Van Rensburg and Another v Van Rensburg

• Jurisdiction: South Africa
• Judge: Smuts AJ
• Judgment Date: 01 June 1962
• Citation: 1962 (3) SA 646 (O)
• Hearing Date: 04 April 1962
• Court: Orange Free State Provincial Division

Smuts, A.J.:

On the 19th February, 1962, plaintiffs issued a summons against defendant and the claims contained therein read as follows:

'1. Payment of the sum of R1,552.81, being an amount due and owing by E the defendant in respect of goods sold and delivered to him on or about 27th April, 1961.

2. Payment of interest on the aforesaid sum of R1,552.81 at the agreed rate of 8 per cent p.a. as from the 5th December, 1961, to date of payment.

3. Payment of R77.60, being collection commission at the agreed rate of 5 per cent on the aforesaid sum of R1,552.81, which the defendant undertook to pay to the plaintiffs.

4. Costs of suit.'

F Defendant having failed to enter appearance, the matter was set down for judgment by default. I granted judgment in terms of paras. 1 and 4 of the summons but reserved judgment on paras. 2 and 3.

Para. 3 of the summons is a claim for collection commission at an agreed G percentage of the amount of the debt owed by the defendant. Such a stipulation has been held to be a penalty and unenforceable save to the extent that actual loss or damage is proved to have been suffered. See D. & D. H. Fraser Ltd v Waller, 1916 AD 494, and Smit v Naude, 1957 (4) SA 70 (O).

Mr. Flemming contended, however, that the provisions of sec. 1 of Act 15 H of 1962 enable a Court to give judgment in respect of a claim such as that contained in para. 3 of the summons. He contended that although Act 15 of 1962 came into force only after summons was issued, sec. 1 relates to a procedural matter and that therefore sec. 1 is retrospective in its operation. The section referred to reads as follows:

'(1) A stipulation, hereinafter referred to as a penalty stipulation, whereby it is provided that any person shall, in respect of an act or omission in conflict with a contractual obligation, be liable to pay a sum of money or to deliver or perform anything for the benefit of any other person, hereinafter referred to as

Smuts AJ

a creditor, either by way of a penalty or as liquidated damages, shall, subject to the provisions of this Act, be capable of being enforced in any competent court.

(2) Any sum of money for the payment of which or anything for the delivery or performance of which a person may so become liable, is in this Act referred to as a penalty.'

A Mr. Flemming's contention that sec. 1 of Act 15 of 1962 merely affects procedure is to my mind without substance.

The effect of sec. 1 is to validate purely penal stipulations which, prior to that enactment, were regarded as contrary to public policy and therefore unenforceable. The Legislature has effected a change to substantive law in regard to the validity of penal stipulations and it B is because such stipulations are now to be regarded as valid that they are enforceable. It is not simply a matter of procedure as contended by Mr. Flemming.

The question, however, still remains whether the Legislature intended that stipulations for the payment...