DA Cruz v Bernardo
| Jurisdiction | South Africa |
| Citation | 2022 (2) SA 185 (GJ) |
DA Cruz v Bernardo
2022 (2) SA 185 (GJ)
|
Citation |
|
|
Case No |
2020/26428 |
|
Court |
Gauteng Local Division, Johannesburg |
|
Judge |
Turner AJ |
|
Heard |
August 10, 2021 |
|
Judgment |
August 10, 2021 |
|
Counsel |
G Kairinos SC for the applicant. |
Flynote : Sleutelwoorde
Interest — In duplum rule — Whether in duplum rule applies to mora interest claimed on liquidated debt as contemplated in s 1(1) of Prescribed Rate of Interest Act — Prescribed Rate of Interest Act 55 of 1975, s 1(1).
Headnote : Kopnota
In previous proceedings in the Johannesburg High Court before Foulkes-Jones AJ, the applicant had successfully brought a claim, based in delict, against the respondent for the repayment of moneys invested by the applicant in one of the respondent's businesses (after the deal in terms of which such investment had been made had collapsed). The respondent was ordered to pay the capital sum of R812 500, as well as interest on the amount a tempore morae calculated from 3 December 2007 (being the date on which the applicant had initially claimed repayment) to date of payment. Subsequent to the judgment, the applicant sent a letter to the respondent demanding payment of the capital sum, of R812 500, plus the interest owing at that stage, in the amount of R1 590 952,91. The respondent in answer disputed the calculation of the interest amount, contending that the in duplum rule applied to limit the interest payable by the respondent to R812 500. The respondent subsequently paid the capital amount outstanding and made a further payment of R812 500. This prompted the applicant, in the present matter, to apply to the Johannesburg High Court again to seek, inter alia, an order declaring that the in duplum rule did not apply to the moratory interest awarded in the judgment by Foulkes-Jones AJ; declaring that the respondent remained indebted to the applicant in the amount of R785 008,56, being the balance due in respect of moratory interest awarded in the judgment; and seeking interest on the aforesaid amount of R785 008,56 a tempore morae to date of final payment, both days inclusive.
2022 (2) SA p186
The in duplum rule, broadly speaking, provided that arrear interest ceased to accrue once the sum of the unpaid interest equalled the amount of the outstanding capital. The question in the present matter was whether the rule applied to liquidated debts — like the present one — in respect of which there was no law or agreement governing the calculation of the rate of interest, but which, instead, in terms of the common law, bore mora interest, and accordingly fell within the purview of s 1(1) of the Prescribed Rate of Interest Act 55 of 1975. That section provided that the type of debt in question attracted interest as calculated 'at the rate contemplated in subsection (2)(a) as at the time when such interest begins to run, unless a court of law, on the ground of special circumstances relating to that debt, orders otherwise'. After a thorough review of the operation of the rule in South Africa (see [17] – [43] and [57]), the court held that the in duplum rule did not apply to limit mora interest claimable on a liquidated debt (see[58], [62] and [66]). The plaintiff was therefore not precluded from recovering mora interest on its liquidated debt in an amount that exceeded the capital amount of the original debt (see [62]).
In reaching such a finding, the court had regard to the following:
All of the cases and the examples in the old authorities in which the in duplum rule was discussed and applied involved contractual claims where the interest rate was fixed by agreement between the parties (see [43] and [57.1]). The rule has been stated to apply to arrears interest ('agterstallige rente') on all contracts in which a capital sum owing was subject to a stipulated exchange rate (see [59]). The purpose of the rule was, from Roman times, to prevent lenders from exploiting borrowers in respect of debt agreements (see [59]).
However, mora interest was fundamentally different to contractual interest. It was not payable in terms of an agreement, but constituted compensation for loss or damage resulting from default (see [45.1], [55], [57.3] and [60]). The circumstances in which a liquidated debt giving rise to mora interest may be recoverable covered a broad territory and may cover circumstances as broad as theft, to goods sold and delivered. Further, a court had some flexibility in determining a defendant's liability for mora interest in terms of the Prescribed Rate of Interest Act and so, like with an unliquidated claim, the defendant's liability for interest was not certain until the court had delivered its judgment. (See [60].)
Delays in litigation may run longer than it took for the interest to equal the capital at the applicable mora interest rate. In these circumstances it was preferable, as a matter of public policy and in the interests of justice, for the court to retain a discretion on how interest should be awarded, exercised on the facts of each case. Where the court had such a discretion, it could exercise that discretion to limit interest payable to a dilatory plaintiff or to allow that interest where the defendant was the reason for the delay. Section 1(1) of the Prescribed Rate of Interest Act provides the court with that discretion. The 'special circumstances' which give a court the discretion set out in s 1(1) of the Prescribed Rate of Interest Act would include circumstances where a plaintiff had been dilatory or where delay ought not to be visited on one of the parties.
The Prescribed Rate of Interest Act did not impose a ceiling on interest liability and did not expressly incorporate an in duplum principle (where it could easily have done so) (see [56] and [57.4]).
In the circumstances the court granted the applicant the relief in the terms sought (see [71]).
2022 (2) SA p187
Cases cited
Administrasie van Transvaal v Oosthuizen en 'n Ander 1990 (3) SA 387 (W): referred to
Administrator, Cape, and Another v Ntshwaqela and Others 1990 (1) SA 705 (A) ([1990] 2 All SA 34): referred to
Bellairs v Hodnett and Another 1978 (1) SA 1109 (A): referred to
Bellingan v Clive Ferreira & Associates CC and Others 1998 (4) SA 382 (W): referred to
Commissioner, South African Revenue Service v Woulidge 2002 (1) SA 68 (SCA) ([2002] 2 All SA 199): discussed
Drake Flemmer and Orsmond Inc and Another v Gajjar NO 2018 (3) SA 353 (SCA): discussed
Elan Boulevard (Pty) Ltd v Fnyn Investments (Pty) Ltd and Others 2019 (3) SA 441 (SCA): referred to
eThekwini Municipality v Verulam Medicentre (Pty) Ltd [2006] 3 All SA 325 (SCA) ([2005] ZASCA 98): dicta in paras [9] – [10] applied
F & I Advisors (Edms) Bpk en 'n Ander v Eerste Nasionale Bank van Suidelike Afrika Bpk 1999 (1) SA 515 (SCA) ([1998] 4 All SA 480): dictum at 525E – G applied
Fatti's Engineering Co (Pty) Ltd v Vendick Spares (Pty) Ltd 1962 (1) SA 736 (T): referred to
Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A): dictum at 304D – I followed
Gardiner and Another v Margo 2006 (6) SA 33 (SCA) ([2006] 3 All SA 229): discussed
King and Others NNO v De Jager and Others 2021 (4) SA 1 (CC) (2021 (5) BCLR 449; [2021] ZACC 4): referred to
Land and Agricultural Development Bank of SA v Ryton Estates (Pty) Ltd and Others 2013 (6) SA 319 (SCA): referred to
Linton v Corser 1952 (3) SA 685 (A): referred to
LTA Construction Bpk v Administrateur, Transvaal 1992 (1) SA 473 (A): discussed
Margo and Another v Gardner and Another; Gardner and Another v Margo and Another 2010 (6) SA 385 (SCA) ([2010] ZASCA 110): discussed
Nedcor Bank Ltd v Behardien 2000 (1) SA 307 (C): referred to
Paulsen and Another v Slip Knot Investments 777 (Pty) Ltd 2014 (4) SA 253 (SCA) ([2014] 2 All SA 527; [2014] ZASCA 16): referred to
Paulsen and Another v Slip Knot Investments 777 (Pty) Ltd 2015 (3) SA 479 (CC) (2015 (5) BCLR 509; [2015] ZACC 5): discussed and distinguished
Scoin Trading (Pty) Ltd v Bernstein NO 2011 (2) SA 118 (SCA) ([2011] 2 All SA 608; [2010] ZASCA 160): referred to
Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in Liquidation) 1998 (1) SA 811 (SCA) ([1998] 1 All SA 413; [1997] ZASCA 94): discussed and distinguished
Stroebel v Stroebel 1973 (2) SA 137 (T): referred to
Transvaal Canoe Union v Butgereit and Another 1990 (3) SA 398 (T): referred to
Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1: referred to
Watson and Another v Renasa Insurance Co Ltd 2019 (3) SA 593 (WCC): discussed
West Rand Estates Ltd v New Zealand Insurance Co Ltd 1926 AD 173: referred to
2022 (2) SA p188
Zondi v MEC, Traditional and Local Government Affairs, and Others 2006 (3) SA 1 (CC) (2006 (3) BCLR 423; [2005] ZACC 18): referred to.
Legislation cited
The Prescribed Rate of Interest Act 55 of 1975, s 1(1): see Juta's Statutes of South Africa 2020/21 vol 2 at 1-508.
Case Information
G Kairinos SC for the applicant.
B Hitchings for the respondent.
An application for an an order declaring that the in duplum rule did not apply to the moratory interest awarded in the judgment by Foulkes-Jones AJ, delivered on 22 May 2020; declaring that the respondent remained indebted to the applicant in the amount of R785 008,56, being the balance due in respect of moratory interest awarded in the judgment; and seeking interest on the aforesaid amount of R785 008,56 a tempore morae to date of final payment, both days inclusive.
Order
The respondent is liable to pay to the applicant the amount of R785 008,56, being the balance due in respect of moratory interest awarded in the judgment and order under case No 15636/2008 in the Gauteng Division of the High Court, Johannesburg, by Her Ladyship Ms Acting Justice Foulkes-Jones (the judgment).
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