THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 398/2017

In the matter between:

BROMPTON COURT BODY CORPORATE SS119/2006                      APPELLANT

and

CHRISTINA FUNDISWA KHUMALO                                                  RESPONDENT

Neutral citation:  Brompton Court Body Corporate v Khumalo (398/2017) [2018]
ZASCA 27  (23 March 2018)

Coram:
Ponnan, Van der Merwe and Mocumie JJA and Pillay and Makgoka
AJJA
Heard:
1 March 2018
Delivered:
23 March 2018

Summary:   Prescription – an arbitration award generally does not create a new
debt for purposes of the Prescription Act 68 of 1969 (the Act) – a claim to make an
arbitration award an order of court in terms of s 31 of the Arbitration Act 42 of 1965 is
not a ‘debt’ in terms of the Act.

___________________________________________________________________

ORDER

On appeal from: Gauteng Division of the High Court, Johannesburg (Mokose AJ
sitting as court of first instance):
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
‘Prayers 1, 2 and 3 of the notice of motion are granted, with costs.’

JUDGMENT

Van der Merwe JA (Ponnan and Mocumie JJA and Pillay and Makgoka AJJA
concurring)

[1] The appellant is the body corporate of the Brompton Court sectional title
scheme. At all relevant times the respondent, Ms Christina Fundiswa Khumalo,
owned a sectional title unit in the scheme. Disputes arose between the parties,
which, by agreement, were referred to arbitration.

[2] The respondent was the claimant in the arbitration. She claimed that her
account with the appellant be credited with various amounts in respect of levies,
other charges and interest that I find unnecessary to particularize. She also claimed:
(a) the costs of repairs to the structure of the unit, for which she asserted the
appellant was responsible; (b) damages on the basis that as a result of the conduct
of the appellant, she was unable to rent out the unit for a period of three months; and
(c) damages for defamation. The appellant counter-claimed for payment of the
outstanding balance owed to it by the respondent in respect of ordinary levies,
special levies, a security levy, consumption of electricity and interest.

[3] The arbitrator published his award on 21 December 2012. He allowed the
claims for the costs of repairs (in the amount of R20 000.00) and for loss of rental
income (in the amount of R27 750.00) but dismissed all of the respondent’s other
claims. The arbitrator found that the respondent owed the amount of R135 099.48 in
respect of the counter-claim. He subtracted the aforesaid amounts of R20 000.00
and R27 750.00 from this amount and made an award in favour of the appellant for
payment of the balance of R87 349.48, interest thereon and costs of the arbitration.

[4] Per notice of motion issued on 26 March 2014, the appellant applied in terms
of s 31 of the Arbitration Act 42 of 1965 to the Gauteng Local Division of the High
Court, Johannesburg that the arbitration award be made an order of court.
The respondent  opposed the application in effect only on the basis that the debt in
question had prescribed in terms of the Prescription Act 68 of 1969 (the Act). (In the
absence of an application to review the arbitration award, the allegations in the
answering affidavit that the arbitrator was biased or exceeded his authority, did not
constitute a defence to the application.) The court a quo (Mokose AJ) upheld the
defence of prescription and dismissed the application with costs. She refused leave
to appeal but the appellant was subsequently granted leave to appeal by this court.
The issue in the appeal is whether the defence of prescription was correctly upheld.

[5] Counsel for the appellant submitted that the arbitration award constituted a
new debt and that the three year period of prescription only commenced to run on
the date of publication of the award, that is 21 December 2012. As the application
was launched on 26 March 2014, so it was contended, the respondent’s reliance on
prescription was misplaced. In this regard reference was made to John Saner SC
Prescription in South African Law, (1996) at p 3-160, where it is firstly stated, without
qualification, that when a binding arbitral award is made, a new debt arises and
secondly, that if an arbitral award is not made an order of court within three years of
its granting, the right to do so (being a ‘debt’ in terms of the Act) prescribes. Similar
views were expressed in Primavera Construction SA v Government of Northwest
Province & another 2003 (3) SA 579 (BPD) p 604 paras 13 and 14 and Prime Fund
Managers (Pty) Ltd v Rowan Angel (Pty) Ltd & another [2014] ZAGPPHC 81; [2014]

2 All SA 227 (GNP) paras 44 and 45. The correctness of each of those statements
will be considered in turn.

As to the first:
[6] The first statement cannot be accepted as a principle of general application.
The converse will generally be true. Even a judgment of a court of law generally
does not create a new debt. It serves to affirm and/or liquidate an existing debt which
was disputed. What the judgment does in relation to prescription of a debt, is to give
rise to a new period of prescription of 30 years in terms of s 11(a)(ii) of the Act.
The same must generally apply to an arbitration award, save that it does not attract a
new prescriptive period in terms of s 11 of the Act.

[7] The conclusion that an arbitration award generally does not give rise to a new
debt, is supported by the provisions of s 13(1)(f) of the Act, which provides:
‘(1) If —
(f) the debt is the object of a dispute subjected to arbitration;’
and
‘(i) the relevant period of prescription would, but for the provisions of this subsection, be
completed before or on, or within one year after, the day on which the relevant impediment
referred to in paragraph (a), (b), (c), (d), (e), (f), (g) or (h) has ceased to exist,
the period of prescription shall not be completed before a year has elapsed after the day
referred to in paragraph (i).’

[8] Should the alleged debt that was subject to arbitration be rejected by the
arbitrator, no question of delay of the completion of prescription arises. It follows that
save in exceptional circumstances, such as abandonment of the arbitration
proceedings before completion thereof, the ‘impediment’ of pending arbitration
proceedings will cease to exist on affirmation of an existing debt by an arbitration
award. If the arbitration award constituted a new debt, it would make no sense to
provide for the delay of the completion of prescription of the original underlying debt
after the award and s 13(1)(f) would in most cases be rendered superfluous.    In my
judgment the sensible and logical approach is that the delay of completion of
prescription in terms of s 13(1)(f) is intended to enable a creditor to apply to make

the arbitration award an order of court in terms of s 31 of the Arbitration Act, before
the debt on which it is based prescribes.

[9] It should be mentioned that different considerations apply to arbitrations under
the Labour Relations Act 66 of 1995 (the LRA). This is illustrated by the judgments in
Myathaza v Johannesburg Metropolitan Bus Service (SOC) Limited t/a Metrobus &
others [2016] ZACC 49; 2018 (1) SA 38 (CC). There Mr Myathaza obtained an
arbitration award reinstating him to his employment. When he approached the
Labour Court some four years later to have the arbitration award made an order of
court, the employer relied on prescription. Four Justices of the Constitutional Court
held that the Act was inconsistent with the LRA and did not apply to the LRA and that
even if it did, a reinstatement arbitration award under the LRA did not constitute a
‘debt’ in terms of the Act. The other four held that the Act was applicable to
proceedings under the LRA and that a claim for unfair dismissal under the LRA was
a ‘debt’ in terms of the Act, but that referral of the dispute to the CCMA interrupted
prescription in terms of s 15(1) of the Act. See also Mogaila v Coca Cola Fortune
(Pty) Limited [2017] ZACC 6; 2018 (1) SA 82 (CC).

[10]  In conclusion on this point, reference should be made to the decision in Blaas
v Athanassiou 1991 (1) SA 723 (W). The arbitration agreement in that matter
provided that the award of the arbitrator ‘. . . shall be deemed to be and shall be
treated as if a judgment delivered by a Judge in the Supreme Court of South Africa’.
The court held, no doubt correctly, that inter partes the award had the status of an
order of court. The judgment has been understood to hold that the prescription
period of 30 years applicable to a judgment debt in terms of the Act, applied to the
arbitration award in that matter. See M M Loubser Extinctive Prescription (1996),
pp 41 and 120, J C Saner above pp 3-160 and Primavera above para 12. But that is
not what Hartzenberg J said in Blaas. What he said (at 725H-I), was that the effect of
the agreement was that for a 30 year period ‘. . . the two parties contracted
themselves out of a right to rely against the other on the defence of prescription.’
Thus the judgment was based on a waiver of rights and not on an application of the
30 year prescription period in terms of the Act to an arbitration award.

As to the second:
[11] I am also unable to agree with the second statement, namely that the claim to
make an arbitration award an order of court is a debt that prescribes after three
years. A claim that an arbitration award be made an order of court is not a ‘debt’ in
terms of the Act. In this regard the Constitutional Court has clearly endorsed the
decision of this court in Electricity Supply Commission v Stewarts & Lloyds of SA
(Pty) Ltd 1981 (3) SA 340 (A) at 344E-G, namely that a debt in terms of the Act is an
obligation to pay money, deliver goods or render services. See both the majority
judgment (paras 85-93) and the minority judgment (paras 187-187 and 195) in
Makate v Vodacom Ltd [2016] ZACC 13; 2016 (4) SA 121 (CC). See also Off-Beat
Holiday Club and another v Sanbonani Holiday Spa Shareblock Limited and others
[2017] ZACC 15; 2017 (5) SA 9 (CC) paras 44 and 48. The appellant’s claim to make
the arbitration award an order of court did not require the respondent to perform any
obligation at all, let alone one to pay money, deliver goods or render services.
The appellant merely employed a statutory remedy available to it. This is not entirely
dissimilar to a claim for rectification of a contract, which this court has held not to
constitute a ‘debt’ in terms of the Act. See Boundary Financing Limited v Protea
Property Holdings (Pty) Limited [2008] ZASCA 139; 2009 (3) SA 447 (SCA)
paras 12-14.

[12] It follows that to the extent that contrary views have been expressed in the
judgments of Primavera and Prime Fund Managers, they should not be followed.

[13] As there is no basis for holding that the arbitration award in this matter
created a new debt and prescription did not commence running on date thereof, the
appellant cannot succeed on this point. There is, however, another reason why the
court a quo erred in upholding the defence of prescription.

[14] The respondent raised prescription in the following terms:
‘1.
The matter between parties has since been prescribed in terms of Section 13(1)(f) of
the prescription Act 68 of 1969, which provides that the completion of prescription will
be delayed until one year after the Arbitration proceedings came to an end, for the

Applicant to make an arbitration award an order of court in terms of Section 31 of the
Arbitration Act, 42 of 1965. The Applicant has failed to do so in time.
2.
The arbitration process took place on the 25th of September 2012 and the award was
published on the 21st of December 2012.
3.
The period of [o]ne year has lapsed since the date of publication, to make the award
an order of court in terms of Section 31 of the Arbitration Act, 42 of 1965.’

[15] It is immediately apparent that prescription was raised as if s 13(1)(f) of the
Act provided for a one year period of prescription in respect of an arbitration award.
This proposition formed the basis of the judgment of the court a quo. The proposition
is of course clearly wrong. Section 13(1)(f) provides nothing of the sort. It deals with
the delay in the completion of the running of prescription. The requisite periods of
extinctive prescription in terms of the Act are to be found in s 11 thereof. Applied to
the facts of this case, s 13(1)(f) provides that if the relevant period of prescription in
respect of a debt would, but for the provisions of the subsection, have been
completed before or on within one year of the date of publication of the award on
21 December 2012, the completion of the period of prescription in respect of such
debt would be delayed for one year after 21 December 2012.

[16] As I have said, the appellant’s counter-claim related to ordinary levies, special
levies, a security levy and consumption of electricity. It can be accepted that the
counter-claim encompassed a variety of separate debts. It follows that for the
respondent to succeed she had to prove that one or more of these separate debts
would have prescribed before or on or within a year of the arbitration award.
This entailed proof of the date on which each debt became due. See Gericke v Sack
1978 (1) SA 821 (A) at 827H-828A.

[17] The respondent made no attempt to satisfy this onus. The various debts
clearly became due on different dates and at least some of them would have
become due from month to month. The respondent presented no evidence as to
when any of these debts became due. The uncertainty is compounded by the fact
that it is not possible on the evidence to make any appropriation of the substantial
payments that the respondent made to the appellant prior to the arbitration.

[18] It follows that the defence of prescription had to fail. Counsel for the
respondent properly conceded that in such event, the order of the court a quo must
be replaced with an order granting the appellant’s application with costs.

[19] The following order is issued:
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
‘Prayers 1, 2 and 3 of the notice of motion are granted, with costs.’

_________________________
C H G van der Merwe
Judge of Appeal

APPEARANCES
For Appellant:

A Granova

Instructed by:

Jordaan & Wolberg Attorneys, Johannesburg

Rossouws Attorneys, Bloemfontein

For Respondent:

M C Ntshangase

Instructed by:

Khumalo Attorneys & Associates, Randburg

Maduba Attorneys, Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

23 March 2018

STATUS

Immediate

Brompton Court Body Corporate v Khumalo (398/2017) [2018] ZASCA 27
(23 March 2018)

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.

On 21 December 2012 the appellant, the body corporate of the Brompton
Court sectional title scheme, obtained an arbitration award in its favour
against the respondent, Ms C F Khumalo. The respondent owned a unit in the
scheme. The arbitration award represented the outstanding balance owed by
the respondent to the appellant in respect of levies, electricity charges and
interest. During March 2014 the appellant approached the Gauteng Division of
the High Court, Johannesburg (the high court) for an order making the
arbitration award an order of court in terms of s 31 of the Arbitration Act 42 of
1965. The respondent opposed the application on the basis that the debt in
question had prescribed in terms of the Prescription Act 68 of 1969. The high
court upheld the defence of prescription and dismissed the appellant’s
application with costs.

On appeal to the Supreme Court of Appeal (SCA), the appellant sought to
have the decision of the high court overturned on the ground that the
arbitration award created a new debt and that a three year prescriptive period
commenced to run only on the date of the award. As the application was
made within three years thereafter, so it was contended, the respondent’s
reliance on prescription was misplaced. The SCA held, however, that the
arbitration award did not create a new debt. It also held that the claim to have
the arbitration award made an order of court, was not a ‘debt’ for purposes of
the Prescription Act. The SCA therefore held that the appellant could not
succeed on this point.

The SCA concluded that the high court erred in approaching the matter as if s
13(1)(f) of the Prescription Act provided for a one year period of prescription in
respect of an arbitration award. The SCA reasoned as follows: Applied to the
facts of this case, s 13(1)(f) provides that if the relevant period of prescription
in respect of a debt would, but for the provisions of this sub-section, have
been completed before or on or within one year of the date of the award, the
completion of the period of prescription in respect of such debt would be
delayed for one year after 21 December 2011. As the arbitration award was
based on a variety of separate debts, the respondent had to prove that one or
more of these separate debts would have prescribed before or on or within a
year of the arbitration award. The respondent made no attempt to satisfy this
onus and therefore the defence of prescription had to fail.

Therefore the SCA today upheld the appeal with costs and substituted the
order of the high court with an order making the arbitration award an order of
that court, with costs.