Liberty Group Limited v Illman

Charter Life Insurance Company Ltd (later Liberty Active Ltd) concluded a broking agreement with ECE Financial Holdings in 2003, under which ECE earned commission on insurance products. Liberty advanced commissions to ECE before receiving premiums. Many policies later lapsed or were cancelled, triggering a contractual obligation on ECE to repay the advanced commissions. Eight individuals, including the respondent, had each signed identical deeds of suretyship binding themselves as sureties and co-principal debtors in solidum with ECE. Liberty ceded its rights to recover the claw-back commissions to the appellant. In September 2011, the appellant issued summons against all sureties. Summons was served timeously on one surety (September), against whom default judgment was obtained, but was only served on the respondent in March 2016. The respondent raised a special plea that the claim against him had prescribed.

The appeal was dismissed with costs, and the High Court’s order upholding the respondent’s special plea of prescription was confirmed.

The judgment authoritatively reaffirms South African law on the accessory nature of suretyship and clarifies that a surety described as a co-principal debtor does not become a co-debtor. It confirms that prescription against one surety is not interrupted by service on another surety, thereby providing certainty on prescription and enforcement of suretyship obligations.