph 6 of the
applicant’s replying affidavit, the applicant admits that his employer deducted the tax
from the lump sum payment portion of the provident fund due to him and paid it over to
the respondent in terms of the provisions of the fourth schedule of the Act and thus the
said payment fell into the category of employees tax or as commonly known, “pay as you
earn” (PAYE) tax.
In paragraph 8 of the respondents answering affidavit, the respondent states that the
PAYE payments received emanated from the employer of the applicant and as such
should have been credited to the employer’s account, however in error, was credited to
the applicant’s account instead….”
10.3 Para 10.2 was just to demonstrate how the tax/levy 30 year prescription argument goes!

Madam, I could well cite more caselaw; I don’t believe that this is necessary! Please process my client’s extinctive prescription claim and confirm the same to writing on a signed letterhead.

I would like to hear of similar experiences regarding a misunderstanding of whether the FSB levy is a government tax which goes to the Government or a levy or fee charged for certain services rendered.

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[1] Vide MM Loubster. Extinctive Prescription. 1996. Page 39 and 40.
Confer Master v Il Back & Co LTD 1981 (4) SA 763 (c), 1983 (1) SA 986 (A)
Contra: A fee payable to any company or body is not a tax and the general 3 year period applies!

[Dave A]

4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.

I suggest that's the point that you need to break down, and I regret I'm not convinced you've succeeded.

The subject of the position of Body Corporate levies looks pretty interesting.