THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable

Case No: 237/2016

In the matter between:

SENTRACHEM LIMITED                                                                        APPELLANT

and

A L TERREBLANCHE                                                                         RESPONDENT

Neutral Citation:  Sentrachem v Terreblanche (237/2016) [2017] ZASCA 16
(22 March 2017)
Coram:
Leach, Majiedt, Mathopo and Mocumie JJA and Schippers AJA
Heard:
2 March 2017
Delivered:   22 March 2017

Summary:  Prescription – pension funds – erroneous double payment – substitution
of a party after litis contestatio as a result of a cession of the debt does not give rise
to a valid plea of prescription – cessionary attains all the rights of cedent – has full
locus standi – impoverishment proved on the facts.

___________________________________________________________________

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Engelbrecht 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 substituted with the following:
„(a) The defendant‟s special plea of prescription is dismissed with costs.
(b) The defendant is ordered to pay the plaintiff the sum of R453 972.31.
(c) The defendant is ordered to pay the plaintiff interest on the sum of R453 972.31
at the rate of 15.5 per cent per annum calculated from 11 July 2011 to date of
payment in full.
(d) The defendant must pay the costs of the action including all reserved costs.‟
___________________________________________________________________
JUDGMENT

Majiedt JA (Leach, Mathopo and Mocumie JJA and Schippers AJA concurring)
[1] The main issue in this appeal is whether the substitution of a party after litis
contestatio as a result of the cession of a debt gives rise to a valid plea of
prescription. In addition, the alleged impoverishment of the cessionary in a claim
based on the condictio indebiti has also been placed in issue. The Gauteng Division
of the High Court, Pretoria (Engelbrecht AJ sitting as court of first instance), upheld a
special plea of prescription in respect of an undue enrichment claim brought by the
appellant, Sentrachem Limited (Sentrachem), against the respondent, Mr A L
Terreblanche. That decision was dispositive of the case and consequently the other
issues (locus standi and impoverishment) were not decided. This appeal is with the
leave of the court a quo.

[2] The facts are largely common cause or not seriously disputed and are briefly
as follows. Mr Terreblanche was a member of the Sentrachem Group Pension Fund
(the pension fund). During 2010 the pension fund received approval of a surplus
apportionment scheme in terms of the Pension Funds Act 24 of 1956. In the course
of implementing the scheme, the pension fund made a payment of the sum of
R94 614.99 to Mr Terreblanche on 6 October 2010. On behalf of Mr Terreblanche
the correctness of the computation of this amount was challenged, although the
parties were ad idem that an amount was due to him. As I will demonstrate below,
the issue regarding computation of the first amount does not affect the resolution of
the main issues outlined above.

[3] On the same day (6 October 2010), the pension fund made a second
payment to Mr Terreblanche in the sum of R453 872.31. It is this payment which is in
issue in this appeal. The pension fund‟s case was that this payment was made in
error to Mr Terreblanche in the bona fide and reasonable, but mistaken belief that
the amount was due to him as his share of the surplus apportionment scheme. Its
claim is based on the condictio indebiti. The pension fund issued summons in the
amount of R453 872.31, the amount with which Mr Terreblanche allegedly had been
enriched. The summons was served on Mr Terreblanche on 22 August 2011.

[4] On 13 December 2011 the Registrar of Pension Funds approved the
voluntary dissolution of the pension fund and the liquidator, Mr Jeremy Peter
Andrew, was substituted as plaintiff in terms of Uniform rule 15(2) on 27 February
2012. Thereafter, on 27 September 2013, Mr Andrew entered into a cession and
assignment agreement with Sentrachem, in which the claim against Mr Terreblanche
was ceded to Sentrachem. Pursuant to the cession, Sentrachem was substituted in
place of Mr Andrew as plaintiff in terms of a court order dated 22 November 2013.
Mr Terreblanche did not object to the first substitution, nor to the substitution of
Sentrachem as plaintiff, which occurred on 3 December 2013. Mr Terreblanche also
did not amend his plea as a result of both the substitutions of the plaintiff mentioned
above. The second substitution thus occurred on a date after the end of the
prescription period.

[5] In an amended plea, delivered on 31 March 2015, Mr Terreblanche raised a
special plea of prescription. The plea states that the defendant received
R453 972.31 on 6 October 2010; that prescription began to run from 7 October 2010;
and that the plaintiff‟s claim has prescribed, because more than three years have
passed since the debt became due as contemplated in terms of s 11(d) of the
Prescription Act 68 of 1969. The crux of the submissions was that the substitution of
Sentrachem as plaintiff amounted to the institution of new proceedings that had to be
completed within the statutory period of three years. This contention found favour
with the court a quo and it upheld the special plea of prescription. In doing so, the
court a quo relied on Standard General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd
(FBC Holding (Pty) Ltd as Third Party).1

[6] The dates relevant to the issue of prescription are the following:
(a) On 27 October 2010, Mr Andrew, tasked with the investigations into double
payments, discovered the erroneous payment made to Mr Terreblanche.
(b) On 22 November 2013, Kollapen J granted leave for Sentrachem to be
substituted as plaintiff in place of Mr Andrew, pursuant to the cession agreement.
This application was not opposed.
(c) The formal substitution occurred on 3 December 2013.
It bears mention that the cession agreement provided that the cession would only
become effective upon the date of substitution of Sentrachem as the plaintiff. It was
contended on behalf of Mr Terreblanche that both the dates in (b) and(c) above fall
outside the prescription period, which ended on 26 October 2013 (an earlier
assertion on behalf of Mr Terreblanche that prescription started running on the date
of the payment, ie 6 October 2010, appears to have been abandoned in this court,
correctly so - the period of prescription plainly commenced running on 27 October
2010, when the mistake was discovered).

[7] In essence therefore, what falls to be determined is the effect of the
substitution of Sentrachem as plaintiff and whether the substitution introduced a new
creditor which sought to enforce the claim in its own name after the three year period
laid down in  s 11(d) of the Act, had lapsed ie after the claim had prescribed. A

1 Standard General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd (FBC Holdings (Pty) Ltd, Third Party)
1996 (1) SA 382 (W).

further, related enquiry is the effect, if any, of the cession having occurred after litis
contestatio.

[8] As stated, in terms of s 11(d) of the Act a debt of the present type prescribes
after three years from the time the debt is due (s 12(1)). Section 15 is the key
provision in the present enquiry. In relevant part it reads as follows:
„Judicial interruption of prescription
(1)
The running of prescription shall, subject to the provisions of subsection (2), be
interrupted by the service on the debtor of any process whereby the creditor claims payment
of the debt.
(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 this 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.
(3)
If the running of the prescription is interrupted as contemplated in subsection (1) and
the debtor acknowledges liability, and the creditor does not prosecute his claim to final
judgment, prescription shall commence to run afresh from the day on which the debtor
acknowledges liability or, if at the time when the debtor acknowledges liability or at any time
thereafter the parties postpone the due date of the debt, from the day upon which the debt
again becomes due.
(4)
If the running of prescription is interrupted as contemplated in subsection (1) and the
creditor successfully prosecutes his claim under the process in question to final judgment
and the interruption does not lapse in terms of subsection (2), prescription shall commence
to run afresh on the day on which the judgment of the court becomes executable.
(5)
…
(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.‟

[9] It was contended on behalf of Mr Terreblanche that the original creditor (the
pension fund) had not successfully prosecuted its claim under the summons to final
judgment as contemplated in s 15(4) above. The new creditor (Sentrachem), so it
was contended, had stepped into the pension fund‟s shoes and the prosecution of
the claim by Sentrachem only commenced after the period of prescription had
ended. These submissions were countered on behalf of Sentrachem with Van

Rensburg v Condoprops 42 (Pty) Ltd2 and Fisher v Natal Rubber Compounders (Pty)
Ltd.3

[10] In Van Rensburg a similar defence was raised as one of two main defences to
a claim for estate agent‟s commission. The defendant raised a special plea that the
plaintiff‟s claim was based on a cession of the original plaintiff‟s claim concluded
after litis contestatio and more than three years prior to the notice to amend and
substitute, and that the claim had accordingly prescribed. Unlike the present
instance, however, the court had not been approached to sanction the substitution –
the original plaintiff had merely given notice in terms of Uniform rule 28 of her
intention to amend the claim in a manner which effected the substitution. The
defendant failed to object to the substitution, as is the case here.

[11] In dismissing the special plea of prescription, Leach J took the view that the
defendant‟s argument failed to draw a distinction between a cause of action, on the
one hand, and a „debt‟ as envisaged by the Act, on the other (in this regard the
learned Judge relied on two decisions of this court).4 The learned Judge stated:
„The Prescription Act prescribes periods of prescription in respect of “debts”, not periods of
prescription relating to causes of action. Thus, even accepting that the substitution of a
plaintiff amounts to the introduction of a new cause of action, the debt remains the same, viz
the amount the defendant became obliged to pay as commission due to Nissen having
performed her mandate. That was the debt Nissen sought to enforce by way of the
summons in the present proceedings. That summons interrupted the running of prescription
in respect of such debt. When litis contestatio was reached, the rights of the defendant and
Nissen 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. At all times, between the cession in 2004 and
the substitution in May 2007, Nissen was entitled to proceed to prosecute her claim against
the defendant. When substitution took place Van Rensburg‟s rights under the cession were
perfected and he stepped into Nissen‟s shoes in that regard. In these circumstances there
can be no question of the debt owed by the defendant having prescribed.‟5

2 Van Rensburg v Condoprops 42 (Pty) Ltd 2009 (6) SA 539 (E).
3 Fisher v Natal Rubber Compounders (Pty) Ltd [2016] ZASCA 33; 2016 (5) SA 477 (SCA).
4 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in Liquidation) 1998 (1) SA
811 (SCA) at 826J – 827A; CGU Insurance Ltd v Rumdel Construction (Pty) Ltd 2004 (2) SA 622
(SCA) para 6.
5 Paragraph 12.

Later on, Leach J held:
„. . . In any event, if prescription was a valid defence to a substitution . . . it should have been
raised in opposition to the substitution.‟6
Van Rensburg was referred to with approval in Fisher.

[12]  In Fisher this court was concerned with the cession to another company,
NRC, of the creditor‟s claim for goods sold and delivered. Pursuant to the cession,
the creditor amended its summons by substituting NRC as plaintiff. The defendant, in
raising a special plea of prescription, advanced a similar argument as Mr
Terreblanche did in the present instance, namely that the substitution of NRC as the
plaintiff amounted to the institution of fresh proceedings. The original creditor had
failed to prosecute its claim to final judgment and the interruption of prescription
through the service of summons had fallen away in terms of s 15(2) and (6) of the
Act. Since, at the time of substitution, more than three years had elapsed since the
claim had arisen, the claim had become prescribed.

[13] In giving short shrift to these contentions, this court, in Fisher, held that:
„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.‟7
The court continued as follows:
„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

6 Paragraph 13.
7 Paragraph 15. See also: Waikiwi Shipping Co Ltd v Thomas Barlow and Sons (Natal) Ltd & another
1978 (1) SA 671 (A) at 678E-G.

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.‟8

[14] This case is on all fours with Fisher and Van Rensburg. The effect of the
substitution of Sentrachem as plaintiff did not result in new proceedings having been
instituted. The debt (an erroneous double payment) has remained unaltered
throughout – only the identity of the party which pursued the debt has changed: first
from the pension fund to Mr Andrew and then to Sentrachem. And Mr Terreblanche‟s
failure to object to the substitution amounts to a consent to such substitution. The
special plea of prescription is therefore without merit and ought to have been
dismissed.

[15] Standard General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd  is distinguishable
on the facts. In that case the creditor of the debt, Stangen, did not originally claim
payment of the debt – the original summons was issued by two other entities. An
amendment to the particulars of claim substituted Stangen as plaintiff in the place of
the other two entities, on the basis that they had ceded their claim to Stangen. But,
importantly, it was common cause that the notice of the application for amendment to
substitute Stangen as plaintiff had been given more than three years after the debt
became due. It is in this context and against this backdrop that Streicher J held that:
„By ceding the debt [the two entities] transferred all their rights in respect of their claims
against the defendant to Stangen. As from the time that the debt was ceded they were no
longer creditors of the defendant. Stangen became the creditor and only Stangen could sue
upon the debt.‟9
Later the learned Judge held as follows:
„As I have already indicated prescription can only be interrupted by process whereby the
creditor claims payment of the debt. Before the amendment the creditor of the debt had not
claimed payment of the debt and by the time that the amendment was applied for the debt
had already become prescribed.‟10
The reliance on this decision by the court a quo was therefore misplaced.

8 Paragraph 17.
9 At 385F-G.
10 At 387H-I.

[16] As stated, the court a quo did not deem it necessary to consider the issue of
locus standi, given its conclusion with regard to the special plea of prescription. The
challenge to Sentrachem‟s legal standing to sue is closely related to the contention
that Sentrachem had not been impoverished. I will therefore discuss these two
aspects together. It is well settled that once an order for thesubstitution of Mr Andrew
by Sentrachem as plaintiff had been made, Sentrachem as cessionary became
vested with locus standi to pursue the claim in its own name.11 And, as stated, Mr
Terreblanche‟s lack of objection to the substitution amounted to a consent to
Sentrachem substituting Mr Andrew as plaintiff. It was contended that Sentrachem
itself had not been impoverished – only the pension fund had suffered
impoverishment. This contention is untenable. The claim was based on the condictio
indebiti. It was alleged that Mr Terreblanche had been paid (for the second time) in
the bona fide, reasonable but mistaken belief that the payment was due. It can
hardly be disputed that the pension fund had experienced a diminution in the value
of its assets as soon as the erroneous payment had been made. Mr Andrew stepped
into the the shoes of the pension fund, which had been impoverished.   Mr Andrew,
in turn, ceded the claim to Sentrachem. It is trite that upon a valid cession, the
underlying obligation and the personal right flowing from it remain unchanged. The
transfer of the personal right occurs with all the sureties, real securities, advantages
and disadvantages attached to it.12 The personal right to claim was therefore
properly ceded to Sentrachem – it simply stepped into the impoverished cedent‟s
shoes. What finally puts paid to this contention is the relevant provision in the
cession agreement itself. The cessionary had agreed to bear the expenses incurred
in prosecuting the claim and the damages sustained as a result of the irrecoverability
of the claim. Clause 3.4 of the cession reads as follows:
„The cedent does not warrant the validity of the claim and is not to be liable to the cessionary
for any fees, costs or charges that may be incurred in prosecuting the claim, or for any
damages that may be sustained by the cessionary if the claim proves irrecoverable for any
reason whatsoever.‟
There is therefore no merit in the argument advanced regarding impoverishment.

11 Fisher fn 3 para 12; Brummer v Gorfil Brothers Investments (Pty) Ltd en andere 1999 (3) SA 389
(SCA) at 410F; Van Rensburg  fn 2 para 12.
12 S Scott, The law of cession 2 ed (1991) at 128.

[17] Once a substitution as plaintiff occurs, there can be no dispute concerning the
legal standing to sue. A substitution sanctioned by the court is a legal procedural
step to formalise the transfer of the claim to the cessionary in terms of the cession.
After substitution the cedent is entitled, and is in fact in law obliged, to continue the
suit in its own name.13

[18] The appeal must therefore succeed and costs should follow the outcome.
In the premises I issue the following order:
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and substituted with the following:
„(a) The defendant‟s special plea of prescription is dismissed with costs.
(b) The defendant is ordered to pay the plaintiff the sum of R453 972.31.
(c) The defendant is ordered to pay the plaintiff interest on the sum of R453 972.31
at the rate of 15.5 per cent per annum calculated from 11 July 2011 to date of
payment in full.
(d) The defendant must pay the costs of the action including all reserved costs.‟

_______________________
S A Majiedt
Judge of Appeal

13Ibid 133-4; Brummer fn 11 at 410F; Fisher fn 3 para 11.

APPEARANCES

For the Appellant:
D P de Villiers (with him L Grobler)
Instructed by:
Fasken Martineau (Incorporated in South
Africa as Bell Dewar Inc.), Sandton
Webbers, Bloemfontein

For the Respondent:

M Snyman
Instructed by:

Cremer & Strydom Attorneys, Pretoria
Honey Attorneys Inc., Bloemfontein