Certain Underwriters at Lloyds v South African Special Risks Association

• Jurisdiction: South Africa
• Judge: Schabort J, Labe J and Willis J
• Judgment Date: 23 August 2000
• Citation: 2001 (1) SA 744 (W)
• Docket Number: A5008/2000
• Hearing Date: 15 June 2000
• Counsel: A Subel SC for the appellant. H Barolsky for the respondent.
• Court: Witwatersrand Local Division

Labe J:

[1] It is with some hesitation that I dissent from my learned Brothers, more particularly because when I first began working on the judgment I came to the same conclusion as they did. I give short reasons for my dissent. I

[2] The appellants in this appeal were the respondents in the Court a quo. I refer to them as Lloyds. The respondent in the appeal was the applicant in the Court a quo.

[3] I refer to it as SASRIA. J

Labe J

[4] The facts giving rise to this appeal have been set out by my Brother Willis, J and I do not have to repeat them. A

[5] I mention at the outset, however, that both parties were ad idem that the Arbitration Act 42 of 1965 was not applicable to the appeal, presumably because the agreement to arbitrate was not wholly in writing. B

[6] There was no agreement between the parties that interest would run on the amount which one or the other of them would have to pay the other as a result of any order made by Solomon SC. They were, however, agreed at the appeal that the award would carry interest. The only dispute was whether interest would run from the date of the award of Solomon SC or from the date of the award of the appellate tribunal. C

[7] The parties were ad idem that if they had not agreed on an appeal procedure then upon the making by Solomon SC of his award, Lloyds would have been obliged forthwith to have paid to SASRIA the amount that SASRIA had prepaid. In other words interest would have run on the award from that date. SASRIA would have been in mora at that date. D

[8] SASRIA insisted that there should be an appeal to an appellant tribunal. Not all the correspondence between the parties in regard to the appeal procedure was put before us, but Mr Subel SC for the appellant contended that the mere fact that it had been agreed that there would be an appeal procedure, without more, resulted E in Lloyds not having to pay interest on the award of Solomon SC from the date thereof but they would only have to pay interest once the appellate tribunal had given its award.

[9] The fact that Lloyds was not an actual party to the arbitration before Solomon SC does not affect the matter because the F parties agreed that the arbitration before Solomon SC would determine their rights inter se. The fact that the effect of the award of Solomon SC was a declarator is irrelevant.

[10] See Commissioner for Inland Revenue v First National Industrial Bank Ltd 1990 (3) SA 641 (A) at 652H - 653C, where the G following was said:

'To be in mora there must be a debt and the debt must be enforceable. (Steyn Mora Debitoris volgens die Hedendaagse Romeins-Hollandse Reg at 40; De Wet and Yeats Kontraktereg en Handelsreg 4th ed at 147; Joubert (ed) The Law of South Africa vol 5 para 203.) The Commissioner could not be in mora as regards repayment until such time as it was decided that a duty to repay existed. That was the very point of their H understanding: that the money would only be refundable once it has been established (by a tribunal or by compromise) that the Commissioner misconstrued the statute and was obliged to repay the money. Any claim by the Bank for repayment to be made prior to the determination of the dispute could be met by the Commissioner with the defence that such a claim would be premature and might yet prove to be idle. I

That, in my view, is the short and simple answer to the Bank's contention: the Commissioner was not in mora and so cannot be liable for interest a tempora morae.

It does not really assist the Bank to contend, as its counsel did, that the order of the Court below did not create the Commissioner's obligation to return the money to the Bank but that it merely declared and gave effect to that obligation. J

Labe J

That may well be so, once the order was granted. But that does not mean, as counsel suggested, that his A obligation to repay did not remain in abeyance pending the judgment, and consequently that it was forthwith enforceable, even before judgment. It was not, and the Bank itself never understood it to be, immediately repayable.'

[11] It is clear that had the parties resorted to the courts and not to arbitration mora interest on the judgment of the B Court a quo would have run from the date of the order of the Court of first instance either as confirmed or as varied by the Court of appeal.

[12] See General Accident Versekeringsmaatskappy Suid-Afrika Bpk v Bailey NO 1988 (4) SA 353 (A), where Smalberger JA said this at 357G - J and 359A: C

'Soos alreeds aangedui, dra elke vonnisskuld rente, luidens art 2(1) van Wet 55 van 1975, ''vanaf die dag waarop die vonnisskuld betaalbaar is''. Die vraag ontstaan, wanneer is 'n vonnisskuld betaalbaar? In die gewone gang van sake is dit betaalbaar op die datum wanneer dit deur die uitspraak van die Verhoorhof bepaal word. Waar geen appèl aangeteken is nie dra die vonnisskuld gevolglik rente D vanaf datum van uitspraak (tensy die Hof se bevel anders bepaal) - onderhewig egter aan die voorskrifte van art 21(1A) van Wet 56 van 1972. Indien daar appèl teen die uitspraak aangeteken word (hetsy teen die bevindings op die meriete, of die bedrag toegeken, of albei), word die inwerkingtreding en tenuitvoerlegging van die Verhoorhof se bevel opgeskort hangende die beslissing op appèl (Reid and Another v Godart and Another 1938 AD 511), tensy die teendeel E gelas word. As die appèl afgewys word, verval die opskorting. Meneer Scholtz, namens die appellant, gee toe dat in so 'n geval, waar die vonnis onveranderd of wesenlik onveranderd bly (maar alleenlik in so 'n geval), rente op die vonnisskuld betaalbaar is vanaf die datum van die Verhoorhof se uitspraak. As rede hiervoor voer hy aan dat die afwysing van die appèl daarop neerkom dat die Hof van appèl die uitspraak van die Verhoorhof bekragtig as korrek van meet af aan. Dit F stel nie 'n nuwe vonnis daar nie. In teenstelling hiermee betoog mnr Scholtz dat waar die appèl slaag en die bedrag van die vonnisskuld gewysig word, hetsy deur dit te verminder of te vermeerder (by die geval waar die eiser geslaagd appelleer teen die quantum van die toegestaande bedrag), daar in albei gevalle 'n ''nuwe'' vonnisskuld ontstaan wat alleenlik betaalbaar is vanaf die datum van uitspraak van die Hof van appèl. G

Die logiese uitvloeisel van hierdie betoog kan tot absurde en onbillike gevolge lei. Om maar enkele daarvan te noem. Sou 'n eiser suksesvol teen die quantum van skadevergoeding wat toegestaan is, appelleer, en die bedrag daarvan...