Basson v Niemann and Others

The parties were attorneys who had practised together in partnership. During 1999, while still a partner, the appellant paid investors’ deposits held in the firm’s trust account to a client, Anglo-Euro Company (Pty) Ltd, allegedly without proper authority. Investors later claimed repayment, alleging improper trust payments. After arbitration and related proceedings, the respondents (former partners) accepted liability to the investors and paid substantial amounts during 2006. In December 2009, they instituted action against the appellant seeking indemnification and reimbursement based on his alleged negligence and breach of professional duties. The appellant raised a special plea of prescription, contending that the respondents had knowledge of the material facts more than three years before summons was served.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order upholding the special plea of prescription and dismissing the respondents’ claims with costs.

The case clarifies the application of s 12 of the Prescription Act, particularly the meaning of ‘knowledge of the facts’ and the standard of reasonable care required of creditors. It confirms that prescription is not delayed by a creditor’s failure to investigate, misplaced trust in a debtor, or uncertainty about recovery from third parties such as insurers. It also affirms that incorporation of a firm does not extend or revive partnership-based claims for purposes of prescription.