About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2010
>>
[2010] ZASCA 110
|
|
Margo and Another v Gardner, Gardner and Another v Margo and Another (564/09, 511/09) [2010] ZASCA 110; 2010 (6) SA 385 (SCA) (17 September 2010)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 564/09
In the
matter between:
ROGER
HUGH MARGO First Appellant
SHERIFF
FOR THE DISTRICT OF RANDBURG Second Appellant
and
TONY
RICKY GARDNER Respondent
Case
no: 511/09
In the
matter between:
TONY
RICKY GARDNER First Appellant
OTR
MINING LIMITED Second Appellant
and
ROGER
HUGH MARGO First Respondent
SHERIFF
FOR THE DISTRICT OF RANDBURG Second Respondent
Neutral citation:
MARGO v GARDNER
(564/09)
[2010] ZASCA 110
(17 September 2010)
Coram:
HARMS
DP, HEHER, SHONGWE, LEACH JJA and
EBRAHIM
AJA
Heard:
31 AUGUST 2010
Delivered: 17 SEPTEMBER 2010
SUMMARY:
In duplum
rule – its application –
whether interest accumulates
pendente lite
– meaning of
its suspension and consequences
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from
:
South Gauteng High Court
(Johannesburg) as courts of first instance).
The following order is made:
(1)
In case 564/09
The appeal is dismissed with costs, the appellants are ordered to pay
such costs jointly and severally, the one paying the other
to be
absolved.
(2)
In case 511/09
(a) The appeal is upheld with costs; and
(b) The order of the court a quo is set aside and substituted with
the following:
‘The application is dismissed with costs.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SHONGWE JA (HARMS DP, HEHER, LEACH JJA and EBRAHIM AJA concurring):
[1] This appeal concerns the application of an old common law rule
known as the
in duplum
rule. It means in general terms that a
creditor is not entitled to claim unpaid interest in excess of the
capital outstanding.
An extensive discussion of its historical
development is to be found in
LTA Construction Bpk v
Adminstrateur, Transvaal
[1991] ZASCA 147
;
1992 (1) SA 473
(A).
[2] There are in fact two appeals similar in almost all respects
which were argued as one. The one is Gardner (appellant) against
Margo (Respondent) (case no 511/09) and the other is Margo
(appellant) against Gardner (Respondent) (case no 564/09). Gardner’s
appeal was with the leave of this court and Margo’s with leave
of the court a quo (South Gauteng High Court, Johannesburg).
[3] The appeal by Gardner is against the dismissal of his application
by Horwitz AJ. The appeal by Margo is against an order
of Gyanda
J. Horwitz AJ concluded that the
in duplum
rule did not apply
in the present instance, whereas Gyanda J on the same set of facts
concluded that the
in duplum
rule was applicable and found in
favour of Gardner.
[4] On 14 April 1999 Margo served a summons against Gardner (as the
first defendant) and O T R Mining Ltd (as the second defendant).
Mlambo J found in favour of Margo for the payment of the sum of
approximately R15 000 000.00. Gardner appealed against
the
finding to this court. The appeal succeeded and the following order
was made on 28 March 2006:
‘
1. Against the first
defendant, for payment of the amount of R1 461 432 plus
interest thereon at the rate of 15,5% per
annum from 1 September
1998 to date of payment.
2. Against the second defendant,
for payment of the amount of R1 461 432 plus interest at
the rate of 15,5% per annum
from 1 September 1998 to date
of payment, the second defendant to be liable to make such payment
only in the event that,
and to the extent that, the first defendant
fails to do so.’
The said judgment is reported as
Gardner & another v Margo
2006 (6) SA 33
(SCA).
[5] Pursuant to the SCA judgment Gardner made a payment of the sum of
R1 222 864 on 24 April 2006 and on 23 September
2006 a
further R1 800 000. The total paid at that stage amounted
to R3 022 864. Gardner contended that after
the second
payment he understood that the two payments were made in full and
final settlement of the capital (although with no
proof of this). He
was of the view that the only outstanding item was the question of
costs of the proceedings. This contention
was disputed by Margo.
[6] The relevant bills of costs were taxed and the respective
attorneys exchanged a series of letters between them regarding what
was still owing by Gardner. The gist of the correspondence was in
respect of the calculation of the interest, as well as the taxed
bills of costs. The parties also attempted to enter into negotiations
of how to settle the issue of costs. A set-off was suggested
regarding the payment of costs, though they failed to resolve the
dispute. Margo’s attorneys proposed that the payment of
the
outstanding amount must take place on or before 23 November 2009,
failing which a writ of execution would be issued.
Gardner’s
attorneys made a counter proposal and advised that if the parties
fail to agree they will be forced to bring an
urgent application to
suspend the execution of the warrant. As no settlement had been
reached by 27 November 2007, the proposal
for payment to be made
by 23 November 2007 lapsed and a writ of execution was issued.
[7] On 7 December 2007 a writ of execution was sent to Gardner’s
attorneys as well as to the Sheriff for service, claiming
the sum of
R185 983.00 being the balance of the interest owing on the
judgment debt, and a sum for taxed costs. (The costs
issue is not
relevant in this judgment). Gardner launched an urgent application to
have the writ suspended, pending the outcome
of an application for a
declaratory order that the SCA judgment had been satisfied, and for
the setting aside of the writ. On 28
February 2008 Horwitz AJ
dismissed with costs the application for a declarator, and
subsequently dismissed the application for
leave to appeal.
[8] On 3 October 2008 Margo caused a second writ of execution to be
issued alleging that the first one reflected incorrect amounts
and
was therefore withdrawn. The second writ reflected the balance of the
capital sum of R264 396.06 plus interest thereon
at the rate of
15,5% per annum calculated form 24 September 2006 to 30
September 2008 in the sum of R82 749.02 and
a further interest
on R264 397.06 at 15,5% per annum calculated from 1 October 2008
to date of payment. Gardner launched another
urgent application to
suspend the second writ and later launched another application to
have the aforesaid writ set aside and to
declare that he was not
indebted to Margo for any capital sum, interest or costs pursuant to
the SCA judgment. Gyanda J found in
favour of Gardner and ordered
Margo to pay to Gardner a sum of R5 615.83 representing the
amount by which he found Gardner
had overpaid and also set aside the
second writ and declared that Gardner was no longer indebted to
Margo. On 23 September
2009 the High Court granted leave to
appeal to this court.
[9] I may mention that during argument before Gyanda J, counsel for
Margo raised the question whether the issues dealt with in
Horwitz
AJ’s judgment were not res
judicata as they were between
exactly the same parties and in respect of exactly the same facts.
Gyanda J ruled that he could not
decide that question due to the fact
that Horwitz AJ’s judgment had yet not been signed. In view of
the conclusion I hold
in this matter it will not be necessary to deal
with that question for purposes of this judgment.
[10] Gardner’s submission was that a judgment debt accumulates
interest only until the amount thereof reaches the double
of the
capital amount outstanding in terms of the judgment. He relied on
Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd
(in liquidation)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) at 827H-I, read with page
834G-I and
Commercial Bank of Zimbabwe Ltd v M M Builders and
Suppliers (Pvy) Ltd & others and three similar cases
1997 (2)
SA 285
(ZH) at 303C-E. The argument failed to have regard to the full
import of
Oneanate
and it is wrong to state that interest runs
only
(my underlining) until the amount of interest reaches the
double of the capital amount. The word ‘only’ is in my
view,
misplaced because in
Oneanate
(after referring to the
Commercial Bank
case) (supra) it was held at 834H-I:
‘
that interest on the
amount ordered to be paid may accumulate to the extent of that amount
irrespective of whether it contains an
interest element. This would
then mean 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.’
[11] The gist of the passage quoted above is that interest does not
run only until the amount thereof reaches the double of the
capital
amount outstanding in terms of the judgment but it also runs
pendente
lite
because, as a rule, the
in duplum
rule is suspended
during the litigation. What appears to be clear in the present matter
is that Gardner failed to accommodate or
recognize the suspension of
the
in duplum
rule during the period when the matter was
pending before this court as envisaged in
Oneanate
at page
834H-I (supra). Counsel for Gardner argued that the difference
between this appeal and the
Oneanate
case lies in the cause of
action. The cause of action however makes no difference in the
application of the
in duplum rule
see
LTA Construction Bpk;
(supra)
Bellingan v Clive Ferreira & Associates CC
1998
(4) SA 382
(W);
Meyer v Catwalk Investments
354 (Pty) Ltd
2004 (6) SA 107
(T). ‘The prohibition on interest
in duplum
rule is not limited to money-lending transactions but applies to all
contracts arising from a capital sum owed, which is subject
to a
specific rate of interest’ (Monica L Vessio ‘A limit on
the limit on interest? The
in duplum
rule and the public
policy backdrop’ (2006) 39
De Jure
25 p 26-27).
[12] It is trite that the
in duplum
rule forms part of South
African law. It is also axiomatic that the
in duplum
rule
prevents unpaid interest from accruing further, once it reaches the
unpaid capital amount. However, it must be borne in mind
that a
creditor is not prevented by the rule from collecting more interest
than double the unpaid capital amount provided that
he at no time
allows the unpaid arrear interest to reach the unpaid capital amount.
On the facts of this appeal this court is not
asked to review the
order of the SCA but to give effect to it as it stands. The order of
the SCA is unequivocal and does not provide
for any interest ceiling.
Therefore the amounts claimed in the second writ are all due and
owing by Gardner to Margo on the strength
of the SCA judgment. The
purpose or basis of the
in duplum
rule is to protect borrowers
from exploitation by lenders who permit interest to accumulate, but
essentially also to encourage
plaintiffs to issue summons and claim
payment of the debt speedily. Delays inherent in litigation cannot be
laid at the door of
litigants and it would be unfair to penalize a
creditor with the application of the
in duplum
rule while
proceedings are pending. Compare
Titus v Union & SWA Insurance
Co Ltd
1980 (2) SA 701
(Tk SC) 704.
[13] I agree with counsel for Margo that
‘
It must be borne in mind
that when the SCA order was granted, the double capital would by then
have been reached had the
in
duplum
rule applied
throughout the period from 1 September 1998 to 27 March 2006.
The interest for the period 1 September 1998 to
27 March 2006
amounted to R1 715 360.81. The interest for this period was
clearly more than double the capital amount.’
[14] Gyanda J found that the
in duplum
rule was applicable
relying on the authority of
Oneanate.
However, in my
respectful view, the learned judge omitted to deal with the position
pendente lite
which makes a huge difference on the application
of the rule. This led to two conflicting judgments in which both
relied on one
authority namely the
Oneanate
case.
[15] It is because of the above reasons that I make the following
order:
(1)
In case 564/09
The appeal is dismissed with costs, the appellants are ordered to pay
such costs jointly and severally, the one paying the other
to be
absolved.
(2)
In case 511/09
(a) The appeal is upheld with costs; and
(b) The order of the court a quo is set aside and substituted with
the following:
‘The application is dismissed with costs.’
_________________
J SHONGWE
JUDGE OF APPEAL
APPEARANCES:
For
Gardner: Hennie M de Kock
Phlip
A Myburgh
Instructed
by:
Pierre
Wolmarans
Manong
Badenhorst Abbot van Tonder
RANDBURG
Naudes
Bloemfontein
For
Margo: Marius van Wyk
Instructed
by:
Johan
Dreyer
Dreyer
& Nieuwoudt
RANDBURG
Symington
& De Kock
Bloemfontein