Section 11 of the Prescription Act 68 of 1969 makes provision for the time periods of when debt will
prescribe.
We refer to Section 11(a) which states the following:
11. Periods of prescription of debts
The periods of prescription of debts shall be the following—
(a) 30 years in respect of—
(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
(iv) any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances;
It’s been said that School fees is a statutory debt and therefor it is seen as a tax, and any debt imposed in terms of any tax only prescribe after 30 years.
We agree that School fees are statutory debt in terms of the South African Schools Act, however it is not a tax as referred to in Section 11(a)(iii) of the Prescription Act.
School fees are not owed to the State and it is determined by the governing body of each school and accepted by the parents, and therefor falls out of the ambit of being a tax.
In South Africa the courts have defined tax very narrowly and it’s so narrow that in the case of Eskom v Bonjanala Platinum District Municipality and Another (560/2003) the Supreme Court of Appeal held that municipal service levies were not a tax as defined in terms of Section 11(a)(iii).
In light of the above the prescription period for School fees will be 3 years as in terms of Section 11(d).
We have also discussed the prescription of school fees with the Department of Basic Education and attached hereto is their feedback.
Further attached hereto, is an article that was published in the Potchefstroom Electronic Law Journal and on page 22 it talks about the 3 year period for prescription of school fees. The following was said:
“Schools should be reminded that a debt for school fees would be extinguished after a period of three (3) years unless the prescription period is interrupted. The three years commence as soon as the debt is due. With school fees this would usually be the enrolment date or the date set in the contract. If the claim is based on negotiorum gestio or unjustified enrichment, the prescription commences after the administration of the affairs has been completed or the service was supplied”.
Please note the following with regards to collecting on prescribed debt:
Section 126B of the National Credit Amendment Act, 2014 as well as Section 157B of the National Credit Act, 2019.
In terms of Section 126B, no one may collect or re-activate debt once it has prescribed in terms of the Prescription Act. It further states in subcategory ii) that no person may continue to collect or re-active debt where the consumer raises the defence of prescription, or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.
Further in terms of Section 157B(3) it says that any person who intentionally continues the collection of, or attempts to re-activate a debt is guilty of an offence.
Although the National Credit Act applies to credit agreements, we as a debt collections company do not want to violate the law and the Court still applies the above to all debts.
The South African Law Reform Commission is also busy with a proposed amendment to the Prescription Act and when enforced it will also be illegal to collect on prescribed debt in the Prescription Act.
Legal Update from the Desk of Megan Oosthuizen (BCom)(LLB)
CeeBee In-house Attorney
