Nedcor Bank Beperk v Regering van die Republiek van Suid-Afrika

The Government of the Republic of South Africa issued a treasury cheque (skatkisorder) for R150 595.87 payable to “Total or order”, generally crossed and marked “not negotiable”. No endorsement ever appeared on the instrument. On 26 February 1994, Nedcor Bank, acting as collecting bank, paid out the cheque and credited the proceeds to the account of Mrs F L Mahlangu trading as Duduza Service Station, contrary to the drawer’s instructions. The intended payee, Total, never received payment and the underlying debt remained unpaid, leaving the Government liable. More than three years after the payment, the Government instituted a delictual claim against Nedcor Bank, alleging negligent payment. Nedcor raised a special plea of prescription, contending that the Government had knowledge of the essential facts and the identity of the debtor more than three years before service of summons.

The appeal was upheld with costs, including the costs of two counsel. The order of the court a quo was set aside and replaced with an order upholding the special plea of prescription and dismissing the Government’s claim with costs.

The case is a leading Supreme Court of Appeal authority on the interpretation of section 12(3) of the Prescription Act. It clarifies that prescription begins once a creditor has knowledge of the essential or minimum facts giving rise to a claim, not when the creditor has full evidential certainty or knowledge of every factual detail. The judgment strikes a balance between fairness to creditors and legal certainty for debtors and is frequently cited in prescription disputes.