About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2014
>>
[2014] ZASCA 16
|
|
Paulsen v Slip Knot Investments (434/2013) [2014] ZASCA 16; [2014] 2 All SA 527 (SCA); 2014 (4) SA 253 (SCA) (25 March 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
No: 434/2013
In
the matter between:
ANDRÉ
FRANCOIS
PAULSEN
......................................................................
First
Appellant
MARGARETHA
ELIZABETH
PAULSEN
.................................................
Second
Appellant
and
SLIP
KNOT INVESTMENTS 777 (PTY)
LIMITED
.........................................
Respondent
Neutral citation:
Paulsen v Slip Knot Investments
(434/13)
[2014] ZASCA 16
(25 March 2014)
Coram:
MPATI
P, SHONGWE, WALLIS and WILLIS JJA and MATHOPO AJA
Heard:
4
March 2014
Delivered: 25
March 2014
SUMMARY:
Credit agreement to which the
National Credit Act 34 of 2005
does
not apply – not invalid because credit provider not registered
in terms of
s 40
(1) of Act – mezzanine financing –
application of
in duplum
rule.
ORDER
On
appeal from
: Western Cape High Court, Cape Town (Louw, Ndita JJ
and Dolamo AJ sitting as court of appeal):
1
The appeal is dismissed with costs, such
costs to include those consequent upon the employment of two counsel.
2
The cross-appeal
succeeds with costs, such costs to include those consequent upon the
employment of two counsel.
3
Paragraph 2 of the order of the court below
is amended to read as follows:
The orders made by
the court a quo are set aside and the following substituted orders
are made:
‘
1
The Eighth and Ninth Respondents are ordered to pay, jointly and
severally, the following amounts:
(a)
The sum of R 12 million.
(b)
Interest on the sum of R 12 million up
until 10 February 2010 in the amount of R 12 million.
(c)
Further interest on the capital sum of R 12
million at a rate of 3% per month from 10 February 2010 to 24
February 2012.
(d)
Interest on the total of the amounts set
out in paras (a), (b) and (c) above at a rate of 3% per month from 25
February 2012 to
date of payment thereof, such interest to be limited
to the total of the said amounts.
(e)
Costs of suit on the party and party scale,
such costs to include the costs of two counsel.’
JUDGMENT
Wallis
JA (Mpati P, Shongwe JA and Mathopo AJA concurring)
[1]
In 2006, a company, optimistically named
Winskor 139 (Pty) Ltd (Winskor), had the opportunity to purchase a
portfolio of properties
in Pretoria and resell them at what it
anticipated would be a substantial profit. It had obtained a loan for
the bulk of the purchase
price, but there was a shortfall of R12
million. In order to obtain this amount it approached Slip Knot
Investments 777 (Pty) Ltd
(Slip Knot), which conducts business as a
provider of what is termed mezzanine finance, an expression meaning
nothing more than
short term bridging finance. Such finance is high
risk and those who provide it demand commensurately high returns. How
high, will
be seen when I come to examine the provisions of the
agreement in relation to the return that Slip Knot required on this
loan.
Needless to say, Winskor’s dreams of a speedy and
substantial profit dissipated during the course of the world economic
downturn
that commenced in 2007 and the result is the present
litigation. In it Slip Knot seeks to recover what it lent, together
with interest,
from Mr and Mrs Paulsen (the Paulsens), who bound
themselves as sureties for and co-principal debtors with Winskor for
the repayment
of the loan.
[2]
The litigation commenced in the Western
Cape High Court before Blignault J. He upheld all of Slip Knot’s
claims. The Paulsens
sought and obtained leave to appeal to the full
court of that division. There they enjoyed substantial success in
that their liability
for the payment of interest was held to be
limited by virtue of the operation of the
in
duplum
rule. In addition Slip Knot’s
claims for the payment of interest over and above a fixed amount were
dismissed. The judgment
was delivered by Louw J, and concurred in by
Ndita J and Dolamo AJ. However, that did not entirely satisfy the
Paulsens, who believed
that they had grounds, in terms of the
provisions of
s 40(4)
(a)
,
read with s 89(2)
(d)
,
of the National Credit Act 34 of 2005 (the NCA), for defeating the
claim in its entirety. They accordingly sought and obtained
the
special leave of this Court to appeal against the full court’s
judgment. Slip Knot likewise was dissatisfied and sought
and obtained
special leave to appeal in regard to the dismissal of its claims for
interest. It is that appeal and the cross-appeal
that are before us.
[3]
My colleague Willis JA has prepared a
judgment that I have had the opportunity of reading. I agree with it
in part and disagree
with it in part. On the parts where we agree on
the result my reasoning is different from his. I accordingly express
my views separately.
For convenience I have adopted his nomenclature
to refer to the parties.
[4]
The Paulsens bound themselves as sureties
for and co-principal debtors with Winskor for the latter’s
liabilities arising from
the loan agreement concluded with Slip Knot.
The latter agreement was a large agreement as described in s 9(4)
of the NCA
and Winskor was a juristic person the asset value or
annual turnover of which exceeded the prescribed threshold.
Accordingly, in
terms of s 4(1)
(b)
of the NCA it was one of the credit
agreements to which the Act does not apply and to which I will refer
as ‘excluded agreements’.
In their appeal the Paulsens
contend that it was nonetheless invalid in terms of the provisions of
s 89(2)
(d)
of
the NCA, because Slip Knot was not registered as a credit provider in
terms of s 40 (1) of the NCA.
[5]
The argument and my colleague’s
analysis focus on the obligation to register in terms of s 40
(1) of the NCA. With respect
I believe that is the wrong starting
place. If the loan agreement between Slip Kot and Winskor is invalid
that is because of the
provisions of s 89(2)
(d)
of the NCA. That much is apparent from
s 40(4) of the NCA, which provides that a credit agreement
entered into by a credit
provider who is obliged to register in terms
of the NCA is ‘an unlawful agreement and void to the extent
provided for in
section 89’. Accordingly it is to s 89
that we must turn to ascertain whether this agreement is void and, if
so, to
what extent.
[6]
Section 89 is the opening section in
Chapter 5 of the NCA dealing with ‘Consumer Credit Agreements’.
That heading immediately
alerts the reader to the question whether
the chapter applies generally to all credit agreements, or only to
those to which the
NCA applies. In my view it is clear that it
applies only to those credit agreements in respect of which it is
elsewhere provided
that the NCA shall apply. For that reason
s 89(2)
(d)
does
not apply to the loan agreement between Slip Knot and Winskor and
does not serve to invalidate it. My reasons for reaching
that
conclusion are the following.
[7]
The starting point is s 4 of the NCA,
which deals with the scope of application of the NCA and provides
that, subject to the
limitations spelled out in ss 5 and 6, the
NCA ‘applies to every credit agreement between parties dealing
at arm’s
length and made within, or having an effect within,
the Republic’. That broad statement is then qualified by the
word ‘except’
and there follows a list of exceptions, of
which a large agreement entered into by a juristic person whose
turnover or assets exceed
stipulated limits is one. These exceptions
are the excluded agreements. They are all credit agreements, but they
are excluded from
the application of the NCA. The plain meaning of
that exclusion is that the provisions of the NCA that would otherwise
apply to
them because they are credit agreements do not apply to
them.
[8]
The next step is to determine the scope of
this exclusion and to identify the provisions of the NCA to which it
relates. Counsel
correctly pointed out that the NCA deals with many
matters. Chapter 1 defines the different types of credit agreements
and delimits
the scope of application of the NCA in relation to those
agreements. Chapter 2 deals with consumer credit organisations and
Chapter
3 with regulation of the industry. It is here that the
provisions governing registration of credit providers are to be
found. Chapter
4 deals with policy in regard to consumer credit. If
one pauses at this point it is not immediately clear why the fact
that certain
agreements are excluded from the application of the NCA
should necessarily mean that persons who seek credit in relation to
such
agreements should not be protected against discrimination under
s 61, or disentitled to reasons for the refusal of credit in
terms of s 62, both of which fall in Chapter 4. Nor is it clear
that the regulation of the consumer credit industry should
not
encompass all credit providers and not merely some.
[9]
In order for the exclusion in s 4 to
have operative effect the portions of the NCA that are not intended
to apply to excluded
agreements must be identified. That brings me to
Chapter 5, which is the chapter that deals expressly with consumer
credit agreements.
Its provisions, and those of Chapter 6 dealing
with collection, repayment, surrender and debt enforcement, are the
provisions of
the NCA that apply generally to credit agreements.
Accordingly when s 4 says that the provisions of the NCA do not
apply to
excluded agreements, it is to these provisions that we must
look. These chapters are the obvious place in which to find the
provisions
that do not apply in respect of excluded agreements. And
s 89(2)
(d)
,
on which the Paulsens depend for their contentions, falls squarely
within the opening section of Chapter 5.
[10]
Does Chapter 5 or any of its provisions
apply to credit agreements in respect of which the application of the
NCA has been specifically
excluded? The answer lies in a closer
consideration of the provisions of the chapter. It consists of ss 89
to 123 of the NCA. It
is manifest from reading most of these
provisions that they cannot apply to agreements that are otherwise
excluded from the application
of the NCA. To apply them to such
agreements would render their exclusion from the application of the
NCA pointless. Thus Part
F of Chapter 5 (ss 121 to 123) affords
consumers rights to terminate agreements that would otherwise be
legally binding upon
them. Conversely it constrains the ability of
the credit provider to terminate the agreement where the consumer is
in default of
their obligations. Part E (ss 116 to 120) permits
consumers unilaterally to alter the terms of the credit agreements to
which they
are party; precludes alterations to agreements unless they
reduce the consumer’s liabilities under the agreement and
limits
the alterations that the credit provider can effect. Part D
(ss 107 to 115) deals with the content and form of statements.
Significantly it is careful to exclude (in s 107) certain types
of credit agreement that are clearly subject to the provisions
of the
NCA. That shows that those responsible for drafting the NCA were
alive to the need to exclude certain agreements from its
area of
operation.
[11]
Part C of Chapter 5 (ss 100 to 106)
deals with prohibited charges, the cost of credit, fees and charges
and interest and makes
provision for these to be capped by way of
regulations. It also governs the basis upon which interest, fees and
charges may be
adjusted. If these provisions apply to excluded
agreements they would render their exclusion from the application of
the NCA pointless.
Part B (ss 92 to 99) deals with pre-agreement
disclosure, the form of agreements, notices and other related
matters. Although
it distinguishes between small agreements on the
one hand, and intermediate and large agreements on the other, with
special provision
for pawn brokers in s 99, there is no
indication that it is intended to apply to excluded agreements.
[12]
That brings me to Part A, in which we find
s 89(2)
(d)
.
Part A identifies in s 89 those credit agreements that are
unlawful and in s 90 the provisions of credit agreements
that
are unlawful. These latter include provisions that are commonplace
and would be expected to appear in agreements covering
most large
commercial transactions such as ‘no misrepresentation’ or
‘whole agreement’ clauses; waivers
of common law rights
such as, in the case of a surety, the right to demand that the
principal debtor be excussed before resort
is had to the surety;
limitation of liability or exemption clauses; and provisions
requiring the conclusion of supplementary agreements,
such as deeds
of suretyship or contracts of insurance. The notion that the NCA
intended such provisions to be invalidated in all
commercial
transactions falling within the broad notion of a credit agreement
(see s 8 of the NCA read with various definitions
in s 1)
is obviously incorrect. That would fly in the face of the entire
purpose of the NCA, which is to regulate the provision
of credit to
natural persons and small businesses and even then only at the lower
end of the credit market.
[13]
Against
that background I am unable to see on what basis s 89(2)
(d)
,
of all the provisions in Chapter 5, should apply to excluded
agreements, when none of the other provisions in the chapter do so.
That being so, it is unnecessary for me to consider whether Slip Knot
was required to register as a credit provider under the regulatory
provisions of the NCA. Conceivably those provisions may serve some
purpose in relation to a credit provider that only enters into
excluded agreements. I appreciate that in the definition of ‘credit
provider’ in s 1 the term is only defined
in relation to
‘a credit agreement to which this Act applies’ and that
is a strong indication that the credit providers
that are obliged to
register do not include those that confine their activities to the
conclusion of excluded agreements,
[1]
but prefer not to express a final view on this when it is unnecessary
to do so.
[14]
For those reasons I agree with my colleague
that the Paulsens’ appeal falls to be dismissed with costs,
such costs to include
those consequent upon the employment of two
counsel. I turn then to deal with Slip Knot’s cross-appeal.
[15]
The cross appeal relates to Slip Knot’s
claims in terms of clause 6 of the loan agreement. The clause reads
as follows:
‘
6.
Interest
SLIP
KNOT shall be entitled to payment from the Borrower of interest
accrued on the loan amount, such interest which shall be calculated
at 25% (twenty five percent) of the nett profit in the development,
the Borrower having however guaranteed a minimum interest repayment
of R17 000 000.00 (Seventeen million rand). For example, should 25%
of the nett profit in the development be R16 000 000.00, the
Borrower
will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17
000 000.00
(seventeen million rand). Should 25% of the nett profit in the
development be R18 000 000.00, the Borrower will be liable
to pay
SLIP KNOT the loan amount of R12 000 000.00 (Twelve million rand)
plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
The
full court held that this clause embodied arrangements for the
payment of interest and that it fell foul of the provisions of
the
in
duplum
rule that restricts the amount
of interest that a creditor may recover on a debt to the capital
amount of that debt. It accordingly
held that Slip Knot’s
recovery was to be limited to the capital sum of R12 million and
interest on that sum of R12 million.
[16]
Slip Knot contended that this was a profit
sharing arrangement and, notwithstanding the terminology of the
clause, that it did not
provide for the payment of interest at all.
Accordingly it said that the
in duplum
rule found no application. Like my colleague, I disagree, and believe
that the contention that this is a profit sharing arrangement
is
easily disposed of. A claim to rectify the agreement to remove the
description of this amount as interest and to describe it
instead as
a profit share was not pursued. The matter is therefore one of
interpretation. Apart from the fact that the R17 million
is described
repeatedly as interest, it is payable even if no profit accrues from
the venture in which Winskor was engaged and
for which the loan was
advanced. That excludes the notion that this was a profit share. In
its ordinary connotation ‘interest’
describes the reward
or return that a lender expects the borrower to pay in return for the
loan. That is what the R17 million is.
The fact that further interest
was payable in terms of clause 7 of the agreement if the capital was
not repaid within six months
merely reinforces that conclusion.
[17]
Once interest is payable on a debt the
in
duplum
rule
potentially comes into play. The effect of that rule is clear. Where
a debt is owed and bears interest, the amount of such
interest may
not exceed the capital amount.
[2]
It was argued that this restriction only applied to arrear
interest,
[3]
but as the cases
show that expression merely means accumulated interest on the amount
in arrears.
[4]
It excludes
amounts already paid by way of interest and relates only to interest
that has accrued but is unpaid.
[5]
Then it was argued that this court in
African
Dawn Property Finance 2 (Pty) Ltd v Dreams Travel and Tours CC and
Others
,
[6]
sanctioned the charging of interest exceeding the amount of the
capital. That is a misreading of that judgment, which dealt with
usury and not the operation of the
in
duplum
rule.
All that it held was that there is no rate of interest that is
automatically usurious and therefore contrary to public policy.
It
did not sanction breaches of the
in
duplum
rule.
[18]
It follows that the stipulation for the
payment of interest in clause 6 contravened the
in
duplum
rule. That is readily
illustrated by the following example. Had Slip Knot stipulated that
it be paid interest at a rate of 23.5
per cent per month on the
capital it lent to Winskor, on condition that the interest was
repayable with the capital after six months,
the effect would have
been that Winskor was obliged to repay the R12 million in
capital together with an amount only fractionally
less than
R17 million by way of interest. It could not be disputed that
after the end of the fourth month the
in
duplum
rule would have operated to
prevent the accumulation of further interest. The position cannot be
any different where the interest
is payable in a lump sum.
[19]
I accordingly agree with my colleague that
clause 6 stipulated for the payment of interest and that the interest
for which it stipulated
exceeded the
duplum
.
The full court was accordingly correct to hold that up until the date
of commencement of the proceedings at first instance, which
was the
10 January 2010, the interest recoverable was limited to R12
million. It is at this point and in regard to the recovery
of
further interest that I diverge from my colleague in regard to the
fate of the cross-appeal.
[20]
The
operation of the
in
duplum
rule
after the commencement of legal proceedings was the subject of the
decision in this court in
Oneanate
.
[7]
At the end of a discussion of the relevant authorities Zulman JA
rejected the views of
Huber
that, where the
duplum
had been reached prior to the institution of action, interest did not
run during the pendency of the litigation, but only began
to run
after judgment, and concluded
[8]
that the true position is that:
‘
(i)
the
in duplum
rule is suspended
pendente lite
,
where the
lis
is said to begin upon service of the initiating process, and (ii)
once judgment has been granted, interest may run until it reaches
the
double of the capital amount outstanding in terms of the judgment.’
[21]
Some
confusion may arise from Zulman JA’s use of the expression
pendente
lite
in this passage, as its ordinary meaning is ‘pending the
suit’,
[9]
and he was
dealing with the situation during the pendency of the suit, that is,
after the litigation was underway. In this passage
it means during
the litigation and not before the litigation. Once that is understood
its effect is clear. If the
duplum
has
been reached prior to litigation commencing, interest will accumulate
afresh on the capital debt from the date of service of
the summons or
application papers. Once judgment is pronounced, in this case on 24
February 2012, the capital and interest accumulated
up to that date
are consolidated and interest begins to run again on the consolidated
debt until it reaches the
duplum
.
The
in
duplum
rule
will accordingly operate to limit the interest recoverable on a debt
at two points in time. Prior to litigation it will prevent
interest
accumulating beyond the full amount of the debt. If that point has
been reached prior to litigation interest will start
to run again and
will accumulate until judgment is pronounced. At the stage of
judgment the whole judgment debt, that is, capital
plus all
accumulated interest to date of judgment, will bear interest until it
again reaches the
duplum
.
[22]
The full court held that these principles
do not apply in this case because Slip Knot did not sue Winskor. The
reasoning on which
this was based is the following. Before the
commencement of litigation Slip Knot could only recover the capital
of R12 million
plus interest of a further R12 million from Winskor.
As it did not sue Winskor that is at present the limit of Winskor’s
liability to it. The Paulsens are sued as sureties and their
liability is accessory to that of Winskor. They cannot therefore be
held liable to pay further interest on the amount of their existing
liability because Slip Knot would then recover more from them
than it
could recover from Winskor.
[23]
I do not agree. This approach conflates
what are different matters, namely the accessory liability of the
surety and the obligation
on a debtor to pay interest on the debt.
The liability of Winskor as at the date of commencement of these
proceedings was limited
to the total amount of R24 million by virtue
of the operation of the
in duplum
rule,
and so was that of the Paulsens. However, once they were sued, there
is no reason why interest on what they owed Slip Knot
as co-principal
debtors, should not run again. That is not to impose upon them a
liability different from that of Winskor, because
Winskor would
similarly have been liable had it been sued. The surety is generally
entitled to raise any defence that the principal
debtor could raise.
Accordingly the Paulsens were entitled to raise the operation of the
in duplum
rule
in order to limit their liability before the institution of
proceedings to a total of R24 million. However, Winskor had no
defence to a claim for the payment of further interest if litigation
was commenced against it. There is accordingly no reason why
the
Paulsens should have one.
[24]
By permitting a claim for further interest
after the commencement of proceedings a liability to pay interest is
imposed on the Paulsens
in respect of a debt that they owed to Slip
Knot. They were the only ones who could limit that liability by
paying what they owed.
If they did not do so there is no reason why
they should be able to shelter behind the fact that proceedings were
not taken against
an entity in respect of which liquidation
proceedings were pending.
[25]
The contention that interest does not run
against the sureties unless the principal debtor is sued, where prior
to litigation the
duplum
has been reached, has extraordinary consequences. It could compel a
claimant to sue a manifestly insolvent principal debtor in
order to
ensure that interest ran against the sureties. That would be
pointless and would result in costs being incurred for which
the
sureties would very likely be liable on the ordinary form of
commercial suretyship. What is to happen if the principal debtor
has
already gone into liquidation and the liquidator is prepared to
recognise the claim by the creditor in the winding up? Does
that mean
that interest will not run against the sureties when they do not do
what they have undertaken to do and pay the debt?
Can the sureties
defeat any further claims against them for payment of interest on the
debt beyond the
duplum
by
causing the principal debtor to be liquidated and rendering it
worthless as a target for the creditor? If the principal debtor
was
excussed and, only after that process was complete, it transpired
that it could not pay the judgment debt, the sureties would
be
entitled to say that interest above the
duplum
would only be recoverable from them
once they were sued. Why should they be able to avoid paying interest
when they are sued but
the principal debtor is not? If the benefit of
excussion has not been waived the claim against the surety will arise
at a later
date than the claim against the principal debtor, so that
they cannot be sued simultaneously. What happens if both are sued,
but
in different proceedings that proceed at a different pace, for
example, because the proceedings take place in different divisions
of
the high court for jurisdictional reasons? If the approach of the
full court were correct, there is no answer to these and other
problems, the existence of which can easily be imagined.
[26]
Where
I think the problem lies with the full court’s reasoning is in
its failure to recognise that the accessory nature of
the surety’s
obligations in relation to the principal debtor relates only to the
existence and extent of the principal debt
itself.
[10]
That is why our courts have held that an interruption in the running
of prescription against the principal debtor also interrupts
the
running of prescription against the surety.
[11]
Whilst the surety’s liability may be less than the amount of
the principal debt it cannot be more.
[12]
That does not, however, mean that, once the surety is sued for the
debt and accumulated interest, the principles governing the
recovery
of interest laid down in
Oneanate
and
set out in para 20 above cease to be applicable. It is clear that the
inability to pursue a claim against the principal debtor,
for example
because it is a company and has been deregistered, does not bar a
claim against the surety.
[13]
There is no reason why it should bar the continued running of
interest on the claim and no authority was cited for this
proposition,
nor have I been able to find any. The fact that the
interest reached the
duplum
before
the surety was sued is no reason for not permitting it to commence
running again once litigation commences in accordance
with the
ordinary application of the rule. Nor is the fact that, if it
transpired that the liquidated company had hitherto undisclosed
assets, the claim against those assets would be limited to the
capital and interest up to the
duplum
.
Once the creditor turns to the surety for payment of that debt,
the surety’s obligation is to discharge that debt
and if they
fail to do so the surety is in breach of their own obligations and
therefore liable to pay interest on the outstanding
indebtedness.
[27]
My colleague accepts this, but nonetheless
upholds the conclusion of the full court. He does so in paras 53 and
54 of his judgment
on the basis that the
in
duplum
rule is founded on the public
interest and that to apply it in the present case in the manner set
out in
Oneanate
would
enfeeble the rule in its entirety. He concludes (para 54) that ‘a
residual discretion must remain for a court, in appropriate
circumstances, to apply the
in duplum
rule in the traditional manner’. In reaching this conclusion he
is much concerned at the effect of applying the judgment
in
Oneanate
in accordance with its terms and
expresses the view that mezzanine finance lenders must be
incentivised to commence proceedings
quickly in order to recover
debts owed to them so as to avoid prejudice to their debtors.
[28]
I respectfully disagree. My colleague
points to no authority that supports what is in effect an equitable
approach that invokes
the
in duplum
rule
in some circumstances, such as mezzanine financing, and not in
others. He suggests that the approach in
Oneanate
is not to be used to enfeeble the
in
duplum
rule. But that is precisely what
it does not do. It explains how the rule operates and is to be
applied once litigation is commenced.
He contends for a residual
discretion to apply the rule in what he describes as ‘the
traditional way’. But that is
what
Oneanate
does. None of this is supported by any
authoritative statement of the scope of the rule and it is an
entirely novel approach to
the
in duplum
rule. In the absence of argument that
we should depart from existing authority or adapt the rule in some
way I am not persuaded
that it is either permissible or desirable to
follow the route he suggests.
[29]
The
concern appears to be the large sums of interest that the Paulsens
may be called upon to pay. I agree that they are large,
[14]
but that is because the loan was large and the Paulsens were engaged
on a transaction that they confidently thought would generate
a
profit of R68 million within the short space of six months. The
accumulation of interest beyond the sum of R12 million to
which it
was initially limited is not, as my colleague appears to believe, due
to any dilatoriness on the part of Slip Knot. Their
entitlement was
capped at R24 million from the outset. What has caused
additional interest to accrue has been the Paulsens’
dogged
resistance to Slip Knot’s claims before three courts. Had they
tendered to pay R24 million at the outset they would
not have been
liable for any further amount. Instead they offered to pay
R12 million and the present litigation ensued.
[30]
The
amounts involved are to any ordinary person substantial, but that
flows from the size of the loan. A loan of R1 000 bearing
interest at the maximum permissible rate for unsecured credit
transactions of a little over 32 per cent per annum
[15]
would pass the
duplum
after a little more than 2 years and would double again to R4 000
two years after judgment was obtained if that was sought
and obtained
immediately the two years had passed. At the maximum rate of five per
cent per month applicable to short term credit
transactions the
duplum
is reached within 15 months. A person needing a loan in that amount
is probably more deserving of concern than those borrowing
large sums
in the hope of making even larger profits. Yet my colleague’s
approach does not suggest that the rule as expounded
in
Oneanate
should not apply to such transactions or should be subject to a
residual discretion vested in the court to relax its effect.
[31]
In the circumstances I would uphold the
cross-appeal to the extent of permitting Slip Knot to recover
interest from 10 January 2010
to 24 February 2012 on the sum of R12
million at the agreed default rate of three per cent per month
capitalised monthly in arrears.
I would also permit them to recover
further interest on the judgment debt of R24 million, plus the
interest accumulated between
10 January 2010 and 24 February 2012, at
the same rate from 24 February 2012 to date of payment, subject to
the amount of that
interest not exceeding the amount of the judgment
debt. That success on the cross-appeal should carry with it an order
for costs
of the appeal including the costs of two counsel. In the
court below, however, the Paulsens enjoyed substantial success on the
in duplum
rule
and in having some of the claims for interest deleted from the
judgment. The order for costs in their favour should accordingly
not
be disturbed.
[32]
I accordingly grant the following order:
1
The appeal is dismissed with costs, such
costs to include those consequent upon the employment of two counsel.
2
The cross-appeal succeeds with costs, such
costs to include those consequent upon the employment of two counsel.
3
Paragraph 2 of the order of the court below
is amended to read as follows:
The orders made by
the court a quo are set aside and the following substituted orders
are made:
‘
1
The Eighth and Ninth Respondents are ordered to pay, jointly and
severally, the following amounts:
(a)
The sum of R 12 million.
(b)
Interest on the sum of R12 million up until
10 February 2010 in the amount of R 12 million.
(c)
Further interest on the capital sum of R 12
million at a rate of 3% per month from 10 February 2010 to 24
February 2012.
(d)
Interest on the total of the amounts set
out in paras (a), (b) and (c) above at a rate of 3% per month from 25
February 2012 to
date of payment thereof, such interest to be limited
to the total of the said amounts.
(e)
Costs of suit on the party and party scale,
such costs to include the costs of two counsel.’
M J D WALLIS
JUDGE OF APPEAL
Willis
JA (concurring in part and dissenting in part)
[33]
The appellants were sureties, binding themselves jointly and
severally,
in solidum
, for a loan agreement concluded between
a company known as Winskor 139 (Pty) Limited (‘Winskor’)
and the respondent,
Slip Knot Investments (Pty) Limited (‘Slip
Knot’) in terms of which the respondent lent Winskor R12
million for a twelve
month period from 10 July 2006 to 9 July 2007.
Slip Knot had lent Winskor the money to assist with the funding of a
property development
in Brooklyn. Winskor defaulted on its obligation
to repay the loan together with interest. An application by Slip Knot
for the
liquidation of Winskor is still pending.
[34]
Slip Knot brought an application in the Western Cape High Court for
an order that the two appellants (the sureties), together
with two
trusts which had also been sureties for the debt, the Paulsen Family
Trust and the Keurbos Beleggingstrust, be ordered
to be jointly and
severally liable to pay the sum of R12 million, being the capital sum
lent to Winskor, together with R17 million
as interest and costs of
suit.
[35]
Clause six of the loan agreement entered into between Winskor and
Slip Knot reads as follows:
‘
6.
Interest
SLIP
KNOT shall be entitled to payment from the Borrower of interest
accrued on the loan amount, such interest which shall be calculated
at 25% (twenty five percent) of the nett profit in the development,
the Borrower having however guaranteed a minimum interest repayment
of R17 000 000.00 (Seventeen million rand). For example, should 25%
of the nett profit in the development be R16 000 000.00, the
Borrower
will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17
000 000.00
(seventeen million rand). Should 25% of the nett profit in the
development be R18 000 000.00, the Borrower will be liable
to pay
SLIP KNOT the loan amount of R12 000 000.00 (Twelve million rand)
plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
Slip
Knot contended in its founding affidavit that the relevant portion of
clause six should read as follows:
‘
Slip
Knot shall be entitled to payment from the Borrower of a
profit
share
, such
profit share
which shall be calculated at 25%
(twenty five percent) of the net profit in the development, the
Borrower having however guaranteed
a minimum
profit share
of
R17 000 000.00 (Seventeen million rand)’.
Slip
Knot provided the emphasis given to the underlined words and applied
for the rectification of the agreement in order to replace
the word
‘interest’ with ‘profit share’. The
application for rectification was opposed by the sureties
in their
answering affidavit.
[36]
After
some preliminary skirmishes between the parties, the application came
before Blignault J. He refrained from deciding whether
the underlined
words in the preceding paragraph should read as ‘profit share’,
as contended for by Slip Knot, or interest
contended for by the
sureties. On 24 February 2012 Blignault J granted judgment against
the sureties but dismissed the application
against both the Paulsen
Family Trust and the Keurbos Beleggingstrust. The court of first
instance exonerated the trusts by relying
on
Thorpe
v Trittenwein,
[16]
which confirmed the common law principle that unless the trust deed
requires otherwise, all trustees of a trust are required to
act
jointly in order to incur liability for the trust. The court of first
instance failed to apply the
in
duplum
rule,
in terms of which arrear i
nterest
ceases to run once it reaches the equivalent of the amount of the
capital lent
.
[17]
The order of the court of first instance was that the sureties were
jointly and severally liable to pay Slip Knot:
‘
A.
(1) The sum of R12 million;
(2)
Interest on the sum of R12 million at the rate of 3% per month,
calculated from 21 July 2007 to 10 January 2010, such interest
to be
limited to a maximum amount of R12 million;
(3)
Interest on the sum of R12 million at the rate of 3% per month,
calculated from 10 January 2010 to the date of judgment;
(4)
Interest on the sum of R12 million at the rate of 3% per month,
calculated from the date of judgment to the date of final payment,
such interest to be limited to a maximum amount of R12 million;
(5)
The sum of R17 million;
(6)
Interest on the sum of R17 million at the rate of 15,5% per annum,
calculated from the date of judgment to the date of final
payment;
(7)
Subject to the provisions of B below, the costs of the application
under case No 26398/09 on an attorney and client scale, such
costs to
include the costs of two counsel.
B.
The claims of Slip Knot Investments 777 (Pty) Ltd for payment of the
above amounts by the trustees for the time being of the
Paulsen
Family Trust and the trustees, for the time being, of the Keurbos
Beleggingtrust, are dismissed with costs, including the
costs of two
counsel.’
[37]Sitting
as a court of first instance, the high court granted leave to appeal
to the full court. On 12 February 2013 the full
court (Louw and Ndita
JJ and Dolamo AJ) upheld the appeal in part but dismissed the
remainder. The full court, applying the
in
duplum
rule, ordered the sureties to pay the sum of R12 million, being the
capital sum lent to Winskor but limited interest thereon to
R12
million (ie a further R12 million, over and above the R12
million that was to be repaid in terms of the capital lent to
Winskor). The full court held that a surety is not obliged to pay
more interest than the principal debtor.
[18]
As at the time of delivering judgment no action had been brought by
Slip Knot against the principal debtor, the full court reasoned
that,
at the time of judgment, the principal debtor would be obliged to pay
no more than R12 million plus interest in the same
amount under the
in
duplum
rule. For this reason the full court granted the order which it did.
The full court, allowing the costs of two counsel, ordered
the
sureties to pay the costs of suit on a party-and-party scale.
[38]
The sureties sought the special leave of this court to appeal hereto,
contending that their appeal should have been upheld
in its entirety,
to the extent that Slip Knot’s application should have been
dismissed with costs. Slip Knot then sought
special leave to
cross-appeal against that part of the judgment and order of the full
court which upheld the appellant’s
appeal. Slip Knot
essentially sought the reinstatement of the order of the court of
first instance. This court granted special
leave both to appeal and
to cross-appeal further. Accordingly, this court now has before it
both the appeal and the cross-appeal
against the decision of the full
court (sitting as a court of appeal). I have profited from reading
the judgment prepared by my
brother Wallis
The
appeal
[39]
The relevant facts are not in issue. This is, in large measure,
illustrated by the sureties having disclosed a tender to pay
Slip
Knot R12 million together with interest
a tempore morae
thereon up to the sum of R12 million. In the appeal the issues are
(a) whether, on a correct interpretation of s 40, read with
s 4, of
the National Credit Act 34 of 2005 (‘the NCA’), Slip Knot
should have been a registered credit provider in
terms of the NCA and
(b) if Slip Knot was not so registered, the suite of agreements in
question, including the deeds of suretyship
signed by the sureties,
were void. The cross-appeal is concerned with the interpretation of
clause six in the loan agreement concluded
between Slip Knot and
Winskor, more particularly the application of the
in duplum
rule
to the calculation of interest.
[40]
In the founding affidavit Slip Knot asserted that the provisions of
the NCA are not applicable either to the loan or the deeds
of
suretyship by reason of the fact that Winskor was, in terms of s 1 of
the NCA, a juristic person the asset value of which or
annual
turnover of which, together with the combined asset value and annual
turnover of all related juristic persons, at all relevant
times
exceeded R1 million. In the answering affidavit the sureties were
content that the matter be one for argument but contended,
in
addition to interest exceeding the maximum that is allowed under the
in duplum
rule in our common law, that the rates of interest
which Slip Knot sought to claim were usurious and contrary to public
policy.
[41]
Both
the court of first instance and the full court hearing the appeal
accepted that the transaction was one known as ‘mezzanine
funding’. ‘Mezzanine funding’ has come to the fore
increasingly in recent years.
[19]
It features not infrequently in transactions related to property
development.
[20]
It involves high risk.
[21]
Typically, the lender borrows money from the banks to provide
bridging finance to the property developer at very high rates of
interest for a period that is envisaged to be short term.
[22]
[42]
The relevant portions of ss 4(1)(
a
) and (
b
) of the NCA
read as follows:
‘
4.
Application of Act
(1)
Subject to sections 5 and 6, this Act applies to every credit
agreement between parties dealing at arm’s length and made
within, or having effect within, the Republic, except –
(a)
A credit agreement in terms of which the consumer is –
(i)
A juristic person whose asset value or annual turnover, together with
the combined asset value or annual turnover of all related
juristic
persons, at the time the agreement is made, equals or exceeds the
threshold value determined by the Minister in terms
of section 7(1);
(ii)
the state; or
(iii)
an organ of the state;
(b)
A large agreement, as described in section 9(4), in terms of
which the consumer is a juristic person whose asset value or annual
turnover is, at the time the agreement is made, below the threshold
value as determined by the Minister in terms of section 7(1).’
It
is common cause that the agreement is a ‘large agreement’.
It has not been disputed that, at the time when the agreements
in
question were concluded, the asset value and annual turnover of
Winskor exceeded the threshold values determined in terms of
ss
4(1)
(a)
and 4(1)
(b)
of the NCA.
[43]
The relevant portions of ss 40(1) and (4) of the NCA provide as
follows:
‘
(1)
A person must apply to be registered as a credit provider if –
(a)
that person, alone or in conjunction with any associated person, is
the credit provider under at least 100 credit agreements,
other than
incidental credit agreements; or
(b)
the total principal debt owed to that credit provider under all
outstanding credit agreements, other than incidental credit
agreements, exceeds the threshold prescribed in terms of section
42(1).
[23]
…
(4)
A credit agreement entered into by a credit provider who is required
to be registered in terms of subsection (1) but who is
not so
registered is an unlawful agreement and void to the extent provided
for in section 89.’
It
is immediately apparent that s 40 (1), which requires registration,
is not unqualified. Section 89(2)(d) of the NCA is also not
unqualified: it renders unlawful an agreement if, ‘at the time
that it was made, the credit provider was unregistered
and this
Act requires that credit provider to be registered
’ (the
emphasis is my own). In other words, the NCA envisages situations
where credit may be provided by a credit provider
which is not
registered in terms of the NCA. Moreover, s 89 has to apply to credit
agreements to which the NCA applies and not
to credit agreements to
which the NCA does not apply. Not only does this follow as a matter
of logic but it is reinforced by the
fact that chapter five, under
which 89 falls, nowhere refers to agreements to which the NCA does
not apply.
[44]
Section 1 of the NCA sets out the definitions that are applicable to
the NCA. The section qualifies all definitions with the
words, ‘In
this Act unless the context indicates otherwise’. A ‘credit
agreement’ is defined in s 1 of
the NCA as ‘an agreement
that meets all the criteria set out in section 8’. Section 8
enumerates a lengthy list of
transactions. There is no dispute that
the loan agreement in question falls within the criteria set out in s
8. It is neither in
dispute that Slip Knot was not registered as a
credit provider in terms of s 40(1) of the NCA nor that the
challenged transaction
exceeded the threshold amount prescribed in
terms of s 40(1)(
b
) of the NCA.
[45]
Ex
facie the NCA, Slip Knot was not required to be registered in terms
of s 4 but may be required to apply for registration as a
credit
provider in terms of s 40. Both the court of first instance and the
full court reconciled that apparent conflict by reference
to the
words ‘In this Act unless the context indicates otherwise’
with which s 1 begins. This is the correct approach.
See
Amalgamated
Packaging Industries Limited v Hutt
.
[24]
The fact that s 89(2)
(d)
of the NCA stipulates both (i) non-registration as a credit provider
and (ii) the qualification that the NCA requires that particular
credit provider to be registered, in order for a credit agreement to
be void, gives further impetus to the construction that
non-registration
is not necessarily fatal to the provision of credit.
The reference to ‘credit agreements’ in s 40(1)
necessarily must
be restricted to include only those agreements which
are subject to the NCA or to which the NCA otherwise extends
application.
[46]
Mr Burger, who appeared for the sureties, conceded that not every
person who lends money in excess of R500 000 has to be registered
as
a credit provider. The example, during argument, of the benevolent
uncle lending money to his nieces and nephews to buy houses
for
themselves in different parts of the country, put paid to any notion
that good sense required willy-nilly an interpretation
in favour of
obligatory registration for all who lend money in excess of R500 000,
no matter what the circumstances may be.
[47]
The appeal on the ground that Slip Knot was not a registered credit
provider in terms of the NCA must fail. The agreements
in question
were not void
ab initio
.
The
cross-appeal
[48]
As the full court correctly observed, clause six refers, in terms, to
the payment of R17 million, as ‘interest’
no less than
five times (even though it also refers to it as a payment for net
profit in the development). The word ‘interest’
is also
used in clause 1.1.5 when referring to this sum as ‘the total
amount accrued in interest in terms of clause six.
Clause six
provides that the payment is due, even if, as so happened, there was
no profit arising from the venture. The full court
correctly found
that, upon a proper reading of clause six, it referred, without
rectification, to interest claimed by Slip Knot
and not to profit
share.
[49]
I
agree with Wallis JA that the full court was incorrect in placing
reliance upon the accessory nature of a suretyship agreement
as the
reason for limiting the amount of interest that could be recovered to
R12 million, being the amount of the capital sum which
had been lent
to the borrower. In
Millman
v Masterbond Participation Bond Trust
[25]
,
Friedman JP and Farlam J , after a comprehensive review of the common
law authorities, held that where, as in this case, sureties
had
renounced the benefit of excussion, a creditor has an unqualified
election whether to sue the principal debtor or the surety
and may do
so directly.
[26]
The fact that
a surety’s obligation is accessory does not have the
consequence that it is contingent.
[27]
What is relevant is not whether or, if so, when the creditor sued the
principal debtor but whether, as matter of law, it could
at any time
material to the litigation, have done so.
[50]
Slip
Knot invoked
Standard
Bank of SA Limited v Oneanate Investments (Pty) Ltd (in
liquidation)
[28]
in support of its arguments. Zulman JA, who delivered the judgment of
the court in
Oneanate
,
observed that the
in
duplum
rule is concerned with public interest.
[29]
Having accepted that interest is ‘the life-blood of finance’,
he decided that the application of the rule should be
relaxed to the
extent that it was suspended
pendente
lite
.
[30]
In
Oneanate
this court held that ‘once judgment has been granted, interest
may
run until it reaches double the capital amount outstanding in terms
of the judgment’ (The emphasis is my own).
[31]
The mischief against which
Oneanate
was
directed was a debtor’s dilatoriness, which may include taking
advantage of the courts’ civil procedures and the
law’s
delays to avoid the prompt payment of a debt that was obviously
due.
[32]
[51]
Oneanate
was concerned with an ordinary unpaid banker’s overdraft.
[33]
The case was decided before the repeal of the Usury Act 73 of 1968 in
terms of s 172(4)
(a)
of
the NCA. Section 2(1)
(a)
of
the Usury Act provided for the regulation of ‘the annual
finance charge rate’ (largely coextensive with interest)
by a
‘money lender’ under the direction of the Minister by
notice in the
Gazette.
The definition of a ‘money lender’ in terms of s 1 of the
Usury Act was widely cast to include any person granting
a loan for a
‘money lending transaction’ which was, in turn, broadly
defined as meaning ‘any transaction which,
whatever its form
may be, and whether or not it forms part of another transaction, is
substantially one of money lending.’
It is reasonable to
suppose that, until the coming into operation of the NCA, the
collective consciousness of the general public
was that interest
rates were controlled across-the-board in South Africa. At the time
when
Oneanate
was decided, the kind of issues with which the courts have been
grappling since the coming into operation of the NCA were not on
the
horizon.
[52]
Slip
Knot put its confidence in
African
Dawn Property Finance (Pty) Limited v Dreams Travel and Tours CC
[34]
to submit that the courts must be careful not to let their subjective
views interfere with a bargain deliberately entered into
between
parties dealing at arm’s length with one another, even though
the rate of interest may be high. The
African
Dawn
case
dealt with the rate of interest, not the capping thereof in terms of
the
in
duplum
rule.
In this case there has been no interference with the rate. That point
has not even been argued. It has been accepted throughout
that
‘mezzanine funding’ involves high risk and therefore
attracts high rates of interest.
[53]
Having
had the benefit of reading Wallis JA’s judgment in this matter,
I remain of the view that it cannot have been the intention
of the
court in
Oneanate
Investments
to
enfeeble the
in
duplum
rule almost entirely.
As
Lord Steyn said in
R
v Secretary for the Home Department, ex parte Daly,
[35]
‘In law, context is everything’. This was approved by
this court in
Aktiebolaget
Hässle and Another v Triomed (Pty) Ltd.
[36]
Similar
views were expressed by Harms DP in
KPMG
Chartered Accountants (SA) v Securefin Limited and another
.
[37]
The context of
Oneanate
was an ordinary commercial overdraft.
[38]
‘Mezzanine funding’ is, in the words of Slip Knot itself,
a niche market: useful though it may be, it performs a different
role
from that of the banks. The money which the banks lend is derived
from the deposits therewith of the general public; the funding
for
‘mezzanine’ loans arises from speculative investments.
[54]
LTA
Construction Beperk v Administrateur Transvaal
[39]
remains unaltered with regard to the retention in our law of the
in
duplum
rule
.
[40]
The
in
duplum
rule
remains the standard, the benchmark, the yardstick, the mainstay by
which to test the capping of interest.
[41]
As this court said in
LTA
Construction
,
the
in
duplum
rule fulfills a valuable role and a vital economic function.
[42]
The court quoted Ulrich Hüber as saying, inter alia; ‘
ne
homines augusta et inclinata re destruantur
’,
[43]
the law is not there to destroy people with a grim and sanctimonious
self-righteousness. It is not creditors alone who deserve
the law’s
saving hand: debtors may also qualify. The
in
duplum
rule operates to mitigate a ‘domino effect’ whereby one
debtor’s insolvency triggers another, creating a spiral
of
economic misfortune with deleterious consequences for society
including the loss of jobs. A relevant factor, when it comes to
‘mezzanine funding’, is that by its very nature –
the lending being short term – a debtor’s default
will
very quickly become apparent. In consequence thereof a creditor
should quickly be able to obtain judgment either before or
soon after
the
in
duplum
rule caps the interest.
[55]
As
Zulman JA remarked in
Oneanate
:
‘A creditor can control the institution of litigation and can,
by timeously instituting action, prevent prejudice to the
debtor and
the application of the rule.’
[44]
When it comes to ‘mezzanine funding’, prompt action by a
creditor to recover the debt, together with interest, has
to be
incentivised: the public interest in proceeding speedily with
litigation for the recovery of debt due is not merely to discourage
debtors from ensuring that a
litis
is
pendens
for
as long as possible; potential prejudice to the debtor is a relevant
factor too. A residual discretion must remain for a court,
in
appropriate circumstances, to apply the
in
duplum
rule in the traditional manner. When it comes to ‘mezzanine
funding’ in cases where a debtor has been ‘playing
for
time’, the suspension of the
in
duplum
rule, as envisaged in
Oneanate
,
may come into operation.
[56]
The
sureties for a loan of R12 million, if they were to pay today, would
have to pay an amount of the order of R72 million, if the
order of
the court of first instance were to stand. That cannot be correct,
especially in the light of the appellant’s tender.
The order
which Wallis JA envisages, although less crippling than that sought
by Slip Knot, would remain inordinately onerous.
I come to this
conclusion notwithstanding the fact that the prohibition in Roman and
Roman-Dutch law against ‘interest on
interest’ has become
obsolete.
[45]
[57]
It is appropriate in this case for a court to exercise a discretion
which will have the consequence that the
in duplum
rule is
applied in the traditional way. I arrive at the same conclusion as
the full court, albeit by a different route.
[58]
The complexity of the issues and the magnitude of the quantum have
justified the costs of two counsel. I should have dismissed
both the
appeal and the cross-appeal with costs.
_______________________
N
P WILLIS
JUDGE
OF APPEAL
APPEARANCES:
For
the Appellant: W G Burger SC (with him J C Swanepoel)
Instructed
by:
Joubert
Attorneys, Strand
c/o
McIntyre & Van der Post, Bloemfontein
For
the Respondent: R Stockwell SC (with him, J F Pretorius)
Instructed
by:
Sim
& Botsi Attorneys, Johannesburg
c/o
Lovius Block, Bloemfontein
[1]
This is the view expressed in JW Scholtz, JM Otto, E van Zyl, CM van
Heerden and N Campbell
Guide
to the
National Credit Act
(looseleaf
)
Vol 2, at 5-3 (Issue 5), fn 12, where they describe it as ‘logical’.
[2]
Union
Government v Jordaan’s Executors
1916
TPD 411
at 413 per, de Villiers JP: ‘No interest runs after
the amount is equivalent to the amount of the capital.’
Wessels
and Curlewis JJ concurred in the decisions which was
accordingly rendered by a court of which all three members went on
to become
Chief Justice. The rule in this form was held by this
court still to be the law in
LTA
Construction Bpk v Administrateur, Transvaal
[1991] ZASCA 147
;
1992
(1) SA 473
(A) at 482B-H.
[3]
Sanlam
Life Insurance Ltd v South African Breweries Ltd
2000
(2) SA 647
(W) at 655D-E. Neither that judgment, which dealt with
the determination of the price payable for immovable property by way
of
the application of an interest factor, nor
Ethekwini
Municipality v Verulam MediCentre
[2006]
3 All SA 325
(SCA), which dealt with the calculation of restitution
in respect of a failed property transaction making use of an
interest
factor, has any bearing on the facts of this case, which
involves a straightforward money loan.
[4]
That is clear from the Afrikaans expression ‘opgehoopte
rente’.
[5]
Van
Coppenhagen v Van Coppenhagen
1947
(1) SA 576
(T) at 581-582.
[6]
African
Dawn Property Finance 2 (Pty) Ltd v Dreams Travel and Tours CC and
Others
2011
(3) SA 511
(SCA) para 19.
[7]
Standard
Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (In
Liquidation)
1998 (1) SA 811 (SCA).
[8]
At 834H-I.
[9]
V G Hiemstra and H L Gonin
Trilingual
Legal Dictionary
2
ed, 253 sv ‘
pendente
lite
’
[10]
Kilroe-Daley
v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA 609
(A) at 622H-623H.
[11]
Jans
v Nedcor Bank Ltd
2003 (6) SA 646 (SCA).
[12]
Pfeiffer
v First National Bank of SA Ltd
1998
(3) SA 1018 (SCA)
[13]
Traub
v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd
1983 (3) SA 619
(A) at 634A and
Norex
Industrial Properties (Pty) Ltd v Monarch SA Insurance Co Ltd
1987 (1) SA 827
(A) at 840F-H.
[14]
The maximum they may be called upon to pay is about R72 million.
That is calculated as R24 million prior to the commencement
of
litigation, plus approximately R12 million of interest between that
date and judgment and further interest on the judgment
debt, which
would total approximately R36 million, up to the
duplum
.
That gives R72 million.
[15]
The maximum prescribed rate for unsecure credit transactions is
(Repo Rate x 2.2) + 20% per year, which at the current SA Reserve
Bank Repurchase Rate (the Repo Rate) of 5.5% is a little over 32%.
Regulation 42
in GN 713 of 1 June 2006.
[16]
Thorpe
& Others v Trittenwein & Another
2007 (2) SA 172
(SCA) at 176H.
[17]
See,
Union
Government v Jordan’s Executors
1916
TPD 411
at 413;
LTA
Construction Beperk v Administrateur, Transvaal
[1991] ZASCA 147
;
1992
(1) SA 473
(A) at 482B-H.
[18]
It
relied on
Neon
and Cold Cathode Illuminations (Pty) Limited v Ephron
1978 (1) SA 463
(A) at 471C-H and
Jans
v Nedcor Bank Limited
2003
(6) SA 646
(SCA) para 10.
[19]
See,
for example,
Slip
Knot Investments 777 (Pty) Limited v Project Law Prop (Pty) Limited
& Others
(
36018/2009
)
[2011] ZAGPJHC 21 (1 April 2011) paras 2 and 4.
[20]
Ibid.
[21]
Ibid.
[22]
Ibid.
[23]
The
parties were ad idem that this threshold currently stands at R500
000. See Reg 5 in terms of the
National Credit Act, GN
713, GG
28893, 1 June 2006.
[24]
Amalgamated
Packaging Industries Limited v Hutt & Another
1975 (4) SA 943
(A) at 949H.
[25]
Millman
and another NNO v Masterbond Trust Managers (Pty) Limited (under
Curatorship) and others
1997 (1) SA 113 (C)
[26]
Ibid
at 116B-123C.
[27]
Ibid
at 122C.
[28]
Standard
Bank of SA Limited v Oneanate Investments (Pty) Ltd (in liquidation)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) at 828C-E and 834B-D.
[29]
At
834B.
[30]
At
834D..
[31]
At
834H.
[32]
See
at 834B-E.
[33]
See
at 816J.
[34]
African
Dawn Property Finance (Pty) Limited v Dreams Travel and Tours CC &
Others
2011 (3) SA 511 (SCA).
[35]
[2001] UKHL 26
;
[2001]
3 All ER 433
(HL) at 447 a.
[36]
2003
(1) SA 155
(SCA) at para [1]
[37]
KPMG
Chartered Accountants (SA) v Securefin Limited and another
2009 (4) SA 399
(SCA) para39.
[38]
See
at 834E.
[39]
LTA
Construction
at
482B-83B.
[40]
LTA
Construction
at 482H;
Nedbank
Limited v National Credit Regulator
2011 (3) SA 581
(SCA) para 36.
[41]
Ibid.
[42]
LTA
Construction
at
482H.
[43]
LTA
Construction
at 482H; Ulrich Hüber
Praelectionum
Juris, Romani et Hodierni, Pars III
(1725)
22.1.28.
[44]
At
834D-E.
[45]
See
Davehill
(Pty) Limited and others v Community Development Board
1988
(1) SA 290
(A) at 298G-H.