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[1991] ZASCA 148
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Setsedi v Mamelodi Town Council and Others (272/1990) [1991] ZASCA 148; 1992 (1) SA 483 (AD); (15 November 1991)
LL
Case No 272/1990
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVSION
In the matter between:
MODIBEDI JOHANNES
SETSEDI
Appellant
and
MAMELODI TOWN COUNCIL
First Respondent
THE MINISTER OF
CONSTITUTIONAL
PLANNING AND DEVELOPMENT
Second
Respondent
THE ADMINISTRATOR OF TRANSVAAL
Third Respondent
CORAM
: VAN HEERDEN, MILNE, EKSTEEN, NIENABER JJA
et
PREISS AJA
HEARD
: 4 NOVEMBER 1991
DELIVERED
: 15
NOVEMBER 1991
JUDGMENT
VAN HEERDEN JA
:
2.
The first respondent is a local authority established under s 2, read with s
1, of the Black Local Authorities Act 102 of 1982 ("the
1982 Act") . The
appellant is the occupier of residential premises situated within the area of
jurisdiction of the first respondent.
Prior to January 1990 the first respondent
provided water, electricity, sewerage facilities and services for refuse removal
in respect
of the premises and levied charges therefor. The appellant received
monthly accounts which included interest debits on arrear charges.
Such debits
were paid by the appellant in the
bona fide
and reasonable belief that he
was obliged to pay interest. The appellant also paid certain legal charges with
which he had been debited
by the first respondent.
In January 1990 the appellant initiated motion proceedings in the Transvaal
Provincial Division. In the main he sought orders declaring
that the first
respondent was not entitled to claim arrear
3.
interest and legal costs from him, and directing the
first respondent to
repay to him the amounts of R103,36
and R480,01 which had been paid to the
first respondent
in respect of interest and such costs. The Minister
of
Constitutional Planning and Development and the
Administrator of the
Transvaal were joined as second
and third respondents by virtue of their
alleged
"interest in the matter", but did not oppose the
application.
On 29 January 1990 the first respondent made
an offer of settlement in terms of rule 34(1) of the
Uniform Rules of
Court. The offer, which related to
the claim for repayment of the amount of R480,01, read
as follows:
"GELIEWE KENNIS TE NEEM dat Eerste Respondent onvoorwaardelik die bedrag van
R480,01 en kostes tot datum hiervan soos bereken tussen
party en party en op die
toepaslike Landdroshofskaal "A" aan Applikant ter vereffening van Applikant se
eis in paragraaf 4 van Eiser
se bede, asook ter vereffening van Applikant se
kostes in die geheel met betrekking tot hierdie aansoek, tot
datum
4.
hiervan, aanbied."
The first respondent also
delivered a notice of its intention to raise a question of law, viz, that the
first respondent was entitled
to charge interest on arrear service charges by
virtue of the provisions of the
Prescribed Rate of Interest Act 55 of 1975
("the
1975 Act").
At
the hearing of the application it was common cause that the
respondent had debited the appellant with interest at the rate prescribed
under
s 1
of the
1975 Act. Hence
the only question which fell for decision, apart from
an issue as to costs, was whether that Act was applicable. The court a
quo
held that it was and dismissed the appellant's claims relating to the
interest paid by him. As regards the other prayers, the first
respondent's offer
was made an order of court, but it was ordered to pay the appellant's costs.
Subseguently the appellant was granted
leave to appeal to this court.
5.
S 1(1)
of the
1975 Act provides
that 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
prescribed under subsection (2) - i e, the rate
prescribed from
time to time by the Minister of Justice
("the prescribed rate"). The cardinal question is
whether the rate at
which interest is to be calculated
on arrear amounts owing to the first
respondent is
governed by another law, viz, s 48 of the 1982 Act.
That
section reads:
"A local authority may, subject to section
46(9), on any arrears due to it charge
interest at such rate as may be approved by
the
Minister."
(I shall revert to the provisions of s
46(9).)
In s 1 of the 1982 Act, as originally enacted, "the Minister" was defined as
"the Minister of
6.
Co-operation and Development". By virtue of s 1(i) of Act 58 of 1986 that
definition was replaced by "the Minister of Constitutional
Development and
Planning". Then, by GN 20 of 2 January 1987 (Government Gazette 105665) the
State President assigned the execution
of the provisions contained in the 1982
Act "which assign powers, duties and functions to the Minister of Constitutional
Development
and Planning" to the Administrator of the province concerned. The
State President also determined that, save for an immaterial exception,
a
reference in such a provision to the Minister should be construed as a reference
to an Administrator. All this was done by virtue
of the powers vested in the
State President by s 15 of the Provincial Government Act 69 of 1986.
It
follows that up to the beginning of 1987 a rate of interest, for the purposes of
s 48 of the 1982 Act, had to be determined by
a Minister. However, since 2
January 1987 this power has vested in the
7. Administrator of the Transvaal
in regard to local authorities (including the appellant) whose areas of
jurisdiction are situated
in that province. (In order to obviate repetition I
shall hereinafter refer to s 48 as if at all times a rate of interest had to
be
approved by the Administrator.)
It is common cause that at no stage has a
rate of interest been approved under s 48. Counsel for the appellant contended
that because
of this hiatus the respondent was not entitled to recover interest
on arrear, service charges due to it. The contention ran along
these lines:
S 1
of the
1975 Act does
not apply if the rate at which interest on a debt is to be
calculated is governed by any other law; the 1982 Act is such a law and
s 48
thereof governs the rate of interest which may be charged by the respondent on
arrears due to it; hence the respondent could
not recover
mora
interest
under the provisions of the
1975 Act even
although a rate of interest had at no
stage
8.
been approved of under s 48 of the 1982 Act.
A similar contention was
rejected by the court a
quo
. Its reasoning, though not entirely clear,
may be summarised as follows:
1)
S 48 of the 1982 Act does
not govern a
rate
of interest; it merely "provides for a procedure by
which the rate of interest may be determined by the
Administrator".
2)
The section cannot be
interpreted "in such a way as to diminish the common law right of a person to
claim interest on amounts outstanding
to it".
3)
Indeed, s 48 specifically empowers a local authority to charge
interest on arrears.
4)
Hence, if a rate is
approved of under s 48 that rate applies; if not the
1975 Act
pertains
.
The corner-stone of the ultimate finding
of the court a
quo
is (1) above. Counsel for the appellant submitted,
rightly in my view, that it is based on an erroneous interpretation of
s 1(1)
of
the
9.
1975 Act and
s 48 of the 1982 Act. It will be recalled that the former
section does not apply if the rate at which interest is to be calculated
is
"governed by any other law". In the context in which the phrase "governed by"
appears, it clearly means "regulated by" (cf the
phrase "deur ... gereël
word" in the Afrikaans text). The section is conseguently not applicable if,
inter alia, another law
makes provision for the determination of a rate of
interest on arrears. In such a case the law in question governs, or regulates,
the rate of interest. It is not necessary that the other law should actually
prescribe
a rate; it nevertheless governs the rate even if it merely
provides how the rate is to be determined. By way of analogy reference
may be
made to a contractual provision in terms of which the rate of interest cm arrear
amounts is to be determined by a third party.
Clearly the agreement governs the
applicable rate of interest whether or not a determination has been made.
10.
S 48 of the 1982 Act provides that a local authority may charge interest on
arrears at a rate approved by the Administrator. It therefore
governs the
applicable rate of interest. The fallacy in the reasoning of the court a
quo
, and in the argument of counsel for the respondent in this court, is
that the phrase "governed by any other law" - in s 1 (1 ) of
the
1975 Act
- has
wrongly been equated with "prescribed by or under any other law". That
misconception led the court to the conclusion that as
long as no rate has been
approved under
s 48
, a rate of interest chargeable by a local authority is not
governed by that section.
I do not find in the 1982 Act any indication that the legislature
nevertheless intended the rate prescribed under
s 1(2)
of the
1975 Act to
apply
prior to the approval of a rate under the former section. It is convenient to
consider the respondent's position on the assumption
that
s 48
had not been
incorporated in the 1982 Act. On this assumption the respondent would
11.
clearly have been entitled to claim
mora
interest on arrears owing to
it at the prescribed rate. There would have been no need for a provision in the
1982 Act specifically
authorisinq
the respondent to recover
mora
interest. Its right to claim interest, and the debtor's corresponding
obligation to pay the same, would have arisen ex
lege
.
S 48 of the
1982 Act therefore cannot be construed as an empowering provision in the true
sense of those words. Although it is couched
in permissive terms, the
legislature must have intended that a local authority could charge
mora
interest only if a rate had been approved by the Administrator and then, of
course, at that rate. This is to some extent borne out
by the phrase "subject to
section 46(9)" which appears in s 48. S 46 creates machinery for the recovery,
by a local authority,. of
certain heads of damages suffered by it as a result of
misconduct of a member or employee of that authority. The amount in question
is
to be
12. determined by an official of the local authority who by notice must
order the malfeasor to pay the same within a certain period.
S 46(9) then
provides that if the debtor fails to pay the amount within that period it shall
be deemed that a debt is created to
the local authority, and that interest
calculated at the rate prescribed under the 1975 Act shall be payable on the
debt from the
date of the notice.
It is clear that, as regards debts governed
by s 46, the debtor has to pay interest at the rate prescribed under the
1975
Act whether
or not a general rate has been approved of under s 48 of the 1982
Act. The fact that the legislature provided that the prescribed
rate would apply
only in regard to a class of debts owing to a local authority - also in the
absence of an approval under s 48 -
affords some indication that it was not
intended that that rate should be applicable in regard to other debts. Indeed,
had the legislature
intended the prescribed rate to
13.
apply in the absence of an approved rate, s 48 would
surely have read as
follows:
"A local authority may ... on any arrears ... charge interest at such rate as
may be approved by the Minister or, if no rate has
been approved, at the rate
prescribed under [the
1975
Act]".
Counsel
for the respondent
submitted that
s 48 of the 1982 Act should be restrictively
interpreted so as to avoid a
construction that would
entail an infringement of an existing right, i e
the
right to recover
mora
interest at the rate prescribed
under
s
1(2)
of the
1975 Act. It
suffices to say i)
that the respondent was
established subject to all the
provisions of the 1982 Act and that s 48
thereof
consequently did not take away a pre-existing right of
the respondent, and ii) that the Administrator was
empowered to approve of
a rate of interest at any time
after the inception of the Act. It may well be due to
an oversight that no
such rate has as yet been
determined. In any event, there is no ambiguity in the
14. wording of s
48.
Finally, there is much to be said for the argument, put forward by
counsel for the appellant, that there is a perfectly good reason
why the
legislature intended that a local authority should charge interest on arrears at
the rate approved by the Administrator,
and only at that rate; the reason being
that such an authority is established for the benefit of residents of its area,
and that
it is not a commercial institution. The legislature may therefore well
have thought that the prescribed rate, which is appropriate
in respect of
commercial transactions, would not be apposite in relation to amounts owing by
residents for service charges, etc.
It is true, as pointed out by counsel for
the respondent, that a general rate approved of under s 48 would also apply to
interest
on arrears owing to a local authority pursuant to an ordinary
mercantile transaction, but the legislature in all probability envisaged
that
the vast
15. bulk of the income of a local authority would be derived from
residents.
In the result I am of the view that the respondent was not
entitled to debit the appellant with interest on arrear service charges.
On the
assumption that the appeal would be allowed, counsel were in agreement that the
order set out hereunder should be substituted
for the relevant orders of the
trial court.
The respondent lodged a cross-appeal. It is, however,
unnecessary to set out the order against which it was directed. Firstly, counsel
for the respondent rightly conceded that the cross-appeal merited consideration
only if the appeal were to be dismissed. Secondly,
the respondent did not apply
for, and hence did not obtain, leave to appeal:
Goodrich v Botha and
Others
1954 (2) SA 540
(A) 544;
Gentiruco A G v Firestone SA (Pty)
Ltd
1972 (1) SA 589
(A) 606-8, and cf
Protea Assurance Co Ltd v Presauer
Developments (Pty) Ltd
1985 (1) SA 737
(A).
16.
The following orders are made:
1) The appeal
succeeds with costs and the
following is substituted for paragraphs 1 and 2
of the
order of the court a
quo
:
"The respondent is directed to pay to the appellant the amount of
R103,36"
2) The respondent is ordered to pay
the
costs occasioned by the lodging of the cross-appeal.
H J O VAN HEERDEN JA
MILNE JA
EKSTEEN JA
CONCUR
NIENABER JA
PREISS AJA