Anglorand Securities Ltd v Mudau and Another

The respondent (plaintiff in the court a quo), Mr Mudau, alleged that in December 2001 he entered into an oral agreement with Anglorand Securities Ltd, represented by its employee Mr Rashama, to invest R160 000 in shares and related investments. He paid the amount into Anglorand’s bank account. No shares were purchased, no investment booklet was provided, and the money was not refunded. Mudau made enquiries and demands during 2002 and was informed that Anglorand denied liability, asserting that the funds had been paid into an account linked to Rashama. A formal letter of demand was sent on 14 October 2002. Summons was only served on 16 August 2006. Anglorand raised a special plea that the claim had prescribed under the Prescription Act 68 of 1969.

The appeal was upheld with costs. The order of the Limpopo High Court was set aside and replaced with an order upholding the second defendant’s special plea of prescription and dismissing the plaintiff’s claim with costs.

The case is significant for clarifying the principles governing the commencement and interruption of prescription in South African law. It reaffirms that prescription starts running when liability is disputed and the creditor has knowledge sufficient to institute action, and that only a clear acknowledgement of liability by the debtor can interrupt prescription under section 14 of the Prescription Act.