IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No.: 20656/2023
In the matter between:
SHIREEN LYNN STOFFELS First Applicant
LIZELLE HEROLD obo LEEAM SPALDING Second
Applicant
and
ROAD ACCIDENT FUND Respondent
Coram: Gassner AJ
Heard: 27 May 2024
Delivered: 25 June 2024 (by email to the parties’ legal representatives and by
release to SAFLII)
JUDGMENT
GASSNER, AJ
Introduction
[1] The first applicant is the plaintiff and judgment creditor in an action (‘the
Stoffels action’) against the respondent, the Road Accident Fund (‘RAF’), in which
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judgment was granted in her favour in the amount of R3 749 650.59 for damages, as
well as costs a nd ancillary relief. The order was issued on 12 February 2021 (‘the
Stoffels judgment’).
[2] The second applicant is the plaintiff and judgment creditor in an action against
the RAF (‘the Herold action’) in which judgment was granted in her favour in the
amount of R4 403 735.00 for damages as well as costs and ancillary relief. The
order was issued on 5 March 2021 (‘the Herold judgment’).
[3] In the Stoffels action and in the Herold action the applicants (who were
represented by the attorney of record in t his application) claimed interest at the
prevailing rate of interest, calculated from date of demand, alternatively from 14 days
after date of judgment to date of final payment as well as interest on their costs from
the date of the Taxing Master’s allocatur to date of payment.
[4] The RAF paid the judgment debts in both actions late: in the Stoffel s action
only on 17 September 2021 and in the Herold action on 20 August 2021. In emails of
8 March 2022 and 1 April 2022 the attorney in the Stoffel s and in the Herold action s
demanded payment from the RAF in respect of interest in the amount of
R145 979.55 and R130 061.00 respectively, calculated from 14 days of date of
judgment to date of payment. The RAF, however, did not pay any interest nor did it
respond to the demands.
[5] Interest was also demanded on the taxed costs in the Stoffels action from 14
days from date of allocatur to date of payment on 24 August 2022. In response to
this demand the RAF advised in an email of 7 November 2022 that Treas ury
declined to make interest payments where the court order does not provide for
interest. Similarly, in response to an interest demand in the Herold action, the RAF
advised that:
‘As per our internal directive regarding interest payments the court order
needs to contain a clause indicating that interest can be claim(ed).’
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[6] The Stoffels and Herold judgments do not contain provision s that interest is
payable on the capital amount awarded or on the costs.
[7] In light of the RAF’s refusal to pay interest on the judgment debts , the
applicants seek an order in the following terms:
‘1. Directing that the Respondent be liable for and pay interest from
14 (fourteen) days after the above Honourable Court granted
judgment in their respective favour on t he capital amounts
awarded and costs at the relevant and prescribed rate of
interest;
2. Declaring the ‘Directive’ of the Respondent that it will not pay or
be liable for interest on Capital awards and costs to be unlawful
and irregular.’
[8] The RAF did not proceed with its conditional counter -application that this
application be stayed pending the finali sation of an interest application brought by it
against several parties in the Gauteng High Court, Pretoria.
[9] The applicants contend that they are entitled to post-judgment interest ex-lege
in terms of s 2 of the Prescribed Rate of Interest Act 55 of 1975 (‘PRIA’) which
provides that all judgment debts bear interest from the da te on which the judgment
debt is payable unless the court order or judgment provides otherwise.
[10] The RAF, on the other hand, contends that it cannot, and should not, be held
liable for the payment of interest in circumstances where the orders the applicants
rely on do not make specific provision for payment of interest. In resi sting the relief
the applicants seek in relation to interest, the RAF relies on the principle of res
judicata and s 2A of PRIA which, so the RAF submits, requires courts in the case of
awards on unliquidated claims to make specific orders that interest is payable on
such judgment debts for post-judgment interest liability to arise.
The relevant legislative provisions
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[11] The following provisions of PRIA are relevant in determining whether or not
the plaintiffs are entitled to post-judgment interest:
‘1. Interest on a debt to be calculated at the prescribed rate in certain
circumstances
(1) If a debt bears interest and the rate at which the interest is to be
calculated is not governed by any other law or by an agreement
or a trade custom or in any other manner, such interest shall be
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.
(2)(a) For the purposes of subsection (1), the rate of interest is the
repurchase rate as determined from time to time by the South
African Reserve Bank, plus 3,5 percent per annum.
(b) The Cabinet member responsible for the administration of
justice must, whenever the repurchase rate is adjusted by the
South African Reserve Bank, publish the amended rate of
interest contemplated in paragraph (a) by notice in the Gazette.
(c) The interest rate contemplated in paragraph (b) is effective from
the first day of the second month following the month in which
the repurchase rate is determined by the South African Reserve
Bank.
(3) For purposes of this section-
(a) 'repurchase rate' means the rate at which banks borrow rands
from the South African Reserve Bank; and
(b) 'South African Reserve Bank' means the central bank of the
Republic regulated in terms of the South African Reserve
Bank Act, 1989 (Act 90 of 1989).
2. Interest on the judgment debt
(1) Every judgment debt which, but for the provisions of the sub -
section, would not bear any interest after the date of the
judgment or order by virtue of which it is due, shall bear interest
on the day on which such judgment debt is payable, unless that
judgment or order provides otherwise.
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(2) Any interest payable in terms of subsection (1) may be
recovered as if it formed part of the judgment debt on which it is
due.
(3) In this section ‘judgment debt’ means a sum of money due in
terms of a judgment or an order, including an order as to costs,
of a court of law, and includes any part of such a sum of money,
but does not include any interest not forming part of the principa l
sum of the judgment debt.
2A Interest on unliquidated debts
(1) Subject to the provisions of this section the amount of every
unliquidated debt as determined by a court of law, or an
arbitrator or an arbitration tribunal or by agreement between the
creditor and the debtor, shall bear interest as contemplated in
section 1.
(2)(a) Subject to any other agreement between the parties and the
provisions of the National Credit Act, 2005 (Act 34 of
2005) interest contemplated in subsection (1) shall run from the
date on which payment of the debt is claimed by the service on
the debtor of a demand or summons, whichever date is the
earlier.
(b) ………..
(3) ………..
(4) ……….
(5) Notwithstanding the provisions of this Act but subject to any
other law or an agr eement between the parties, a court of law,
or an arbitrator or an arbitration tribunal may make such order
as appears just in respect of the payment of interest on an
unliquidated debt, the rate at which interest shall accrue and the
date from which interest shall run.
(6) ……….’
[12] In actions against the RAF liability for interest is further governed by s 17(3)(a)
of the Road Accident Fund Act 56 of 1996 (‘the RAF Act’) which provides that no
interest calculated on the amount of any compensation which the court awards in
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terms of that act shall be payable unl ess 14 days have elapsed from the date of the
court’s order.
The interpretation of s 2 and s 2A(5) of PRIA
[13] The much -relied on passages from Natal Joint Municipal Pension Fund v
Endumeni Municipality 2012 (4) SA 593 (SCA) (‘Endumeni’) paras 18 – 25 offe r
guidance as to how to interpret statutory provisions. It is the language used,
understood in the context in which it is used, and having regard to the purpose of the
provisions that constitute the unitary exercise of interpretation. ‘The inevitable point
of departure is the language of the provision itself’, read in context and having regard
to the purpose of the provision and the background to the preparation and production
of the document.’ More recently, the SCA in Capitec Bank Holdings Limited and
Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99
para 51 confirmed that the triade test i s not an invitation to contend for a meaning
‘unmoored in the text.’
[14] It is instruc tive to have regard to the history and purpose of s 2 and s 2A of
PRIA. Under the common law interest was payable on a judgment debt from the date
of judgment provided that the judgment creditor claimed interest in the summons
(see General Accident Versekeringsmaatskappy Suid -Afrika Beperk v Bailey NO
1988 (4) SA 353 (A) (‘Bailey’) at 359B-D). Further, under common law , a judgment
creditor’s claim for interest on an unliquidated claim was limited to post -judgment
interest (see Adel Build ers (Pty) Ltd v Thompson 2000 (4) SA 1027 (SCA) (‘Adel
Builders’) para 11; Union Government v Jackson and Others 1956 (2) SA 398 (A) at
412E; LAWSA (3 ed), Vol 14, Part 1 Damages para 32; Standard Chartered Bank of
Canada v Nedperm Bank Ltd 1994 (4) SA 747 (AD) at 779A-D).
[15] When PRIA came into force on 16 July 1976 it did not include s 2A, headed
‘Interest on unliquidated debts’ , which was only in troduced by s 1 of Act 7 of 1997
with effect from 11 April 1997. I will consider the purpose of s 2A later.
[16] Section 2(1) of PRIA does not specify when a judgment debt is ‘payable’.
However, in light of the common law position, our courts have interpreted the section
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to mean that a judgment debt, in the ordinary course, is payable on the date of
judgment and that interest in terms of s 2(1) runs from such date (see Bailey supra at
357G-H; Saunders N.O v MEC of the Department of Health: Limpopo Province
(A899/2013), Gauteng Division, Pretoria (1 June 2015) (‘Saunders’), a full bench
decision, para 28; Schenk v Schenk 1993 (2) SA 346 (ECD) (‘Schenk’) at 350G-H).
[17] In my view, the wording of s 2(1) of PRIA, inasmuch as it provides for interest
on ‘every judgment debt’ , is clear. An interpretation of s 2 of PRIA which limits its
application to judgment debts which arose from liquidated claims, as argued by the
RAF, is irreconcilable with the plain language of s 2(1). The sub-section confirms the
common law position , unless the court orders otherwise, that a judgment debtor is
liable for post-judgment interest on the judgment debt irrespective of whether it arose
from a liquidated or unliquidated claim. A construction of s 2(1) of PRIA which
excludes from its ambit judgment debts on unliquidated claims is also without merit
as there is no sound reason for differentiating between judgment debts for purposes
of interest liability post-judgment on the basis of the nature of the claim giving rise to
them. It is, therefore, not surprising that there do not seem to be any reported case s
to the effect that s 2 of PRIA provides for post -judgment interest only in re spect of
liquidated claims (cf Standard Chartered Bank of Canada supra at 779D-E).
[18] The appellate division, as it was then, held in Bailey at 359C -E that s 2 of
PRIA has done away with the common law requirement that a judgment creditor has
to include a specific claim for post -judgment interest in the summons. By virtue of
s 2(1) interest on a judgment debt now follows ex-lege and a judgment creditor is
entitled thereto without having to specifically claim it (see also Saunders para 28).
[19] The main argument which Mr Naude, counsel for the RAF, advanced to resist
the applicants’ interest claims, was that with the introduction of s 2A of PRIA, headed
‘Interest on unliquidated debts’, both pre- and post-judgment interest on unliquidated
debts is now governed by its provisions and no longer by s 2 of PRIA. In terms of
s 2A(5), so the argument goes, a court is now required to make an order in res pect
of the payment of interest on an unliquidated debt including the rate at which interest
shall accrue and the date from which interest shall run , for any interest liability to
arise post-judgment.
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[20] For the reasons which follow, I am of the view that this interpretation of PRIA
cannot prevail. First, it ignores the apparent purpose for which s 2A was introduced.
In terms of the common law a plaintiff could not claim pre -judgment interest on
unliquidated damages from date of demand or date of summons (see Union
Government v Jackson and Others 1956 (2) SA 398 (A) (‘Jackson’) at 412E-413A).
Pre-amendment our courts remarked that the common law position was
unsatisfactory because plaintiff s suffered the ne gative effects of inflation and trial
delay (see Bailey at 706A -C; SA Eagle Insurance Co Ltd v Hartley 1990 (4)
(‘Hartley’) SA 833 (A) at 841G -842B). The South African Law Commission : Project
78, Interest on Damages Report, referred to with approval in Hartley, canvassed
these policy considerations and recommended the insertion of s 2A in PRIA. In Adel
Builders, para 11 the SCA confirmed that before the introduction of s 2A no common
law principle or statutory enactment provided for the award of pre -judgment interest
on unliquidated damages and, with reference to the remarks of the lower court,
noted that s 2A was aimed at alleviating the plight of plaintiff s who ha d to wait a
substantial period of time to establish their claim, through no fault of their own, and
were paid in depreciated currency. It follows, that the purpose of s 2A was to create
a statutory entitlement to pre -judgment interest on unliquidated debts from the date
on which payment was claimed by service of a demand or summons and not to
qualify the law governing post-judgment interest provided for in s 2 of PRIA (see also
Drake Flemmer and Orsmond Inc and Another v Ga jjar NO 2018 (3) SA 353 (SCA)
(‘DFO’) paras 62 and 63).
[21] Second, the provisions of sub -section 2A(5) which confer a broad discretion
on courts to make orders regarding interest on unliquidated debts must be read in
the wider context of s 2A. S 2A(5) is a rider to the default position provided for in
s 2A(2)(a), as read with s 2A(1), that mora interest will run on every unliquidated
debt as determined by a court from date of demand or summons. It is in respect of
pre-judgment interest that the court has an overriding discretion, inter alia, regarding
the interest rate and the date from which interest shall run. It is also apparent from
the phrase in s 2A(5) that the court ‘may make such order as appears just in respect
of interest’ that s 2A(5) does not enjoin the court to regulate interest, as the RAF
contends. The sub-section confers a wide discretionary power on courts to address
different circumstances that may arise in unliquidated claims between date of
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demand, summons and judgment which may call for a fact -tailored interest award
(see, for example, David Trust and Others v Aegis Insurance Co Ltd and Others
2000 (3) SA 289 (SCA) (‘David Trust’) para 39) . Th e wide discretionary power
governing pre-judgment interest in terms of s 2A(5) is to be contrasted with the ex
lege position in respect of post-judgment interest in terms of s 2 of PRIA . That
s 2A(5) confers a wide discretion in respect of pre -judgment interest (and not post -
judgment interest) is also borne out by the cases in which the exercise of our courts’
discretion in terms of s 2A(5) was discussed (see, for example, Adel Builders paras
14 – 16; MV Sea Joy 1998 (1) SA 487 (C) at 507H-508H; David Trust para 39).
[22] Third, as mentioned earlier, there seems to be no sound reason to have
different interest regime s in place for post -judgment debts which arose from
unliquidated claims and those that arose from liquid ated claims which would be the
case if the RAF’s construction of s 2A(5) is to be adopted.
[23] Finally, the applicants’ counsel, Mr Eia, submitted that an interest award in
terms of s 2A of PRIA cannot conceivably arise in a RAF action, in that s 17(3)(a) of
the RAF Act provides that no interest calculated on the amount of any compensation
which the court awards shall be payable unless 14 days have elapsed from the date
of the court order. In Vermaak v Road Accident Fund [2008] ZAWCHC 12 this court
held that s 17(3)(a) of the RAF Act trumps s 2A of PRIA in relation to pre -judgment
interest and consequently bars a RAF plaintiff from claiming such interest. In DFO
paras 63 and 66 the SCA assumed that this view was correct without deciding the
point.
[24] Accordingly, the RAF’s main submission that the applicants are not entitled to
post-judgment interest on the ground that the trial court did not make an interest
determination in terms of s 2A(5) of PRIA, regarding the rate and da te from which
interest is to run, cannot be sustained.
Res judicata
[25] The RAF submitted, in the alternative, that if s 2 and not s 2A(5) of PRIA
governs the applicants’ entitlement to post -judgment interest, they are precluded
from claiming such interest as this issue is res judicata. In this regard, the RAF relies
10
on the fact that both in the Stoffels and in the Herold summons the applicants
incorporated a prayer for interest at ‘the prevailing rate of interest calculated from
date of demand, al ternatively from 14 days after date of judgment to date of final
payment’ and in respect of costs of suit ‘at the prevailing rate of interest from date of
the Taxing Master allocatur to date of final payment.’
[26] The res judicata defence, in my view, is misconceived. O n the basis of Bailey
the applicants, in terms of s 2 of PRIA , were entitled to post -judgment interest as a
matter of law and did not have to include a claim for such interest in their summons.
No adjudication was re quired to found their entitlement to interest on the judgment
debt which in terms of the definition in s 2(3) also includes an order as to costs. The
Stoffels and the Herold judgments are silent as to interest either on the judgment
debt or in respect of c osts and did not include an order varying the ex lege position
provided for in s 2 of PRIA . Given that s 2 of PRIA provides that post -judgment
interest runs, ex lege, unless the court orders otherwise, it cannot be inferred that the
court adjudicated on post-judgment interest. Inasmuch as the post-judgment interest
has not been adjudicated upon, I conclude that the RAF cannot resist the applicants’
interest claims on the basis of res judicata (see National Sorghum Breweries v
International Liquor Distributors 2001 (2) SA 232 (SCA) at 239F-H).
[27] It should be noted that in Saunders the court came to a similar conclusion . In
that case the judgment incorporated a settlement agreement which was silent as to
the interest payable on the damages award against the MEC. The court upheld the
appellant’s argument that although the damages claim was compromised , this did
not include a compromise of the appellant’s interest claim which only came into force
on judgment. The court accordingly held, on the basis of s 2(1) of PRIA , that the
appellant was entitled to claim post-judgment interest on the judgment debt.
The writ argument
[28] The RAF raise d the further argument that the applicants would be precluded
from issuing out valid writs in terms of Rule 45 as the orders are silent as to interest .
It highlighted that with the 2016 amendment to S 2(1) of PRIA uncertainty may arise
about the applicable mora rate as the Minister of Justice has not consistently and
correctly implemented the publishing of the app licable interest rates. However, I am
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not seized with an application concerning the enforceability or validity of a writ of
execution; the applicants in terms of prayer 1 of the notice of motion simply seek an
order regarding their entitlement to and payme nt of post-judgment interest on the
judgment debts payable by the RAF. Accordingly, I am not asked to decide for the
purposes of this application the enforceability of any writs issued out on the strength
of the declaratory order sought and the practical ( and possibl e legal) ramifications
that may arise if the Minister of Justice does not publish the correct mora interest
rate within the period specified in the amended ss 1(1) and (2) of PRIA.
Conclusion in respect of the relief the applicants seek in p rayer 1 of the notice
of motion
[29] In the circumstances, I find that the applicants have established an
entitlement to post-judgment interest on the judgment debts payable by the RAF, as
sought in p rayer 1 of the notice of motion . Regarding the interest on costs the
Stoffels and Herold actions are on a different footing as the costs in the Herold action
were not taxed but agreed. Interest on the the costs in the Stoffels action is to run 14
days from date of allocatur and in the Herold action, 14 days fro m the date the costs
were settled in terms of the agreement recorded in the letter dated 26 October 2021,
signed by the attorneys of the RAF and the second applicant’s attorney.
[30] The RAF’s counsel was critical of the fact that the rate of interest is not
specified in the order which the applicants seek. However, t he order sought is
broadly in line with the post-judgment interest order granted by the appellate division
in Langley Fox Building Partnership (Pty) Ltd v De Valence 1991 (1) SA (1) AD at
16A-C and could be quantified in an affidavit should this become necessary (see
Butchart v Butchart 1997 (4) SA 108 (W) at 112B-G)
The RAF’s directive
[31] The applicants seek further declaratory relief against the RAF in broad terms,
namely that ‘the Directive of [ the RAF] that it will not pay or be liable for interest on
capital awards and costs to be unlawful and irregular’. In my view, the determination
of the additional declaratory relief sought centers on two questions. First, have the
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applicants established the existence of such a directive on the papers? And second,
should the court exercise its discretion in terms of s 21(1) of the Superior Courts Act
10 of 2013 in circumstances where the applicants’ entitlement to post -judgment
interest has been determined in their favour pursuant to the relief sought in p rayer 1
of the notice of motion?
[33] In support of the existence of the RAF directive, the applicants rely on the
following evidence:
33.1 an email dated 7 November 202 2 in the Stoffels action from a writs
officer of the RAF’s Cape Town office in which she conveyed the
following to the applicant’s attorney , ‘Kindly note that the attached
Court Order does not make reference to your claim for costs interest.
Please note that Treasury will not make payment, where the Court
Order is silent on interest’ (own emphasis);
33.2 an email dated 7 October 2022 in the Herold action from a junior writs
officer of the RAF Cape Town office notifying the second applicant’s
attorney that ‘[A]s per our internal directive regarding interest payments
the court order need to contain a clause indicating that interest can be
claim (sic). In the attached court order nothing is stipulated and
therefore we cannot proceed with requesting interest payment’;
33.4 a subsequent email dated 28 July 2023 from the same RAF officer to
the applicant’s attorney declining to share ‘our internal directive’.
[34] It seems that in the Stoffels action the RAF email was in response to a
demand from the first applicant’s attorneys to pay interest on the costs and not a
response to a demand to pay interest on the capital. It is not clear from the papers
whether the RAF re ply in the Herold action was in response to a demand to pay
interest on the costs or on the costs and the capital award.
[35] The RAF in its answering affidavit deposed to by its regional manager of its
Cape Town branch denies that there is any RAF directive which ‘dictates whether or
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not [RAF] is liable for the payment of interest.’ Given the uncertainty as to the
existence of the RAF’s directive and, to the extent that it may exist , its content and
ambit, I am of the view that the directive has not been sufficiently established on the
papers to found the additional declaratory order which the applicants seek.
[36] The further obstacle to granting the declaratory relief in respect of the RAF
directive is that if the applicants are awarded post -judgment interest pursuant to
prayer 1 of the notice of motion, and this aspect has been det ermined in their favour,
they will no longer continue to be ‘interested parties’ in respect of the legality of the
directive (see Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
2005 (6) SA 205 (SCA) para 16 regarding the essential requirement that the
applicant for a declaratory order must be a person interested in an ‘existing, future or
contingent right or obligation’ although the existence of a dispute is not necessarily a
prerequisite for the discretionary power conferred by s 21(1)(c) of the Superior
Courts Act).
[37] Even i f I am incorrect in concluding that the applicants do not retain an
interest in respect of the legality of the (alleged) directive, for the reasons which
follow I am not persuaded that I should exercise my d iscretion and grant the broad
relief they seek in terms of s 21(1). First, the applicants right to post -judgment
interest on the RAF judgment debts, both in respect of the capital awards and in
respect of costs , are clearly addressed in terms of the relief granted pursuant to
prayer 1 of the notice of motion and there is no cogent reason to grant further relief
which in effect would secure the same rights . Second, the order sought in terms of
prayer 2, in the absence of clear evidence as to the precise term s of the directive the
applicants complain of, may give rise to uncertainty.
[38] In view of the aforegoing, I dismiss the applicants ’ application for the
declaratory relief sought in prayer 2 of the notice of motion.
Order
[39] In the result, I make the following orders:
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1. In the Stoffels action under case number 2866/15 the Road Accident
Fund (‘the RAF’) is declared to be liable for and directed to pay interest
to the first applicant at the legal rate of interest as prescribed in s 1 of
the Prescribed Rate of Interest Act 55 of 1975, as amended (‘PRIA’):
1.1 on the judgment debt payable by the RAF, in terms of the order
granted in the Stoffels action , from 14 (fourteen) days after the
court granted judgment to date of final payment; and
1.2 on the costs payable by the RAF from 14 (fourteen) days after
date of the taxing master’s allocatur to date of final payment;
2. In the Herold’s action under case number 9006/16 the RAF is declared
liable for and directed to pay to the second applicant inte rest at the
legal rate of interest prescribed in s 1 of PRIA:
2.1 on the judgment debt payable by the RAF, in terms of the court
order granted in the Herold’s action , from 14 (fourteen) days
after the date the court granted judgment to date of final
payment; and
2.2 on the costs payable by the RAF from 14 (fourteen) days after
the parties settled the quantum of the costs payable by the RAF
in the Herold’s action to date of final payment;
3. The application for the relief sought by the applicants in prayer 2 of the
notice of motion is dismissed;
4. The RAF is to pay the applicants’ costs on scale B.
_______________
GASSNER, AJ
Appearances:
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Applicants’ Counsel: Advocate P Eia
Instructed by: A Batchelor & Associates
Respondent’s Counsel: Advocate G Naudé and Advocate M Moodley
Instructed by: Malatji & Co Attorneys
c/o Werksmans Attorneys