In the case of Stemmet and Another v Mokhethi and Another, heard on October 4, 2023, the South African Supreme Court of Appeal (SCA) grappled with the crucial question of when prescription starts to run in cases involving latent defects. The dispute revolved around a property sale where the purchasers, the Mokhethis, alleged that the sellers, the Stemmets, had concealed significant structural defects. The central legal issue at hand was whether the Mokhethis had obtained sufficient knowledge of the defects to initiate their claim within the prescribed time frame under the Prescription Act 68 of 1969.
Facts of the Case:
The Mokhethis purchased a property from the Stemmets in Fichardt Park, Bloemfontein, believing it to be in good condition. After taking possession, they discovered structural defects, including structural cracks, which they alleged the Stemmets were aware of but had failed to disclose. Subsequently, on July 19, 2017, the Mokhethis initiated legal proceedings against the Stemmets, claiming damages for the undisclosed defects. They argued that the defects were fraudulently concealed, leading them to purchase the property under false pretences.
Legal Argument for and Against Prescription:
In anticipation of a potential special plea of prescription, the Mokhethis asserted that they became aware of the defects on August 12, 2014, when informed by Absa that the defects were due to the property being built on clay soil, which expanded and retracted, and that the foundation was inadequately underpinned and supported. They sought damages, including the cost of repairs, amounting to R128,423.26.
The primary legal issue before the court was whether the Mokhethis had acquired the minimum facts necessary for prescription to start running within the framework of the Prescription Act. The Act stipulates that prescription commences when the creditor has the requisite knowledge of both the existence of the cause of action and the identity of the person responsible for the damage.
The majority of the full court of the Free State Division of the High Court had ruled in favour of the Mokhethis, rejecting the special plea of prescription. However, the SCA, after a careful examination of the facts and applicable legal principles, came to a different conclusion.
The SCA noted that the Mokhethis had reasonable grounds to believe that the defects existed as early as June 2014. They were in possession of enough evidence to conclude that the Stemmets had attempted to conceal these latent defects through patchwork on the cracks. The court emphasized that prescription begins when the creditor has the minimum facts necessary to initiate legal action, not when they are fully aware of the extent of their legal rights or possess all the evidence to prove their case.
In essence, the SCA held that the Mokhethis had sufficient knowledge of the essential facts, namely the existence of the defects and the alleged fraudulent concealment, well within the prescription period. Therefore, the Mokhethis’ claim had indeed prescribed.
The Stemmet v Mokhethi case provides clarity on when prescription begins to run in cases involving latent defects under the Prescription Act 68 of 1969. It underscores that the commencement of prescription is not postponed until the creditor is fully aware of all details or has evidence to prove their case comfortably. Instead, prescription starts when the creditor has acquired the minimum facts necessary to institute legal action. In this instance, the Mokhethis’ claim was found to have prescribed, leading to the dismissal of their claim with costs. This judgment reaffirms the importance of timely action in pursuing claims related to latent defects and has implications for similar cases in South African jurisprudence.