Factaprops 1052 CC and Another v Land and Agricultural Development Bank of South Africa t/a The Land Bank

In 1999 the Land Bank advanced a loan of R250 000 to Factaprops 1052 CC. Repayment of the loan was secured by a registered special notarial bond over specified movable assets in terms of the Security by Means of Movable Property Act 57 of 1993. As additional security, the sole member of Factaprops, Mr Darsot, bound himself as surety and co-principal debtor. Factaprops defaulted, with the final instalment due in June 2004. In October 2010 the Land Bank issued summons for payment of the outstanding debt. The appellants raised a special plea of prescription, contending that the claim had prescribed after three or six years. The Land Bank contended that the applicable prescription period was thirty years because the debt was secured by a special notarial bond.

The appeal was dismissed with costs on the attorney and client scale. The special plea of prescription failed and the Land Bank’s claim was held not to have prescribed.

This judgment authoritatively settled conflicting High Court decisions on the prescription period applicable to debts secured by special notarial bonds. It clarified that such debts prescribe after thirty years under section 11(a)(i) of the Prescription Act, strengthening the security position of lenders and providing certainty in South African prescription and security law.