Claim to recover performance rendered under a contract subsequently cancelled—innocent party’s claim for restitution/contractual damages due for the purposes of the Prescription Act only when contract cancelled—similarly, claim arising in unjust enrichment due only on the failure of the condition under which the payments had been made

The Bruwer Family Trust and the Phillip Fourie Family Trust concluded an oral contract in 2016 for the sale of shares in a company; a written deed of sale was to be drawn up in due course. The Bruwer Trust was to make part payment through instalments immediately. Despite repeated demands, the Fourie Trust failed to enter into the written deed; the Bruwer Trust treated that behaviour as a repudiation, accepted that repudiation, and in 2019 cancelled the contract. The trustees of the Bruwer Trust then sought repayment of the amounts it had paid, alternatively damages for breach of contract, and in the further alternative, restitution on grounds of unjustified enrichment. In response, the trustees of the Fourie Trust raised a special plea of prescription: the plaintiffs’ particulars of claim had been served more than three years after the date of the oral agreement and the date of the payments, ie, in 2020, whereas s.11(d) of the Prescription Act 68 of 1969 specified that the default prescription period for debts was three years.

Held: According to the Prescription Act, s.12(1), prescription commences as soon as a debt is due. Moreover, according to s.12(3), “A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises …”. Whereas a right to claim performance under a contract ordinarily became due according to its terms, or within a reasonable time, the obligation to restore or to pay damages at issue here, although contractual in nature, arose only on cancellation of the contract: cf Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd 2018 (1) SA 94 (CC). Thus, the debt became due for the purposes of s.12(1) only in 2019.

As for the plaintiffs’ alternative claim in unjustified enrichment, although neither the particulars of claim nor the defendant’s special plea specified the nature of this claim,