THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Reportable
Case No: 20640/2014

In the matter between:

BERNARD GEOFFREY FISHER                                                            APPELLANT

and

NATAL RUBBER COMPOUNDERS (PTY) LTD                                 RESPONDENT

Neutral citation:
Fisher v Natal Rubber Compounders (Pty) Ltd (20640/14) [2016]
ZASCA 33 (24 March 2016)

Coram:
Lewis, Wallis, Willis, Saldulker and Mathopo JJA

Heard:

4 March 2016

Delivered:

24 March 2016

Summary:
Prescription ─ cession of a claim ─ action instituted by cedent
against the debtor ─ claim ceded after litis contestatio and
substitution of cessionary for cedent not objected to ─ debt not
prescribed in terms s 15(2) and (6) of the Prescription Act 68 of
1969.

___________________________________________________________________

ORDER

On appeal from: KwaZulu-Natal Local Division of the High Court, Durban (Gyanda J
sitting as court of first instance):

The appeal is dismissed with costs including the costs of two counsel.

JUDGMENT

Mathopo JA (Lewis, Wallis, Willis and Saldulker JJA concurring):

[1] This is an appeal against the judgment of the KwaZulu-Natal Local Division of
the High Court (Gyanda J) dismissing the appellant, Mr Bernard Fisher‟s (Fisher)
special plea of prescription against the respondent, Natal Rubber Company‟s (NRC),
claim. The appeal is against that finding with the leave of that court. There are no
factual disputes. The parties agreed to approach the court a quo on the basis of a
stated case and the court ordered a separation of issues in terms of Uniform rule
33(4).

[2] The brief background, is as follows. On 10 November 2010 George Beaton,
trading as Meranti and Board (Meranti) issued a combined summons against Fisher
claiming payment of the sum of R1 077 377 for goods sold and delivered to a
company called Strongwood Manufacturing (Pty) Ltd (now in liquidation). Fisher had
stood surety for the latter company. The summons was served on him on 18
November 2010. On 7 January 2011 Fisher filed his plea on the merits and
pleadings were closed. On 22 October 2013, Meranti ceded to NRC „all of its right,
title and interest in and to the claims‟ in relation to its right of action under case
number 13172/10 in the court a quo. In terms of clause 2.3 of the deed of cession, it
was agreed that NRC would, on fulfilment of the suspensive conditions, apply for its
substitution in the stead of Meranti as the plaintiff and that it would thereafter
prosecute the case until its final determination. It is not in dispute that the suspensive
conditions were fulfilled.

[3] On 9 December 2013 Meranti served a notice in terms of Uniform rule 28(1)
to amend the summons and particulars of claim by substituting NRC as the plaintiff.
Fisher did not oppose the amendment, which was thus effected. On 22 January
2014, Fisher amended his plea in response to the amended particulars of claim by
raising a special plea, contending that, upon cession to NRC after its substitution as
the plaintiff, Meranti‟s interruption of prescription against Fisher had lapsed and that
the claim had been extinguished by prescription in terms of ss 15(2) and (6) of the
Prescription Act 68 of 1969 (the Act).

[4] Subsections 15(2) and (6) provide as follows:
„(2) Unless the debtor acknowledges liability, the interruption of prescription in terms of
subsection (1) shall lapse, and the running of prescription shall not be deemed to have been
interrupted, if the creditor does not successfully prosecute his claim under the process in
question to final judgment or if he does so prosecute his claim but abandons the judgment or
the judgment is set aside.
. . .
(6) For the purposes of this Section, “process” includes a petition, a notice of motion, a rule
nisi, a pleading in reconvention, a third party notice referred to in any rule of Court, and any
document whereby legal proceedings are commenced.‟
This appeal turns on whether the substitution of NRC for Meranti amounted to the
institution of fresh proceedings, so that the interruption of prescription in terms of
s 15(2), effected by Meranti‟s service of the summons, ceased to be effective. This
involved the submission that NRC‟s action against Fisher only commenced when it
was substituted for Meranti as plaintiff.

[5] The argument on behalf of Fisher was the following. The effect of the cession
was to substitute NRC for Meranti as creditor. When the order for substitution was
made Meranti ceased to pursue the claim and NRC pursued it in its own name and
in its own right. Effectively this was a fresh action commenced by the notice of
amendment.1 As Meranti did not prosecute its claim to final judgment the interruption

1 Mias de Klerk Boerdery (Edms) Bpk v Cole 1986 (2) SA 284 (N). On the facts that case is
distinguishable. Summons had been issued in the name of Mr de Klerk instead of the company. A
notice of amendment to substitute the company for Mr de Klerk was served within the three-year
prescriptive period. The respondent contended that this was not process in terms of s 15(6) and
therefore that the claim prescribed. The court rejected the contention on the basis that the company
commenced proceedings by way of the notice of amendment and that this constituted a process.

of prescription effected by the service of summons fell away. By the time NRC was
substituted for Meranti more than three years had elapsed since the claim arose.
Accordingly the claim had prescribed.

[6] The counter-argument on behalf of NRC was the following. Prescription was
properly interrupted in terms of s 15(2) of the Act by service of the original summons
by Meranti. The substitution of NRC for Meranti was purely procedural and after
substitution NRC continued to pursue the same claim under the same process. Its
substitution did not involve the commencement of a fresh action but the continuation
of existing proceedings in respect of the same debt. Accordingly prescription was
interrupted by service of the summons and the claim had not prescribed.

[7] Fisher relied strongly in this regard on Silhouette Investments Ltd v Virgin
Hotels Group Ltd.2 Silhouette is clearly inapplicable to the problem in this case. In
that case, the action had been instituted by Silhouette. It later gave notice of
intention to amend its particulars of claim by the substitution of one Dyer as plaintiff
on the ground that he had taken cession of Silhouette‟s claim against the defendant.
That amendment was effected. A plea was then filed in which reliance was placed
upon a provision in the contract that precluded the cession of Silhouette‟s right.
Consequently, Silhouette attempted to re-amend the particulars of claim by
substituting itself in the place of Dyer as the plaintiff in the action. As this was done
after the expiry of the prescription period, the defendant raised a special plea of
prescription, relying on the proposition that the process by which prescription had
originally been interrupted had not, within the meaning of s 15(2), been prosecuted
to finality, because the original plaintiff, Silhouette, had withdrawn and ceased to
pursue the action while still vested with the claim.

[8] The rationale of Silhouette is the following. Silhouette ceased to pursue the
claim and Dyer stepped in when the summons was amended. But Dyer had not
acquired the claim that Silhouette had been pursuing, so there was no continuity in
pursuing the claim as there is in this case. Instead the party in whom the claim
vested at all times simply withdrew and someone who had no claim continued the

2 Silhouette Investments Ltd v Virgin Hotels Group Ltd 2009 (4) SA 617 (SCA).

action. Accordingly the interruption of prescription lapsed because the claim was not
prosecuted under the process in question to final judgment. When it was restored to
its position as plaintiff that occurred in terms of the notice of amendment, which
became a process under which it was pursuing the claim. The correct view of
Silhouette is that the party that had the claim ceased to pursue it when Dyer was
substituted as plaintiff and, as Dyer had no claim capable of being pursued, the claim
was not prosecuted to finality in terms of s 15(2). When Silhouette was substituted
for Dyer, it was in effect commencing proceedings afresh. That is wholly different
from the present case, where the same claim has been pursued throughout.

[9] In Waikiwi Shipping Co Ltd v Thomas Barlow & Sons (Natal) Ltd & another3
where there was a cession of the claim but no application for substitution, this court
held that there was nothing to prevent the cedent from continuing with the claim in its
own name. Jansen JA said the following at (678G):
„In practice any purported transfer after litis contestatio could only become effective if the
court allowed the cessionary to be substituted as the plaintiff. This is a matter apparently
within the discretion of the court and the court will refuse the substitution if there is any
prejudice to the other side. . . . The transfer is, therefore, only perfected when the court gives
its seal of approval by granting the substitution.‟
And in Government of the Republic of South Africa v Ngubane,4 an earlier judgment
of this court concerned with the question whether an action for pain and suffering
could be ceded prior to litis contestatio, Holmes JA observed that (at 608B):
„. . . it seems to me that, in regard to a cession after litis contestatio, you are not ceding your
interest in the claim but in the result of the litigation.‟
Jansen JA in Waikiwi said the following, when commenting on this dictum (at 677G-
678A):
„The “interest in the claim” and the “interest in the result of the litigation” are contrasted.
However, there may be three factors involved: (i) the original founding right, (ii) the right
arising from litis contestatio to proceed with the action to its conclusion, (iii) the spes in
respect of the benefits that will flow from the successful conclusion of the proceedings. (As
to this last, it may be pointed out that a spes may also be “ceded”. There is, however, a
difference of opinion in respect of the nature and precise effect of such a “cession”: De Wet
and Yeats Kontrakreg en Handelsreg 3 ed at 180; Schreuder v Steenkamp 1962 (4) SA 74

3 Waikiwi Shipping Co Ltd v Thomas Barlow & Sons (Natal) Ltd & another 1978 (1) SA 671 (A).
4 Government of the Republic of South Africa v Ngubane 1972 (2) SA 601 (A).

(O) at 76A-D. But this dispute does not affect the present issues.) It would seem that in
Ngubane’s case this court by “interest in the result of the litigation” meant the spes, and by
“interest in the claim”, right (ii) (perhaps including right (i)). No doubt a cession may be
framed to relate explicitly to the spes (cf the cession in Hall v Howe [1929 TPD 591], and
Schreuder v Steenkamp (supra)), but the dictum seems to imply that even in other cases a
cession after litis contestatio must be construed as a cession of the spes.‟

[10] This view was endorsed by Nienaber JA in Brummer v Gorfil Brothers
Investments (Pty) Ltd en andere,5 where he expressed himself as follows at (410F):
„Die beginsel wat na my mening uit die Waikiwi-beslissing te abstraheer is, is dit: waar ‟n
vorderingsreg wat die onderwerp van ‟n geding is na litis contestatio sedeer word, moet die
sessionaris, as hy die geding in eie naam wil voortsit, by the Hof aansoek doen om as eiser
gesubstitueer te word; alvorens hy dit doen, beskik hy nie oor die nodige locus standi nie;
die keersy is dat die sedent, tot tyd en wyl sodanige substitusie plaasvind, nie sy locus
standi verbeur nie. Dit is ‟n suiwer prosesregtelike aangeleentheid waarvoor daar gesonde
praktiese redes bestaan.‟6

[11] What Nienaber JA said in effect about cession after litis contestatio is that the
cessionary stepped into the shoes of the cedent, but that the cedent did not lose his
locus standi until the cessionary has been substituted. In other words in the absence
of substitution, Meranti would still have been entitled to pursue the action in its own
name and obtain judgment. See also Van Rensburg v Condoprops 42 (Pty) Ltd,7
where Leach J held that because there had been no objection to substitution it was
no longer open to the defendant to raise prescription. In the same judgment he said
the following (para 12):
„When litis contestatio was reached, the rights of the defendant . . . in regard to such debt
were frozen, and the subsequent cession of Nissen‟s right, title and interest in the debt did
not divest her of her right to prosecute that claim until such time as Van Rensburg was
substituted as plaintiff.‟

5 Brummer v Gorfil Brothers Investments (Pty) Ltd en andere 1999 (3) SA 389 (SCA).
6 To my mind the principle to be extracted from Waikiwi is this: where a claim that is the subject of
proceedings is ceded after litis contestatio, the cessionary must, if he wants to continue the
proceedings in his own name, apply to court to be substituted as plaintiff; before he does that, he
lacks the necessary locus standi; the converse is that the cedent, until such substitution takes place,
does not lose his locus standi. This is a purely procedural matter for which there are sound practical
reasons. (My translation.)
7 Van Rensburg  v Condoprops 42 (Pty) Ltd 2009 (6) SA 539 (E).

I fully accept the rationale in Waikiwi and Brummer, that subject to the need for the
cessionary to be substituted as plaintiff, a right of action may be ceded after litis
contestatio. This is what Leach J found in Van Rensburg. Where a cession of a claim
takes place after litis contestatio, the cessionary cedes his or her interest not in the
claim but in the result of the litigation.

[12] The cession alone does not transfer the right to prosecute the action to the
cessionary. That right only accrues to the cessionary when it is substituted for the
cedent as plaintiff. The subject matter of pending litigation can be ceded freely and
fully until litis contestatio. Such a right may be ceded subject to one limitation: the
cessionary is not entitled subsequently to pursue concurrent litigation in its own
name. The corollary is that the cedent may continue the existing litigation in  its own
name. The cession would not divest the cedent of its locus standi nor vest the
cessionary with it unless the court on application permits the substitution of the
parties. Such an application will not succeed if the substitution will prejudice the
debtor.8 On substitution, the cessionary can pursue the action in its own name.

[13] This review of the law dealing with the implications of a cession after litis
contestatio highlights an absurdity in the argument on behalf of Fisher.  If Meranti
had simply continued to pursue the action in its own name, either because that was
so agreed with NRC, or because the court refused to authorise a substitution, the
point of prescription would not have arisen. But in those circumstances the claim
would still have been pursued for the benefit of NRC, albeit the named plaintiff
remained Meranti. It would be absurd to hold that the effect of a substitution was to
create a defence of prescription where none previously existed.

[14] This approach is reinforced by Tecmed.9 There the original plaintiff, after
having issued summons in respect of its claim, merged with another entity and a new
entity was formed. The original plaintiff ceased to exist and all its rights and
obligations were transferred to the new entity by operation of law. It was then sought

8 Devonia Shipping Ltd v MV Lius (Yeoman Shipping Co Ltd Intervening) 1994 (2) SA 363 (C); Rosner
v Lydia Swanepoel Trust 1998 (2) SA 123 (W) para 8.
9 Tecmed (Pty) Ltd & others v Nissho Iwai Corporation & another 2011 (1) SA 35 (SCA).

to substitute the new entity in the place of the original plaintiff. A plea of prescription
was raised. Brand JA said the following in para 20:
„At the heart of Silhouette Investments lies the notion that the legal effect of a cession after
litis contestatio is to terminate the proceedings instituted by the cedent, with the corollary
that the substitution of the cessionary as the plaintiff must be regarded as the institution of
new proceedings. As to whether that underlying notion is correct in respect of cessions, is
not necessary to consider in this case. I say that because Sojitz does not rely on a transfer
of rights by means of a cession. What it relies upon is a universal succession of all Nissho
Iwai‟s rights and obligations by operation of Japanese law.‟
That case was no different from the present one. A claim vested in one legal entity
passed by operation of law to another and that party was substituted as plaintiff in
the action. Central to the court‟s rejection of the argument that the claim had
prescribed was the finding that there was an essential continuity in pursuing the
claim.

[15] It follows that since the underlying debt was not altered, the cessionary was
entitled to proceed with the claim. As the cessionary, NRC stepped into the shoes of
the cedent, Meranti, the right of the cedent to pursue the claim fell away. Upon
substitution, the cessionary acquired by way of cession, all rights and obligations
vested in the cedent at the time of the substitution. What was bestowed on NRC by
cession was a claim in respect of which the running of prescription had been
interrupted by the service of the summons. In my view the original interruption of
prescription by the timeous service of the summons was not affected in any way by
the cession or subsequent amendment. The amendment was a mere procedural
step followed to effect the substitution. (See Tecmed and Van Rensburg.)

[16] To demonstrate the fallacy in Fisher‟s argument one has to look at the „debt‟
and the „process‟ (summons) – in terms of the Act – under which the debt was
pursued. To my mind the debt remains the same throughout. It is illogical to contend
that when the cessionary sues on a ceded claim the underlying debt changes. All
that happens is that the identity of the person entitled to enforce the debt changes,
but not the debt itself.

[17] It seems to me clear that the process under which the debt was being
pursued remained the same throughout. To suggest that the summons operated to
interrupt the running of prescription when it was initially served but ceased to fulfil
that function when there was a notice of amendment or substitution is clearly not
consistent with the Act. Any judgment that is granted in favour of NRC in this case
will be granted in terms of the original summons and particulars of claim, not in terms
of the application for substitution. In the result the original process that interrupted
prescription will be prosecuted successfully. That is what is required by s 15(2) of the
Act. There is no doubt that it is only the identity of the party (NRC) now pursuing the
debt that changes. The debt remains the same and unaffected by prescription.

[18] For these reasons, the special plea must fail. In the result the following order
is made:
The appeal is dismissed with costs including the costs of two counsel.

______________

R S Mathopo

Judge of Appeal

Appearances
For Appellant:
K J Kemp SC (with him L E Combrink)

Instructed by:
Shepstone & Wylie Attorneys, Durban
Matsepes Inc, Bloemfontein

For Respondent:

C P Hunt SC
Instructed by:
Evershed Attorneys, La Lucia Ridge
E G Cooper & Majiedt Inc, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

24 March 2016

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

Fisher v Natal Rubber Compounders (Pty) Ltd (20640/14) [2016] ZASCA 33 (24
March 2016)

The Supreme Court of Appeal (SCA) today handed down judgment relating to whether consequent to
the cession of a claim after the close of pleadings, the amendment of pleadings and substitution of
parties amounts to the institution of fresh proceedings having the effect of lapsing the interruption of
prescription under ss 15(2) and (6) of the Prescription Act 68 of 1969 (the Act) where such
interruption was effected through the service of the original summons.

On 10 November 2010 George Beaton trading as Meranti and Board (Meranti) sued Mr Bernard
Fisher (Fisher) in the court a quo for the sum of R1 077 377 in respect of goods sold and delivered to
a company (Strongwood Manufacturing (Pty) Ltd (now in liquidation)) for which Fisher had stood
surety. The summons was served on Fisher on 18 November 2010 and he filed his plea on 7 January
2011 and pleadings were subsequently closed.

On 22 October 2013, Meranti ceded all of its rights in relation to its claim in the case to the Natal
Rubber Company’s (NRC). The cession was subject to the condition, which was fulfilled, that NRC
would apply for its substitution in the stead of Meranti as the plaintiff and that it would thereafter
prosecute the case until its final determination.

On 9 December 2013 Meranti, had in accordance to the cession condition, served a notice to amend
the summons and particulars of claim by substituting NRC as the plaintiff. Fisher did not oppose the
amendment, which was thus effected. Nonetheless, on 22 January 2014, when he amended his plea
in response to the amended particulars of claim, Fisher raised a special plea contending that upon
cession to NRC after its substitution as the plaintiff, Meranti’s interruption of prescription against him
had lapsed and that the claim had been extinguished by prescription in terms of ss 15(2) and (6) of
the Act.

On appeal, it was argued on behalf of Fisher that the effect of the cession was to substitute NRC for
Meranti as creditor and that when the order for substitution was made Meranti ceased to pursue the
claim and NRC pursued it in its own name and in its own right. Effectively this was a fresh action
commenced by the notice of amendment.  As Meranti did not prosecute its claim to final judgment the
interruption of prescription effected by the service of summons fell away. By the time NRC was

substituted for Meranti more than three years had elapsed since the claim arose. Accordingly the
claim had prescribed.

The counter-argument on behalf of NRC was that prescription was properly interrupted in terms of s
15(2) of the Act by service of the original summons by Meranti. The substitution of NRC for Meranti
was purely procedural and after substitution NRC continued to pursue the same claim under the
same process. Its substitution did not involve the commencement of a fresh action but the
continuation of existing in respect of the same debt proceedings, and accordingly that prescription
was interrupted by service of the summons and the claim had not prescribed.

The SCA held that that subject to the need for the cessionary to be substituted as plaintiff, a right of
action may be ceded after the close of pleadings and that where the cession of a claim takes place
thereafter, the cessionary cedes his or her interest not in the claim but in the result of the litigation.

The SCA held that cession alone does not transfer the right to prosecute the action to the cessionary,
instead that right only accrues to the cessionary when it is substituted for the cedent as plaintiff. The
subject matter of pending litigation can be ceded freely and fully until the close of pleadings. Such a
right may be ceded subject to the single limitation that the cessionary is not entitled subsequently to
pursue concurrent litigation in its own name. The court held that the cession would not divest the
cedent of its locus standi nor vest the cessionary with it unless the court on application permits the
substitution of the parties. And such an application will not succeed if the substitution will prejudice
the debtor. On substitution, the cessionary could pursue the action in its own name.

The SCA further held that it followed in the case that since the underlying debt had not been altered,
that the cessionary was entitled to proceed with the claim. NRC as the cessionary had stepped into
the shoes of the cedent (Meranti) and the right of the cedent to pursue the claim had fallen away.
What was bestowed on NRC by the cession was a claim in respect of which the running of
prescription had been interrupted by the service of the original summons. The SCA found that the
original interruption of prescription by the timeous service of the summons had not been affected in
any way by the cession or subsequent amendment as the amendment was a mere procedural step
followed to effect the substitution of the plaintiff.

The SCA accordingly dismissed the appeal with costs including the costs of two counsel.

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