Paulsen and Another v Slip Knot Investments 777 (Pty) Limited (CCT 61/14) [2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR 509 (CC) (24 March 2015)

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Paulsen and Another v Slip Knot Investments 777 (Pty) Limited (CCT 61/14) [2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR 509 (CC) (24 March 2015)

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CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 61/14
In
the matter between:
ANDRÉ
FRANCOIS
PAULSEN
................................................................................
First
Applicant
MARGARETHA
ELIZABETH
PAULSEN
.........................................................
Second
Applicant
and
SLIP
KNOT INVESTMENTS 777 (PTY)
LIMITED
................................'..................
Respondent
Neutral
citation:
Paulsen and Another v Slip
Knot Investments 777 (Pty) Limited
[2015]
ZACC 5
Coram:
Mogoeng CJ, Moseneke DCJ, Cameron J, Jafta J,
Khampepe J, Leeuw AJ, Madlanga J, Nkabinde J and Van der Westhuizen J
Judgments:
Madlanga J with Jafta J and Nkabinde J concurring
(main judgment): [1] to [102]
Moseneke DCJ
with Mogoeng CJ, Khampepe J, Leeuw AJ and Van der Westhuizen J
concurring (concurring judgment): [103]to [119]
Cameron
J (dissenting judgment): [120] to [150]
Order:
[102]
Heard
on:
16 September 2014
Decided
on:
24 March 2015
Summary:
arguable point of law — general
public importance — ought to be considered —
National
Credit Act 34 of 2005
— obligation to register as credit
provider — excluded credit agreements —
in
duplum
rule — development of
common law — public policy
ORDER
On
appeal from the Supreme Court of Appeal (hearing an appeal from the
Western Cape High Court, Cape Town):
1.
Leave to appeal is granted.
2.
The orders made by the Western Cape High Court, Cape Town on
24 February 2012 and 12 February 2013 are set aside.
3.
The appeal against the order of the Supreme Court of Appeal is upheld
only to the extent reflected in paragraph 4 below.
4.
The applicants are ordered to pay to the respondent, jointly and
severally—
(a)
the sum of R12 million;
(b)
interest on that sum at the rate of 3% per month calculated from 21
July 2007 to 10 January 2010, up to a total of R12 million;
(c)
interest on the sum of R24 million, being the total of the amounts in
(a) and (b) above, at the rate of 3% per month from the
date of
judgment, 24 March 2015, to date of payment, limited to
R24 million.
JUDGMENT
MADLANGA
J (Jafta J and Nkabinde J concurring):
Introduction
[1]
This
is an application for leave to appeal against an order of the Supreme
Court of Appeal
[1]
upholding the
validity of a R12 million loan agreement and finding sureties to that
agreement liable for up to R72 million, made
up of the capital sum of
R12 million and accrued interest.  A whopping R60 million
difference between capital and interest!
The application arises
from the Supreme Court of Appeal’s rejection of arguments by
the applicants, Ms Margaretha Paulsen
and her husband Mr André
Paulsen (Paulsens), that: the loan agreement was invalid because the
respondent, Slip Knot Investments
777 (Pty) Limited (Slip Knot), was
not registered as a credit provider in terms of the
National Credit
Act
[2]
(NCA or Act); and the
in
duplum
[3]
rule limited interest payable under the loan agreement to a maximum
of R12 million.
Background
[2]
In
2006 Winskor 139 (Pty) Ltd (Winskor), a company involved in the
business of property development whose shares are held by the

trustees of the Paulsen Family Trust,
[4]
sought to purchase a portfolio of properties in Brooklyn, Pretoria
and resell them at a handsome profit.  It was able to obtain

funding for the bulk of the purchase price.  There was a
shortfall of R12 million.  Winskor concluded a loan agreement

with Slip Knot.
[5]
In
terms of this agreement Slip Knot advanced R12 million to Winskor on
10 July 2006 (commencement date).  The R12 million
was
payable within 12 months from the commencement date.
Winskor was liable to pay interest at 3% per month on the outstanding

capital amount from the seventh month after the commencement date to
the date of final payment.
[6]
The interest was to be capitalised monthly.
[3]
As security for the loan, the Paulsens,
acting in their personal capacities and as trustees of the Paulsen
Family Trust and Keurbos
Beleggingstrust, bound themselves jointly
and severally as sureties and co-principal debtors with Winskor for
its indebtedness
to Slip Knot under the loan agreement.
[4]
As fate would have it, an economic downturn
commenced in 2007.  It wreaked havoc throughout the world.
Winskor was not
spared.  As a result, by the due date, 9 July
2007, Winskor had defaulted on its obligation to settle its
indebtedness
in terms of the loan agreement, including interest.
Slip Knot instituted an application against the Paulsens, the Paulsen

Family Trust and the Keurbos Beleggingstrust to recover what was owed
to it by Winskor in the Western Cape High Court, Cape Town
(High
Court).  The application was served on 10 January 2010.
Since litigation for the liquidation of Winskor was already
afoot,
Slip Knot cited it without seeking any relief from it.
[5]
In relevant part, the claim was for: (a)
the capital sum of R12 million; (b) interest on the capital sum
which, as at the date
of commencement of litigation, had accumulated
to R12 million and been limited to that amount by the
in duplum
rule; (c) further interest on the capital sum at the rate of 3% per
month from the date of institution of proceedings to date of

judgment; and (d) interest on the sum of the amounts set out in (a)
to (c) at the rate of 3% per month from the date of judgment
to date
of payment, subject to the interest being limited by the
in
duplum
rule to an amount equal to that
sum.
[6]
The
Paulsens defended the suit.  Their defences, which mutated
somewhat as the litigation progressed, eventually concretised
to
three.  The first was that, because Slip Knot was not registered
under the NCA, the loan agreement was invalid.
[7]
The second was that even if the loan agreement was valid, the amount
of interest payable under it was limited to an overall
total of
R12 million by the
in duplum
rule.
The third was that, if the institution of proceedings had the effect
in law of suspending the operation of the
in
duplum
rule, interest in this matter could not exceed R12 million as no
proceedings had been instituted against Winskor, the principal

debtor.
[8]
[7]
The
High Court upheld all of Slip Knot’s claims, but against the
Paulsens only.
[9]
An
appeal by the Paulsens to the Full Court, based on the same core
issues, was partially successful.  That Court upheld
the
Paulsens’ third defence.
[10]
The Paulsens, who were intent on invalidating the entire liability
based on their first defence, further appealed to the
Supreme Court
of Appeal.  Unhappy with the Full Court’s capping of
interest at R12 million, Slip Knot cross-appealed.
[8]
In
a majority decision authored by Wallis JA, the Supreme Court of
Appeal dismissed the Paulsens’ appeal with costs.
The
majority commenced by pointing out that if the agreement is invalid,
this would be due to the provisions of
section 89(2)(d)
of the
NCA.
[11]
This was
because, as directed by
section 40(4)
,
[12]
in order to determine whether the loan agreement is invalid, regard
must be had to
section 89.
The majority held that
section
89(2)(d)
only operates in respect of those credit agreements to which
the NCA applies.  Therefore, to determine whether this specific

loan agreement is invalid, the starting point is
section 4
of the
NCA, which sets out “excluded agreements” or agreements
to which the Act does not apply.
[13]
The majority thus found that the loan agreement between Slip Knot and
the Paulsens was not invalidated, because the loan
agreement fell
under the
section 4
exclusions.  The majority thus found no need
to consider whether or not Slip Knot was required to register as a
credit provider
in terms of the Act.
[9]
The
majority upheld the cross-appeal and reversed the partial success of
the Paulsens before the Full Court.  It concluded
that “[i]f
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”.
[14]
For this position, the majority relied on
Oneanate
,
[15]
where Zulman JA held that—
“
the
in
duplum
rule
is suspended
pendente
lite
[during
the pendency of litigation], where the
lis
[litigation] is said to begin upon service of the initiating
process.”
[16]
The
majority also held that when proceedings were instituted, the
Paulsens became liable for further interest on that debt, just
as
Winskor would have been if it had been sued.  Interest accrues
because of the surety’s failure, upon the institution
of
proceedings, to meet its own obligation – which was equivalent
to the principal debtor’s.  If the surety does
not pay, it
should not be able to shelter behind the fact that proceedings were
not taken against the principal debtor.
[17]
[10]
The
minority
[18]
disagreed with the conclusion that the
in
duplum
rule must be lifted when litigation begins.
[19]
It held that
“
it
cannot have been the intention of the court in
Oneanate
to enfeeble the
in
duplum
rule almost entirely”
[20]
and
that the context of its application plays an important
consideration.
[21]
It
held that a residual discretion must remain for a court, in
appropriate circumstances, to apply the
in
duplum
rule
even after proceedings have been instituted.
[22]
As the suspension of the
in
duplum
rule in this case would be “inordinately onerous” upon
the debtor, the minority would have exercised the Court’s

discretion not to suspend the operation of the
in
duplum
rule
even during the course of litigation.
[23]
In
this Court
[11]
The Paulsens persist in the arguments that:
(a) the loan agreement was invalid due to Slip Knot’s failure
to register as a
credit provider; (b) if the loan agreement is valid,
due to the
in duplum
rule, the Paulsens cannot be held liable for any interest above the
capital amount of R12 million; and (c) even if the institution
of
proceedings does have the effect in law of suspending the operation
of the
in duplum
rule, interest in this matter is limited to R12 million as no
proceedings had been instituted against Winskor, the principal
debtor.
These, together with whether leave to appeal should be
granted, are the issues for determination.
Leave
to appeal
[12]
The
Paulsens apply for leave to appeal on the basis that the issues
sought to be determined raise arguable points of law of general

public importance that ought to be considered by this Court.
Slip Knot argues the opposite.  Significantly, the Paulsens
have
not alleged that the application raises any constitutional
matters.
[24]
[13]
The
Court’s jurisdiction is governed by section 167(3) to (7) of
the Constitution.  Whereas previously section 167(3)
conferred
jurisdiction on the Court to “decide only constitutional
matters and issues connected with decisions on constitutional

matters”, the section has been amended by the Constitution
Seventeenth Amendment Act
[25]
to
make the Constitutional Court the highest court in all matters. The
amended section 167(3) provides:
“
The
Constitutional Court—
(a)
is the highest court of the Republic; and
(b)
may decide—
(i)
constitutional matters; and
(ii)
any other matter, if the Constitutional Court grants leave to
appeal on the grounds that the matter raises an arguable point of law

of general public importance which ought to be considered by that
Court
; and
(c)
makes the final decision whether a matter is within its
jurisdiction.”  (Emphasis added.)
[14]
At
first glance, it would seem obvious to base this Court’s
jurisdiction on the claim that this matter raises a constitutional

issue.  That is so because this Court has previously found that
the interpretation of the NCA implicates constitutional issues.
[26]
However, the Paulsens have rested their case for leave to appeal
solely on the assertion that this matter raises arguable
points of
law of general public importance.  Generally a finding of
jurisdiction must stand or fall on this basis.  That
is so
because this Court has held that “[j]urisdiction is determined
on the basis of the pleadings . . . and not the substantive
merits of
the case”.
[27]
[15]
It
is therefore only to the Constitution’s Seventeenth Amendment
that we may look.  The most significant consequence
of this
amendment is to extend the ambit of the Constitutional Court’s
jurisdiction “beyond constitutional matters
so as to embrace
any other matter where it grants leave to appeal”.
[28]
In other words, the amendment confers jurisdiction upon the Court to
decide matters that this Court has come to regard as

non-constitutional.
[29]
[16]
This Court has not yet determined the full
scope of its new jurisdiction or definitively granted leave to appeal
on the basis of
section 167(3)(b)(ii).  Reduced to bare
essentials, this section provides for this Court to grant leave if –
(a)
the matter raises an arguable point of law;
(b)
that point is one of general public importance; and
(c)
the point ought to be considered by this Court.
[17]
What
is the import of the words “which ought to be considered by
that Court” in section 167(3)(b)(ii)?  Although
a point of
law may be both arguable and of general public importance, there may
be factors that militate against its receiving
the attention of this
Court.  It seems to me that, on this, some of the factors that
are of relevance to the interests of
justice factor in the context of
our jurisdiction based on constitutional matters may find
application.
[30]
[18]
To summarise, a holding that a matter
raises an arguable point of law of general public importance does not
inexorably lead to a
conclusion that the matter must be entertained.
Whether the matter will, in fact, receive our attention will depend
on the
interests of justice, a subject I deal with later.
[19]
The discussion that follows demonstrates
that we are here concerned with arguable points of law of general
public importance which
ought to be considered by this Court.
(a)
Arguable point of law
[20]
This
is a bifurcated requirement.  The point must be one of law; and
it must be arguable. Starting with the first prong, quite

axiomatically, the point must not be one of fact. This Court’s
jurisprudence on purely factual matters, developed in the
context of
what constitutes a constitutional, as opposed to a factual issue, is
an instructive guide on this.
[31]
In this matter this subject should not detain us. Definitely there
are points of law, namely:
[32]
(a)
Does the NCA require a person, whose business of providing credit
falls outside the ambit of the Act, to register?
(b)
Does failure to register render a credit agreement to which the NCA
does not apply invalid?
(c)
Does the
in duplum
rule apply during the pendency of
litigation?
(d)
If it does not apply, can a surety be held liable for more interest
than that for which the principal debtor is liable if legal

proceedings have not been instituted against the principal debtor?
[21]
Moving
on to the second facet, not infrequently, even in a most hopeless
case a skilful arguer may ingeniously craft an argument
on a point of
law which, at first blush, may appear convincing.  That is not
necessarily enough for purposes of this jurisdictional
requirement.
It cannot be any and every argument that renders a point of law
arguable for purposes of section 167(3)(b)(ii).
Surely, a point
of law which, upon scrutiny, is totally unmeritorious cannot be said
to be arguable.  Indeed, in
Baloi
Centlivres JA said “there are very few cases which are not
arguable in the wide meaning of that word”.
[33]
The notion that a point of law is arguable entails some degree
of merit in the argument.  Although the argument need
not, of
necessity, be convincing at this stage, it must have a measure of
plausibility.  In what appears to have been a judge-created

test, leave to appeal under section 369 of the then applicable
Criminal Procedure and Evidence Act
[34]
could be granted if the question at issue was arguable.  Not
surprisingly, in
Beatley
& Co
[35]
Tindall AJP held that the word “arguable” is used “in
the sense that
there
is substance in the argument advanced
”.
[36]
[22]
I make bold to say in order to be arguable,
a point of law must have some prospects of success.  Support for
this is to be
found in decisions of this Court, albeit made in a
different context.  In
SATAWU
Mogoeng CJ said:
“
The
exercise of the right to assemble by trade unions and other
organisations is an important constitutional issue.  The riot

damage allegedly caused by the gathering, which is said to have
affected vulnerable people in the business sector, underscores
the
public interest in the matter.  This judgment will have
significant implications for the exercise of the right to assemble,

not only for the applicants, but also for the public at large.  The
applicants
have
an arguable case and therefore have some prospects of success on
appeal.
It is thus in the interests of justice that leave to appeal be
granted.”
[37]
(Emphasis added.)
[23]
Without derogating from the breadth of what
I have just said, some factors may be of assistance on this
question.  Needless
to say, these factors are no more than
indicators and are by no means decisive.  In any given case this
Court has to make
a value judgment on whether the point of law is
indeed “arguable”.  The examples I itemise here do
not purport
to be exhaustive.  They are just that –
examples:
(a)
The Supreme Court of Appeal may have expressed itself on the matter
by a narrow majority;
(b)
A minority view in the Supreme Court of Appeal may be quite forceful;
(c)
Different divisions of the High Court may have expressed divergent
views on the point, with no pronouncement on it by the Supreme
Court
of Appeal;
[38]
(d)
There may be no authoritative pronouncement on an issue; with
available, cogent academic or expert views on it being divergent;
(e)
The matter may raise a new and difficult question of law; or
(f)
The answer to the question in issue may not be readily
discernible.
[39]
Ultimately,
whether a point of law is arguable depends on the particular
circumstances of each case.
[24]
As
appears from a discussion of the merits below, some of the points
raised by the Paulsens are arguable.  Their defence on
the
validity of the loan agreement requires this Court to make a
determination as to the proper interplay between sections 4,
40
and 89 of the NCA.  As has been noted, “the NCA cannot be
described as the ‘best drafted Act of Parliament
which was ever
passed’ . . . [and] [n]umerous drafting errors, untidy
expressions and inconsistencies make its interpretation
a
particularly trying exercise”.
[40]
Given the confusion inherent in the NCA, it is at least arguable that
the Act could be interpreted as the Paulsens propose.
More
significantly,
the
Paulsens’ defence on the application of the
in duplum
rule certainly does bear prospects of success.  This will become
apparent when this issue is discussed under the merits section.
(b)
General public importance
[25]
This
Court has yet to lay a standard as to when a point of law qualifies
as being of general public importance.  There are
other
jurisdictions where apex courts grant leave to appeal only where a
matter is of general public importance.  It would
be useful to
consider what the courts of those jurisdictions have said on the
standard.
[41]
For
example, the Constitution of Kenya provides for appeals to the
Supreme Court “in any other case in which the Supreme
Court, or
the Court of Appeal, certifies that a matter of general public
importance is involved”.
[42]
With the exception of the reference to a matter of fact,
[43]
the interpretation of the relevant provision by the Supreme Court of
Kenya is instructive:
“
Before
this Court a matter of general public importance warranting the
exercise of the appellate jurisdiction would be a matter
of law or
fact, provided only that: its impacts and consequences
are
substantial, broad-based, transcending the litigation interests
of the parties, and bearing upon the public interest
.”
[44]
(Emphasis added.)
[26]
This
does not mean the requirement will be met only if the interests of
society as a whole are implicated.  English courts
have found
that an issue is of general public importance when it is likely to
arise again in other cases and where its determination
would affect a
large class of persons rather than merely the litigants.
[45]
As stated in
Wiltshire
Primary Care Trust
,
“issues do not have to be of importance to all citizens or the
whole nation in order to be of ‘general public importance’”,

it is enough to be “of importance to a sufficiently large
section of the public”.
[46]
In
sum, for a
matter
to be of general public importance, it must transcend the narrow
interests of the litigants and implicate the interest of
a
significant part of the general public.
[47]
It will serve a litigant well to identify in clear language what it
is that makes the point of law one of general public
importance.
[48]
[27]
It is
manifest that both the proper interpretation of the NCA on the issues
raised and determination of the question whether the
in
duplum
rule is suspended
pendente
lite
will have a significant impact on the general populace.
As
noted in
Kubyana
,
the NCA “regulates commercial activity undertaken by many
people and institutions on a daily basis.  The issues at
stake
are therefore of fundamental importance to many South Africans.”
[49]
Charging interest on commercial transactions is so widespread as to
affect a large number of members of society.  Likewise,
there
are countless people and entities that charge and derive a financial
benefit from interest.  A pronouncement either
way on whether
the
in
duplum
rule is suspended
pendente
lite
will affect many on either side of the scale.
[28]
So there is an “arguable point of law
of general public importance”.
(c)
Interests of justice
[29]
Where, in an application for leave to
appeal founded on a constitutional matter, this Court holds that
there is indeed a constitutional
issue, that does not automatically
lead to the grant of leave.  This Court has a discretion and on
this the fundamental criterion
is the interests of justice.  In
Boesak
we
held:
“
A
threshold requirement in applications for leave relates to the issue
of jurisdiction.  The issues to be decided must be
constitutional matters or issues connected with decisions on
constitutional matters.  This is dealt with more fully below.
A
finding that a matter is a constitutional issue is not decisive.
Leave may be refused if it is not in the interests of justice

that the Court should hear the appeal.
The
decision to grant or refuse leave is a matter for the discretion of
the Court and, in deciding whether or not to grant leave,
the
interests of justice remain fundamental.  In considering the
interests of justice, prospects of success, although not
the only
factor, are obviously an important aspect of the enquiry.  An
applicant who seeks leave to appeal must ordinarily
show that there
are reasonable prospects that this Court will reverse or materially
alter the decision of the SCA.”
[50]
(Emphasis added and footnotes omitted.)
[30]
The
interests of justice factor aims to ensure that the Court does not
entertain any and every application for leave to appeal brought
to
it.  Coming to this Court’s non-constitutional appellate
jurisdiction, the question arises: do interests of justice
not come
into the equation?  I think they do.  This is what the
words “which ought to be considered by that Court”
in
section 167(3)(b)(ii) of the Constitution are directed at.  If –
for whatever reason – it is not in the interests
of justice for
this Court to entertain what is otherwise an arguable point of law of
general public importance, then that point
is not one that “ought
to be considered by [this] Court”.  The interests of
justice criterion is firmly entrenched
in this Court’s
jurisprudence on applications for leave to appeal involving
constitutional matters.
[51]
Whatever its true provenance in respect of applications for
leave to appeal on constitutional matters from the Supreme Court
of
Appeal,
[52]
I cannot conceive
of any basis why it should not be applicable here.  On the
non-constitutional appellate jurisdiction we
must borrow from this
Court’s existing jurisprudence on interests of justice.
[31]
With
the exception of the last, the points the Paulsens raise have some
prospects of success.
[53]
On this I need do no more than to refer to the ensuing discussion on
the merits.  Without doubt, the points are of import.
[54]
Clamantly, it is in the interests of justice that this appeal be
entertained.  I grant leave to appeal.
Merits
(a)
Invalidity of the credit agreement
[32]
The Paulsens’ argument that the loan
agreement is invalid because at the time of its conclusion Slip Knot
was not registered
as a credit provider rests on two contentions.
One is that a credit provider like Slip Knot, which exclusively
provides credit
in respect of agreements falling under the exceptions
provided for in section 4 of the NCA, is nonetheless required to
register
under section 40(1).  The other is that Slip Knot’s
failure to register renders its loan agreement with Winskor invalid

under section 40(4) read with section 89, even if the specific
agreement was not subject to the Act.
[33]
Section 40 of the NCA, entitled
“Registration of credit providers”, stipulates:
“
(1)
A person must apply to be registered as a credit provider if¾
(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).”
[34]
All accept that the total number of
agreements under which credit was provided by Slip Knot and the
principal debt owed to it under
all these agreements exceeded the
relevant thresholds.
[35]
Section 4, entitled “Application of
Act”, provides:
“
(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 an effect within, the Republic, except¾
(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);
.
. .
(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 determined by the Minister in terms of section 7(1).”
It
is common cause that all of the loans provided by Slip Knot,
including the loan agreement concluded between Slip Knot and Winskor

that gave rise to this suit, qualify for the exceptions set out in
section 4(1)(a) and (b).
[36]
For
the purpose of calculating whether a credit provider meets the
threshold levels in section 40(1)(a) and (b), the question is,
do we
count all credit agreements (as the Paulsens contend), or only those
credit agreements subject to regulation under the Act
(as Slip Knot
contends)?  While there is some ambiguity, the more sensible
interpretation, both on a textual and purposive
reading of the
statute,
[55]
is that only
those credit providers who provide the threshold number of “credit
agreements” that are subject to the
Act must register.
Although the Paulsens contend that there is absolutely no
relationship between section 4 and section 40,
they were unable to
articulate a convincing rationale for this proposition.
[37]
In
section 4(1)(a)(i), the Legislature exempts credit agreements in
respect of which the consumer is a large juristic person (like

Winskor).  This evinces a conscious legislative choice not to
protect this type of consumer under the Act.  It is to
this
category of consumers that Slip Knot provided credit.  Since
none of them enjoyed protection under the provisions of
the Act,
there is little, if any, reason why Slip Knot and similarly placed
credit providers should register in terms of the NCA.
[56]
[38]
In
oral argument both before this Court and the Supreme Court of
Appeal,
[57]
the Paulsens
conceded that if a person provided over 100 loans to her friends,
none of which was made at arm’s length, she
would not have to
register in terms of the Act.  Bridging finance agreements to
large juristic persons, just like agreements
that are not at arm’s
length, are exempted from regulation under the Act by section 4(1).
As it is illogical and unnecessary
to require registration by a
person who provides loans solely to her friends, it would be
similarly illogical to require registration
by Slip Knot, which
solely provides bridging finance loans to real estate developers that
are not protected by the NCA.
[58]
[39]
Even
if Slip Knot were to be required to register under section 40(1), its
failure to do so would not render this agreement void.
Section
40(4) provides for the consequences of a credit provider failing to
register in accordance with section 40(1): any
agreement with
that credit provider is “an unlawful agreement and void to the
extent provided for in section 89”.
[59]
Therefore,
in order to determine the validity of the agreement, section
40(4)
must be read with section 89(2)(d).
[60]
Section 89 is contained in Chapter 5 of the NCA, entitled
“Consumer Credit Agreements”.  The term “credit

agreement” in this chapter can only be understood to refer to
those credit agreements which are subject to the Act.
[61]
To understand the term differently would render many of the
provisions in this chapter entirely meaningless.
[40]
For example, section 90 sets out certain
unlawful provisions which may not be contained in “a credit
agreement”.
Clearly, these unlawful provisions are
irrelevant to a credit agreement which is not subject to the Act.
The majority in
the Supreme Court of Appeal makes the point aptly:
“
I
am unable to see on what basis section 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.”
[62]
[41]
In conclusion, the plea for the
invalidation of the agreement on the ground that Slip Knot was not
registered as a credit provider
in terms of the Act is unmeritorious
and must fail in its entirety.
(b)
The in duplum rule during the pendency of litigation
[42]
The
in
duplum
rule is a long-standing and well-established part of our law.
It provides that arrear interest ceases to accrue once the
sum of the
unpaid interest equals the amount of the outstanding capital.
[63]
For perspective, it is necessary to give a brief outline of the
history of the
in
duplum
rule in South African law.  The rule has its origins in
classical Roman law.
[64]
The rule was carried through to Roman-Dutch law, reference to it
being made by various old authorities, including, most pertinently

for this case, Huber and Van der Keessel.
[65]
Our common law is based on the same Roman law rule
[66]
and the rule has been recognised in local case law as far back as
1830.
[67]
[43]
More
recently, in
LTA
Construction
the rule was confirmed as still forming part of South African law,
not having been abrogated by disuse.
[68]
Indeed in that case the Appellate Division noted that the
in
duplum
rule is far from an anachronism, and is in fact an aspect of daily
economic life under our common law.
[69]
[44]
As
stated in numerous cases and academic writings stretching back over
centuries, the overarching purpose of the rule is to protect
debtors
from being crushed by the never-ending accumulation of interest on an
outstanding debt.
[70]
As
Tuchten AJ neatly put it in
Bellingan
:
“
[T]he
jurisprudential foundation for the restriction [of interest to the
duplum
]
was the policy consideration that debtors whose affairs are declining
should not be entirely drained dry.”
[71]
[45]
Similarly, as the Appellate Division
stressed in
LTA Construction,
the
rule serves generally to aid debtors in adverse financial positions:
“
Dit
vorm deel van ons daaglikse ekonomiese lewe.  Dit vervul ’n
ekonomiese funksie om skuldenaars wat hulle in finansiële

verknorsing bevind, te help.”
[72]
[46]
The
issue concerning us on the
in
duplum
rule
stems from the unanimous judgment in
Oneanate
.
In that case the Supreme Court of Appeal was faced with the question
whether the
in
duplum
rule should operate
pendente lite
– meaning from the date of service of the process initiating
the proceedings until the date of judgment.
[73]
According to the leading case at the time,
Stroebel
v Stroebel
,
[74]
it was clear that the rule applied even
pendente
lite
.
Nonetheless,
Oneanate
held that the operation of the
in
duplum
rule should be suspended
pendente
lite
,
based on two grounds: (i) the Court’s reading of the old
authorities and (ii) public interest considerations.  I will

demonstrate that the Supreme Court of Appeal was wrong on both counts
and that
Oneanate
falls to be overruled.
[47]
Oneanate
canvassed
Roman-Dutch law authorities on the rule, including Van der
Keessel and Huber, as well as South African case law.
As that
decision acknowledges,
[75]
according to Huber, the rule clearly did apply
pendente
lite
.
[76]
However,
Oneanate
read Van der Keessel to have said that it did not.
[77]
As I will show, this, with respect, is a misreading of Van der
Keessel.
[48]
Oneanate
proceeds
to express a preference for Van der Keessel for the reason that
Huber’s formulation relies on the German author Carpzovius.

The views of Carpzovius are said to stem from an understanding that
the
total
interest paid may never exceed the capital amount.  He also
relies on the fact that Huber wrote primarily on the law of the
Dutch
province of Friesland, under which a judgment always novated the
original debt, which is different from the position adopted
in the
South African common law.  According to
Oneanate
,
Van der Keessel’s understanding of the
in
duplum
rule more closely accorded with
South Africa’s common law basis of the rule, apparently
originating as it did from a decision
of the Dutch Hooge Raad.
[49]
Does Van der Keessel enunciate the
principle
Oneanate
attributes to him?  I say he does not.  This is how
Oneanate
deals with this aspect:
“
Stroebel
’s
case is, however, authority for the proposition that,
in
spite of the contrary view of Van der Keessel
,
if the
duplum
has
been reached, interest does not again commence to run
pendente
lite
.”
[78]
(Emphasis added and citation omitted.)
Van
der Keessel writes in the
Praelectiones
:
[79]
“
Daar
word egter beweer dat hierdie reël ’n uitsondering toelaat
ten aansien van rente wat
pendente
lite
oploop, en ek het dit êrens opgeteken gevind dat so ’n
beslissing deur die Hooge Raad gegee is.  ’n Verdere

uitsondering, en dié is onbetwisbaar geld in die geval van
jaargelde.”
[80]
(Endnote omitted.)
[50]
From this it appears that Van der Keessel,
in relation to the
pendente lite
exception, is saying no more than that it is alleged that such an
exception exists, and that he found it written “somewhere”

that the Hooge Raad had made the decision – apparently without
having seen the decision himself.  Crucially, he then
goes on to
talk about a further exception to the
in
duplum
rule that is “
indisputable
”.
This contrast – that is, the reference to the other exception
being “indisputable” – is not
without
significance.  There is an implicit acceptance by Van der
Keessel that the exception to the
in
duplum
rule may well be questionable.
This is a far cry from a categorical exposition of a rule that
suspends the
in duplum
rule
pendente lite
.
If anything, after mentioning what has been “said” about
the possible existence of the “suspending”
rule, he –
in essence – proceeds to express doubt that it, in fact,
exists.  That much is manifest from the contrast
he makes about
the rule on annuities which is “indisputable”.
[51]
On this reading of Van der Keessel, the
difference between what he says, and the law as expounded by Huber
(that the
in duplum
rule applied even
pendente lite
),
is more apparent than real.
[52]
It
is certainly not readily apparent that some source exists where Van
der Keessel ever embraced the
pendente
lite
exception to the
in
duplum
rule.
If, as seems to be the case, reliance for the existence of this
exception is the
Praelectiones
,
[81]
then
Oneanate
was wrong in this regard.  Likewise, to the extent that my
colleague, Cameron J, whose judgment (dissenting judgment) I have
had
the pleasure of reading, relies on this part of the
Oneanate
reasoning,
[82]
he too must,
with respect, be wrong.  Thus, insofar as the perceived
existence of this exception informed the
Oneanate
conclusion, I cannot agree.
[83]
[53]
Oneanate
accepted
that
Stroebel
,
which based its formulation of the rule on Huber
[84]
and which was followed in later decisions,
[85]
conclusively established that under South African common law, the
in
duplum
rule continued to operate
pendente lite
.
However,
Oneanate
chose to depart from this established position, justifying its
decision as follows:
“
It
appears as previously pointed out that the rule is concerned with
public interest and protects borrowers from exploitation by
lenders
who permit interest to accumulate.  If that is so, I fail to see
how a creditor, who has instituted action can be
said to exploit a
debtor who, with the assistance of delays inherent in legal
proceedings, keeps the creditor out of his money.
No
principle of public policy is involved in providing the debtor with
protection pendente lite against interest in excess of the
double.
Since the rule as formulated by Huber does not serve the public
interest, I do not believe that we should consider
ourselves bound by
it.
A creditor can control the institution of litigation and can, by
timeously instituting action, prevent the prejudice to the
debtor and
the application of the rule.  The creditor, however, has no
control over delays caused by the litigation process.
. . .  If
one accepts that interest and indeed compound interest is ‘the
life-blood of finance’ in modern times
I am of the opinion that
one should not apply all of ‘the old Roman Dutch Law to
modern conditions where finance plays
an entirely different
role’.”
[86]
(Emphasis added and citation omitted.)
[54]
The
Paulsens argue that the Supreme Court of Appeal in
Oneanate
was not at liberty to depart from a well-established common law
principle on considerations of public policy or the public
interest.
[87]
For this,
they argue that the
in
duplum
rule had become part of our positive law and, consequently, even
though its origin was based in public policy, it was not subject
to
the whims of further policy-based application or amendment by a
court.
[55]
While
I accept, as I must, that public policy may dictate that courts
develop the common law in appropriate instances, I take the
view that
there is no comparison between
Oneanate
and cases like, for example,
Carmichele
.
[88]
In accordance with
Carmichele
,
it was certainly wrongful of the police not to protect a section of
vulnerable people in our society – women – from
sexual
and physical abuse at the hands of men with utter disrespect for
women’s rights to bodily and psychological integrity
[89]
and dignity.
[90]
There
could not possibly be
cogent
public policy considerations pointing in the opposite direction.
Public policy pointed in one direction, and one direction

only.
[91]
[56]
When
faced with valid policy considerations pointing in opposite
directions, on the other hand, short of making a choice based on

nothing more than personal preference and predilections – to
the total disregard of the countervailing considerations –
it
is not easy to decide what public policy actually dictates.
Oneanate
is a case in point.  I am going to show that there are
persuasive competing public interest considerations that are at the

opposite end of those on which
Oneanate
relied.
[92]
And I am
going to conclude that
Oneanate
was wrong in developing the common law in these circumstances.
Why do I say it was wrong?
[57]
Where
public policy considerations do not chart the path of desired common
law development with sufficient clarity, courts are not
suitably
placed to take the leap and make a judgment call one way or the
other.  To do otherwise, courts may find themselves
straying
into terrain that may well be legislative in nature.  That would
be at variance with the separation of powers doctrine.
On the
vexing issue before us, at the moment,
[93]
that role is best left to the Legislature.  As this Court stated
in
Carmichele,
“[i]n
exercising their powers to develop the common law, Judges should be
mindful of the fact that the major engine for law
reform should be
the Legislature and not the Judiciary”.
[94]
Likewise, in
Masiya
this
Court held:
“
The
development of the common law . . . is a power that has always vested
in our Courts.  It is exercised in an incremental
manner as the
facts of each case require.  This incremental manner has not
changed, but the Constitution in section 39(2)
provides a paramount
substantive consideration relevant to determining whether the common
law requires development in any particular
case.  This does not
detract from the constitutional recognition, as indicated above, that
it is the Legislature that has
the major responsibility for law
reform.  Courts must be astute to avoid the appropriation of the
Legislature’s role
in law reform when developing the common
law.”
[95]
[58]
The
question at stake in
Oneanate
(and here) is so heavily laden with polycentricism that a court ought
not to make a choice on what considerations best advance
the public
interest.  It is exactly in matters that raise polycentric
issues that courts should defer to the Legislature.
Entering
that boggy terrain and making policy choices would be but a
usurpation of the legislative function in contravention of
the
separation of powers doctrine.  That said, I am not suggesting
that this Court should be servile and not do its duty in
accordance
with section 39(2) of the Constitution.
[96]
Where it is appropriate for it to develop the common law, it must.
[59]
Now to demonstrate the competing policy
considerations.
[60]
In
Oneanate
the Supreme Court of Appeal does not appear to have been alive to, or
at the very least does not mention, the fact that in our
present
constitutional dispensation, public policy stems from, or is informed
by, the Constitution itself.
[97]
In particular, it completely ignored an important policy
consideration founded on the Constitution – namely, the right

of access to courts, which is enshrined in section 34 of the
Constitution.
[98]
[61]
This is what this Court has said of this
right:
“
Our
democratic order requires an orderly and fair resolution of disputes
by courts or other independent and impartial tribunals.
This is
fundamental to the stability of an orderly society.  It is
indeed vital to a society that, like ours, is founded
on the rule of
law.  Section 34 gives expression to this foundational value by
guaranteeing to everyone the right to seek
the assistance of a court.
When
we had occasion to consider section 34, we alluded to these matters
saying:
‘
Section
34 is an express constitutional recognition of the importance of the
fair resolution of social conflict by impartial and
independent
institutions.  The sharper the potential for social conflict,
the more important it is, if our constitutional
order is to flourish,
that disputes are resolved by courts.  As this Court said in
Lesapo
:
‘
The
right of access to court is indeed foundational to the stability of
an orderly society.  It ensures the peaceful, regulated
and
institutionalised mechanisms to resolve disputes without resorting to
self-help.  The right of access to court is a bulwark
against
vigilantism, and the chaos and anarchy which it causes.  Construed
in this context of the rule of law and the principle
against
self-help in particular, access to court is indeed of cardinal
importance.’’
Section
34 therefore not only reflects the foundational values that underlie
our constitutional order,
it
also constitutes public policy
.”
[99]
(Emphasis added and footnotes omitted.)
[62]
Section
39(2) of the Constitution stipulates that “when interpreting
any legislation, and when developing the common law or
customary law,
every court, tribunal or forum must promote the spirit, purport and
objects of the Bill of Rights”.
Among these noble
objects, this Court has repeatedly noted that access to courts is “of
cardinal importance”.
[100]
This is because “[t]he fundamental right of access to courts is
essential for constitutional democracy under the rule
of law”.
[101]
Thus “when the Judiciary exercises its constitutional powers to
develop the common law, it must thereby seek to give
expression to
the right of access to courts”.
[102]
[63]
By
suspending the application of the
in
duplum
rule
pendente
lite
,
Oneanate
indiscriminately targets all debtors – regardless of whether
they are defending the claim in good faith or not.
[103]
To hit all debtors in this manner would surely have an undesirable,
chilling effect.  Some debtors, despite a genuinely
held belief
that they have a valid defence, may sooner opt to settle a claim than
face the potentially financially ruinous interest
that would again
commence to pile up once court process was served.  We need look
no further than this very case where, upon
the application of the
in
duplum
rule, the Paulsens would have been exposed to a maximum of
R24 million, excluding interest that might accrue after date of

judgment.  With the suspension of the rule in accordance with
Oneanate
,
the amount due by them, again excluding interest after judgment, has
sky-rocketed to an amount in excess of R72 million.
[104]
[64]
Surely,
with the effect that it has, the
Oneanate
principle
does implicate a debtor’s section 34 right.  Indeed, it
inhibits rather than promotes it; this, contrary to
what the Supreme
Court of Appeal said in
Van
Zijl v Hoogenhout
:
litigants are “entitled to the benefits of a constitutional
dispensation that promotes rather than inhibits access to courts
of
law”.
[105]
This
ought to have been one of the factors that should have been uppermost
when the Supreme Court of Appeal developed the
common law in
Oneanate
.
But that was not the case.
[65]
The
dissenting judgment disputes this conclusion, arguing that the right
of access to courts is of little importance because enforcing
the
in
duplum
rule simply shifts the burden of litigation from debtors to
lenders.
[106]
It takes
the view that preventing interest from accumulating once litigation
has started may cause creditors to abandon their
claims against
defaulting debtors as their money is eroded by inflation.
[107]
[66]
We
need to look at South Africa’s socio-economic realities.
A large percentage of the providers of credit are large,
established
and well-resourced corporates.  On the other hand, although
there may be what the dissenting judgment refers to
as “stout-boned”
credit consumers, it would be ignoring our country’s economic
reality to suggest that there
is any comparison between these
corporates and most credit consumers.  To many credit consumers,
who fall on the wrong side
of this country’s vast capital
disparities, astronomical interest may mean the difference between
economic survival and complete
financial ruin.  While in some
cases creditors may lose money to inflation during litigation, this
is very unlikely to have
the same catastrophic effect on the creditor
compared to what the accumulation of run-away interest will have on
the debtor.
[108]
If I
were to be forced to make a choice between the two, it would be an
easy one for me.
[67]
Applying the
in
duplum
rule
pendente
lite
does not inhibit creditors’
access to courts nearly to the same extent that lifting the rule
inhibits debtors’ access
to courts.  It is difficult to
imagine that creditors will abandon meritorious claims against
debtors merely because the amounts
they are set to recover upon
victory will be limited to double the principal amount of the loan.
[68]
To allow for uncapped, and possibly
exorbitant, interest to run
pendente
lite
grants a powerful tool to
creditors to bully and possibly annihilate debtors using the
litigation process to their best advantage.
And this is made
possible by the sheer imbalance in financial muscle.  By
allowing uncapped interest to run as a result of
a debtor exercising
her right of access to courts by suspending the
in
duplum
rule
pendente
lite
we risk rendering the debtors’
right of access to courts tenuous, if not illusory.
[69]
In
sum, suspension of the
in
duplum
rule
pendente
lite
serves as a significant impediment to debtors seeking assistance from
courts, inhibiting rather than promoting the right of access
to
courts.  Conversely, the continued application of the rule does
not serve as an equivalent impediment to creditors.  This
policy
consideration against the suspension of the rule, founded as it is on
the Constitution itself, is weighty indeed
[109]
and ought to have been considered in
Oneanate
.
[70]
There
is a countervailing policy consideration, also founded on
constitutional values, which comes into play here.  That is
the
respect for freedom of contract which, as this Court has noted,
“gives effect to the central constitutional values of
freedom
and dignity”.
[110]
Holding a debtor bound to the interest obligation contained in an
agreement regardless of the double having been reached
may be seen to
accord with freedom of contract; and thus with the rights to freedom
and dignity.
[71]
Under
common law the principle of freedom of contract (often expressed in
the maxim
pacta
sunt servanda
)
[111]
has never been absolute.  Rather, it has always been subject to
limiting rules intrinsic to the law of contract.
[112]
The
in
duplum
rule, including its application
pendente
lite
,
is one of these rules.  It is perhaps so that, based on the
Barkhuizen
principle on freedom of contract,
[113]
some of these rules may not pass constitutional muster.  In the
context of this case, it would be well-nigh impossible to
determine
which ones may and which ones may not.  In
Barkhuizen
itself this Court made it clear that freedom of contract is by no
means absolute under our constitutional dispensation.  It

endorsed an “approach that leaves space for the doctrine of
pacta
sunt servanda
to operate, but at the same time allows courts to decline to enforce
contractual terms that are in conflict with the constitutional
values
even though the parties may have consented to them”.
[114]
[72]
Indeed, in
Barkhuizen
the Court had to weigh up the same two constitutional interests at
stake here – freedom of contract and access to courts
–
and it laid down the following principle:
“
[A]
court will bear in mind the need to recognise freedom of contract,
but the court will not let blind reliance on the principle
of freedom
of contract override the need to ensure that contracting parties must
have access to courts.”
[115]
Thus
it cannot be said that respect for freedom of contract must always
trump all other considerations.
[73]
To say
pacta
sunt servanda
should prevail here
because debtors like the Paulsens are “stout-boned” and
should be held to bargains they concluded
open-eyed misses the
point.  The plain reality is that in South Africa debtors are
typically not as financially resourced
as the large corporates that
dominate the credit market.  That there may be some
“stout-boned” debtors does not
detract from this economic
reality.
[74]
Also, in this country there may be those
emerging out of the ranks of the financially vulnerable.  On the
face of it, they
may appear to resemble – in financial terms –
those who were never the subject of disadvantage under apartheid.

This may give the semblance that they too are “stout-boned”.
In some cases though, the reality may be that, because
they are new
entrants into this new status, their financial strength is actually
precarious.  One mishap – which could
even take the form
of unbridled interest – may cause them complete financial ruin.
[75]
It
cannot be plausibly gainsaid that for our democracy to be meaningful,
it is only fitting that those previously denigrated by
racism and
apartheid, confined to the fringes of society and stripped of dignity
and self-worth must also enter the terrain of
meaningful, substantial
economic activity.
[116]
Surely, our hard-fought democracy could not have been only about the
change of the political face of our country and such
upliftment of
the lot of the downtrodden as the public purse and government
policies permit.  Entrepreneurship and the economic
advancement
of those with no history of being financially resourced must be given
room to take root and thrive.  This can
hardly happen without
finance.  The sort of interest to which
Oneanate
exposes our legal system is deleterious to this necessary economic
advancement.
[117]
[76]
I am not unmindful of the fact that the
financial position of some of those who were not disadvantaged by
apartheid may be precarious
although, on the face of it, appearing
solid.  Rather than detract from, this bolsters my point: one
should be careful not
to overemphasise the apparent financial
strength of debtors and thus the equality of arms of contracting
parties.
[77]
Beyond the important constitutionally-based
policy considerations of access to courts and freedom of contract –
neither of
which was addressed in
Oneanate
– there are other policy considerations both for and against
the suspension of the rule
pendente
lite
.
This judgment, on the one hand, and the dissenting and
Oneanate
judgments, on the other, show us as much.
[78]
The major problem I have with
Oneanate
is that its approach was one-sided.  I find it problematic that
Oneanate
focused only on the effect of the rule on creditors (or “finance”)
rather than weighing the interests of creditors
and debtors equally.
Once
Oneanate
gets past the application of the rule pre-litigation, there is not a
single word about the interests of debtors.  Debtors
are no more
immune to the vagaries of the litigation process than are creditors.
Oneanate
does
not explain why only the interests of the creditor are of relevance
in this regard.  Why should the
in
duplum
rule not continue to cap
interest even
pendente lite
?
With the exception of some devious ones, debtors also have no control
over the litigation process.
[79]
Must
the debtor get the short end of the stick purely because, as it was
held in
Oneanate
,
“interest and indeed compound interest is the ‘life-blood
of finance’ in modern times” and that we “should

not apply all of ‘the old Roman-Dutch law to modern conditions
where finance plays an entirely different role’”?
[118]
In
Oneanate
,
the Court seemed to believe that the sole basis for the application
of the rule pre-litigation is to prevent a creditor from purposefully

delaying bringing suit in order to rack up huge sums of interest.
The dissenting judgment appears to have adopted this view
as
well.
[119]
In fact, as
described above at [42] to [43], the protection afforded by the
in
duplum
rule has a far broader basis than this.  The possible total
financial ruin of debtors by uncapped interest
pendente
lite
is at least as much an important public interest consideration as the
interest of finance.
[80]
Debtors
may be drained entirely dry by the accumulation of interest during
the pendency of litigation just as well as prior to the
initiation of
litigation.  The consideration that the
in
duplum
rule is aimed at aiding debtors is not diminished by the initiation
of legal proceedings.  This overarching purpose of the
in
duplum
rule augurs for its application both before and during
litigation.
[120]
[81]
The dissenting judgment correctly notes
that inflation rates are significantly higher today than they were
during the 16th and 17th
century.  But it is also true that
interest rates are commensurately higher.  So while the passage
of time without interest
accruing hurts lenders in today’s
high-inflation rate environment, it is equally true that the passage
of time with interest
accruing at contractual rates prejudices
borrowers’ interests during litigation significantly in today’s
high-interest
rate environment.  Thus the broad basis for the
existence of the rule – protecting debtors from being buried
under a
mountain of debt – applies with at least equal force in
today’s modern world of finance, both before and during the

litigation.
[82]
Another
purpose of the
in
duplum
rule was to enforce sound fiscal discipline upon creditors by serving
to disincentivise lending money to a bad risk.
[121]
Given that the recent global financial crisis (which has affected
South Africa no less than many other countries) arose in
large part
from a failure of fiscal discipline, this concern is still quite
relevant.  As with the larger purpose of protecting
debtors,
Oneanate
’s
suspension of the
in
duplum
rule
pendente
lite
serves to weaken the effectiveness of the rule in incentivising
fiscal discipline among creditors.
[83]
We
must also consider how the application of the rule
pendente
lite
affects creditors.  A creditor in whose favour a judgment is
granted recovers her capital outlay, interest thereon (which
is not
necessarily limited to the double, as paid instalments are not capped
by the
in
duplum
rule), post-judgment interest
[122]
and costs.  Of course, creditors would be better off if they
could recover additional interest accumulating in excess of double

the capital amount during the pendency of litigation.  But
general notions of fairness would seem to dictate that the hardship

faced by creditors who must forgo the collection of this interest is
less than the hardship incurred by debtors who, because they
chose to
litigate claims in good faith, must pay multiple times the borrowed
capital amount in interest.  And on this, I again
emphasise that
preponderantly debtors are more financially vulnerable than
creditors.
[84]
Suspending
the
in
duplum
rule is not the only possible way of ameliorating a creditor’s
situation.  Vexatious litigation or delaying tactics
by a debtor
who truly has no defence may, for example, be addressed by means of
summary judgment.  Even mechanisms such as
punitive costs awards
exist to counteract reprehensible behaviour on the part of a
litigant.  While some unscrupulous debtors
may employ meritless
defences in an attempt to stretch out litigation for as long as
possible, it does not make sense for this
to continue after the
judgment of the court of first instance has been handed down.
That is so because the judgment debt
will be due – and
ordinarily attracts interest – from the date of judgment of the
court of first instance.
[123]
This should serve to limit the amount of undue harm to be suffered by
lenders.
[85]
I
am well aware of the possibility of abuse of the litigation process
by debtors.  And I accept that it was, indeed, a factor
worth
taking into account when considering whether to develop the common
law rule.  But
Oneanate
does
not appear to have been alive to the fact that, upon the suspension
of the
in
duplum
rule
pendente
lite
,
creditors could themselves abuse the litigation process to derive the
best possible advantage for themselves.  Yet, where
the debtor
is not of means, this would not be of advantage to a creditor.
But not all debtors are impecunious.  Racking
up interest of the
nature as we have in this case against a financially-endowed debtor
could be a real incentive for creditors
to abuse the litigation
process.
[124]
On the
contrary, the non-suspension of the
in
duplum
rule may incentivise creditors to act swiftly.
[86]
I
have said all of the above to illustrate a simple point: there are
strong public policy considerations in favour of maintaining
the
operation of the
in
duplum
rule
pendente lite
.
Of course there are, as illustrated by the dissenting and
Oneanate
judgments, competing considerations suggesting the opposite.  In
my book, though, those in favour of the continued application
of the
in
duplum
rule outweigh those that are not.  But, if I make a definitive
choice in this regard, I too will be guilty of exactly that
which I
have cautioned against.
[125]
Whatever my personal views may be on the relative weight of the
competing public interest considerations, the point is that
there is
something to be said for the considerations put forth in the
dissenting judgment.  In these circumstances, it would
be
improper and beyond the judicial function for me to impose my view
and preference.
Oneanate
did exactly that: it disregarded cogent countervailing
considerations.  That was wrong, plain and simple.  The
dissenting
judgment is falling into the same trap.
[87]
I
have had the pleasure of reading the concurring judgment by the
Deputy Chief Justice (concurring judgment).  I welcome the
fact
that the difference between it and this judgment does not relate to
what I see as the core principle: that is, where competing
public
policy considerations – infused, as they should be, with
constitutional values and norms – are such that it
is difficult
to make a choice one way or the other, it would be inappropriate for
a court to impose its preferred choice.
I understand it to say
that in this case the choice is not difficult to make.
[126]
[88]
The concurring judgment commits the exact
same mistake that the dissenting judgment commits.  It too
reaches its conclusion
based on its preferred public policy
considerations.  Interestingly, it does so by opting for the
extreme opposite of the
policy choice made by the dissenting
judgment.  I must pause here and make this observation.
The very fact that two
esteemed, eminent colleagues make –
each
with conviction
– diametrically
opposed choices on the true path shown to us by public policy
underscores the very point I am making.
That is, each of the
choices they make is but a personal preference.
[89]
This
leads to one conclusion; and that is,
Oneanate
’s
development of the common law was misplaced.  Therefore, the
in
duplum
rule, even
pendente
lite
,
should have been left intact.
[127]
Had
Oneanate
been appealed to it, this Court would have been at liberty to uphold
the appeal and upset this development of the common law.
[128]
That would not have been a development of the common law; it would
merely have been a rejection of the Supreme Court of Appeal’s

development and a retention of what the common law had always been.
And that would not have been at variance with the pronouncement
that
“[c]ourts must be astute to avoid the appropriation of the
Legislature’s role in law reform when developing the
common
law”.
[129]
The
question now is: are we prevented from setting right a wrong policy
choice, because of the passage of years and the fact
that
Oneanate
did not come on appeal?  I say not.
[90]
This
Court has no control over what matters are brought before it.  It
has never been faced with the operation of the
in
duplum
rule.  That is a function of the fact that it has not been
brought before us by litigants.  An incorrect decision cannot
be
allowed to bed down and become part of our common law purely because
of the fortuitous nature of what lands on our plate for
adjudication.
Not being able to upset
Oneanate
just because it did not come before us on appeal would be inimical to
this Court’s status as the apex Court in the judicial

hierarchy.  For those reasons, I proceed to overrule
Oneanate
insofar as it held that the
in
duplum
rule is suspended
pendente
lite
.
That means the law reverts to what it was, to the benefit, not only
of the Paulsens, but all debtors, except those whose
matters have
been finalised with no possibility of appeal.  For the reasons
stated in [86] above,
[130]
I
disavow any suggestion that this conclusion constitutes a development
of the common law.  This is but a rejection of the
Oneanate
development, which, because of the competing public policy
considerations, could not appropriately be made by a court.  The

time lapse between 1997, when
Oneanate
was decided, and now makes no difference in this regard.
[91]
As I indicated, it is for Parliament –
not the courts – to make a policy choice in this polycentric
morass.  If
the credit market or financial sector feels that
there is a case to be made for the suspension of the
in
duplum
rule
pendente
lite
or, indeed, for its entire
scrapping, it is at liberty to lobby Parliament.  It is there
that, in a matter like this, the
separation of powers doctrine
dictates the matter should receive attention.
[92]
The
short point: at the moment,
[131]
this is not a matter on which courts should be of assistance.
Of course, in deserving cases courts are enjoined not to shirk
their
duty to develop the common law in accordance with section 39(2) of
the Constitution.
[93]
In conclusion on this subject, in deference
to the Legislature, in
Oneanate
the Supreme Court of Appeal ought not to have taken the quantum leap
of grafting into the long-established rule a suspension of
the
in
duplum
rule
pendente
lite
.
[94]
Accordingly, I would uphold the Paulsens’
appeal on the application of the
in
duplum
rule
pendente
lite
, with the effect that outstanding
arrear interest is not permitted to run during the course of
litigation once the double of the
capital debt has been reached.
(c)
Suretyship
[95]
The Paulsens raised an argument that a
surety can never be liable to pay interest in excess of what would be
due in accordance with
the
in duplum
rule where proceedings claiming the
amount owing have not been instituted against the principal debtor.
In light of my findings
on the
in duplum
rule, it is unnecessary to decide this issue.
Post-judgment
interest
[96]
It
is settled law that the
in
duplum
rule permits interest to run anew from the date that the judgment
debt is due and payable.
[132]
The usual practice for appellate courts, including this Court, is to
retain the date on which the court of first instance
handed down
judgment as the date on which judgment debts are due and
payable.
[133]
In oral
argument, counsel for both the Paulsens and Slip Knot accepted that
in the order, for the purposes of calculating
post-judgment interest,
the date on which the High Court entered judgment should be replaced
with the date on which this Court
hands down judgment.
[97]
Were the High Court’s date of
judgment to be used as the date from which the judgment debt is due
and payable, this would
have the effect of suspending the
in duplum
rule for the pendency of the appellate litigation, thus allowing
interest to accrue during this period.  The same reasons
that
led me to conclude that the rule applies
pendente
lite
, lead to the conclusion that the
date this Court hands down judgment should be the date from which the
running of interest recommences.
I am, therefore, of the view
that we should oblige the request of the parties.
[98]
However,
I emphasise that this logic applies because the Paulsens’
appeal was meritorious, and indeed the order I propose
differs
materially from that of the High Court and Supreme Court of
Appeal.  I am here not concerned with totally unmeritorious,

unsuccessful appeals brought as a dilatory tactic.  In such
instances, different considerations must apply, for the reasons

explained by Labe J in
Certain
Underwriters
.
[134]
[99]
There are three further closely related
questions with similar practical implications.  First, does
post-judgment interest
run on the whole of the judgment debt or only
on the original capital amount of the loan?  Second, does the
in
duplum
rule cap the running of such
additional interest at double the sum of the whole of the judgment
debt or double the sum of the original
capital amount of the loan?
Third, does this interest run at the contractual rate or at the
statutorily prescribed rate of
interest?
[100]
With
regard to the first two questions, the order of the Supreme Court of
Appeal provided that interest runs on – and is limited
to an
amount equal to – the whole of the judgment debt, including the
portion which consists of previously accrued interest.
[135]
The parties do not dispute these aspects of the Supreme Court of
Appeal’s order, and therefore this Court will not
disturb
them.
[136]
The Supreme
Court of Appeal also held that the post-judgment interest runs at the
rate agreed upon contractually; that is
3% per month.
[137]
The Paulsens do challenge this finding, arguing that the statutorily
prescribed default rate of 15.5% per annum should apply
instead.
However, the clear weight of authority is against the Paulsens,
[138]
and they have provided no persuasive arguments justifying a departure
from the accepted practice of applying the contract rate
to
post-judgment interest.
Costs
[101]
The
Paulsens wanted to obliterate their entire liability to Slip Knot.
They have succeeded only in undoing the development
of the
in
duplum
rule.  Likewise, the accrued interest to which Slip Knot would
have been entitled, but for this Court’s conclusion on
the
in
duplum
rule, would have been far more than it is now able to recover.
[139]
Thus although Slip Knot has succeeded on the NCA point, it has lost
on a significant part of what it set out to achieve.
It seems
only fair that there should be no order of costs in all four Courts.
Order
[102]
The following order is made:
1.
Leave to appeal is granted.
2.
The orders made by the Western Cape High Court, Cape Town on
24 February 2012 and 12 February 2013 are set aside.
3.
The appeal against the order of the Supreme Court of Appeal is upheld
only to the extent reflected in paragraph 4 below.
4.
The applicants are ordered to pay to the respondent, jointly and
severally—
(a)
the sum of R12 million;
(b)
interest on that sum at the rate of 3% per month calculated from 21
July 2007 to 10 January 2010, up to a total of R12 million;
(c)
interest on the sum of R24 million, being the total of the amounts in
(a) and (b) above, at the rate of 3% per month from the
date of
judgment, 24 March 2015, to date of payment, limited to
R24 million.
MOSENEKE
DCJ (Mogoeng CJ, Khampepe J, Leeuw AJ and Van der Westhuizen J
concurring):
Introduction
[103]
I have profited from reading the judgment
by Madlanga J (main judgment) and the dissent of Cameron J
(dissenting judgment).
I support the order that the main
judgment makes and most of the grounds on which it rests.  It
follows that, persuasive as
it is, the dissenting judgment opts for
an outcome on the reach of the
in duplum
rule
pendente lite
,
which I cannot support.  This, my concurrence, is directed at
expressing a residual but vital difference between my reasoning
and
that of the main judgment.
[104]
The
main judgment favours us with a handy interpretation of section
167(3) of the Constitution as altered by the Constitution Seventeenth

Amendment Act.
[140]
It
gives us a useful understanding of when this Court’s apex and
general jurisdiction is engaged.  For the considerations

outlined in the main judgment, it is in the interests of justice to
grant leave to appeal.
[105]
I
also support the manner in which the main judgment disposes of the
meaning of the implicated provisions of the
National Credit
Act
[141
]
.  It is quite
correct that the Paulsens may not take refuge in, or escape liability
on account of, the construction of the
NCA that they prefer.
I
adopt the emphatic result of the main judgment that “the plea
for the invalidation of the agreement on the ground that Slip
Knot
was not registered as a credit provider in terms of the Act is
unmeritorious and must fail in its entirety”.
[142]
[106]
I
also embrace the manner in which the main judgment resolves the
debate over post-judgment interest.  For good reason, it

concludes that
the
in
duplum
rule permits post-judgment interest to run afresh at the rate set by
the loan agreement from the date of the judgment to the date
of
payment.
[143]
I
support its order that the Paulsens must pay interest on the sum of
the capital and the capped interest, being R24 million,
at the
contract rate from the date of judgment to the date of payment,
limited to R24 million.
The
residual difference
[107]
In
this dispute there is no grumbling about what the
in
duplum
rule lays down or its longstanding pedigree as part of our law.
[144]
It is a common law norm that regulates the accrual of interest on a
debt that is due and payable.  The rule is that
arrear interest
stops accruing when the sum of the unpaid interest equals the extent
of the outstanding capital.  The plain
policy consideration
underlying the rule is to prevent a broken debtor from being pounded
by the ever-growing interest burden.
The purpose of the rule is
dual.  It permits a creditor to recover double the capital
advanced to the debtor whilst it seeks
to alleviate the plight of
debtors in financial distress.
[108]
The
contested question here is whether the
in
duplum
rule
is suspended during litigation aimed at recovering the debt owing.
The pendency of litigation starts when the process
that initiates an
action to recover a debt is issued and ends when judgment is
delivered.  In
Oneanate
the Supreme Court of Appeal (per Zulman JA) held that the beginning
of a suit to recover the debt suspends the operation of the
in
duplum
rule.
[145]
This meant
the limitation the rule placed on the accrual of arrear interest, to
the extent of the outstanding capital, fell
away once litigation had
started.  On this take, unpaid interest may balloon at the
agreed rate for as long as litigation
persists and until the date of
payment.
[109]
Up
until
Oneanate
,
judicial authority had favoured the rule being applied, even
pendente
lite
.
[146]
Nonetheless,
Oneanate
adapted
and developed the common law by holding that the protection afforded
to debtors under the
in
duplum
rule should be suspended
pendente
lite
.
This the Court did because of its reading of the old authorities, and
because public policy supported the alteration of
the ruling common
law.  The Court in
Oneanate
reasoned that:
“
No
principle of public policy is involved in providing the debtor with
protection
pendente
lite
against interest in excess of the double.  Since the rule as
formulated by Huber does not serve the public interest, I do
not
believe that we should consider ourselves bound by it.”
[147]
[110]
The
1997 decision in
Oneanate
in effect developed the common law in order to align it with public
policy.  It altered positive law, but without even the
slightest
reference or regard to constitutional values.  The main judgment
holds, correctly in my view, that the Supreme Court
of Appeal was
wrong in its understanding of the old authorities on the
in
duplum
rule and on the conclusion that the rule does not serve the public
interest.  The main judgment acknowledges that the decision
in
Oneanate
is not before this Court on appeal but even so concluded that it was
entitled to consider it and overrule it.
[148]
The main judgment does in fact overrule
Oneanate
and
thus restores the common law on the
in
duplum
rule to what it was before.
[111]
The
main judgment reversed the development of the
in
duplum
rule favoured in
Oneanate
on
the ground that it offends the constitutional injunction that
everyone must have access to courts.  It concedes that there
is
at least one other countervailing consideration, being the
constitutionally authorised norm of
pacta
sunt servanda
.
The main judgment goes ahead and refuses to commit to a particular
form of development of the common law save to reverse
the development
in
Oneanate
.
[149]
Its approach overrules
Oneanate
insofar as it holds that the
in
duplum
rule
is suspended
pendente
lite
and finds that the law would revert back to what it was.  Thus,
the
in
duplum
rule,
even
pendente
lite
,
should have been left intact.
[112]
At
this point of its reasoning, the main judgment holds that it has not
and may not develop the common law related to the
in
duplum
rule because it is a task best left to the Legislature.
[150]
It does not want to make the same error of changing the
in
duplum
rule made in
Oneanate.
Doing
so, the main judgment holds, would offend the separation of powers
and usurp the role of Parliament of making “a policy
choice in
this polycentric morass”.
[151]
[113]
I
am in respectful disagreement with the main judgment’s approach
to set aside the suspension of the
in
duplum
rule
preferred by
Oneanate
without acknowledging that in doing so it has also developed the
common law.  What it has in effect done is to discard the
public
interest evaluation of
Oneanate
in favour of public policy considerations animated by the right of
access to courts and to a fair hearing founded on the
Constitution.
[152]
This the main judgment has done even after weighing up the
countervailing and constitutionally sanctioned consideration that
a
contractual obligation validly assumed must be fulfilled, and that
not every contracting party may be assumed to be financially

“stout-boned”.
[153]
The main judgment did not find that these opposite public policy
considerations were equally poised and many-sided.
Instead it
found that
Oneanate
was
so clearly wrong and one-sided in its assessment of public policy
that it was entitled to set aside its precedent and reinstate
the
displaced common law rule.
[114]
The
main judgment has not merely corrected a little error of assaying
public policy made in
Oneanate
.
It has altered and developed the common law that ruled the roost for
more than a decade and a half.
[154]
Its reasoning has rightly recognised the financial and often class
inequality between lenders and borrowers.  It points
to the
financial injustice of an uncapped and mounting interest yoke where
the lender is rewarded well beyond a fair return on
money
advanced.
[155]
It
draws attention to the adverse impact of uncapped interest
pendente
lite
on access to courts.  It gives a constitutional nod in favour of
sanctity of contract, but holds that the value of that principle

alone is not sufficient to permit an onerous and crushing debt burden
on the debtor.  A burden of that kind cannot properly
be
imposed, not even under the guise of free will, particularly in a
society where equal worth is an ideal that is prized perhaps
more
than financial gain.  In fact, the Paulsens have succeeded here,
and others similarly situated may succeed only because
the common law
on the
in
duplum
rule has been changed.
[115]
The
main judgment makes another mistake in reasoning that the separation
of powers precludes it from adapting the common law in
this case.
There may be cases where Parliament is entitled to judicial
deference.
[156]
But we
must keep in mind that Parliament may alter the common law in order
to procure one or other legitimate public good
through legislative
reform.
[157]
Even
after a court has developed a common law rule, nothing precludes
Parliament from revisiting that rule and changing it.

Ordinarily, a development of the common law takes away nothing from
the power of Parliament to alter the common law provided that
the
change it makes does not offend the Constitution.
[158]
Developing the
in
duplum
rule, a common law norm that has always been under the oversight of
the courts, will not encroach on any exclusive terrain of Parliament.
[116]
If
anything, the Constitution enjoins and permits courts to develop the
common law in line with the objects of the Bill of Rights.
[159]
It is well within the place of courts to shape the common law in a
way that advances constitutional values.  The authority
imposed
upon courts by section 39(2) of the Constitution is thus extensive,
requiring courts to be alert to the normative framework
of the
Constitution not only when some startling new development of the
common law is in issue, but in all cases where the incremental

development of the rule is in issue.
[160]
The overall purpose of section 39(2) is to ensure that our
common law is infused with the values of the Constitution,
and the
normative influence of the Constitution must be felt throughout the
common law.
[161]
Furthermore it is implicit in section 39(2) read with section
173
[162]
that, where the
common law as it stands is deficient in promoting the section 39(2)
objectives, the courts are under a general
obligation to develop it
appropriately.
[163]
[117]
In
addition not even the parliamentary sovereignty of our past held
courts back from adapting the common law.  Our courts have
long
held that common-law rules include concepts that are open to policy
considerations – such as “public policy”,
“
boni
mores
”
or “reasonableness” – and courts have used these
notions of fairness and justice to influence the formal
structures of
the law.
[164]
That
treasured role of the courts has not been seen as, and it is not, to
trespass into the terrain of the Legislature.
[118]
This
Court in
Thebus
and Another v S
dealt with the manner in which courts must carry out this exercise.
[165]
Section 39(2)
requires that
when
every court develops the common law it must promote the spirit,
purport and objects of the Bill of Rights.  This section does

not specify what triggers the need to develop the common law or in
which circumstances the development of the common law is justified.

In
Carmichele
this
Court further recognised that there are notionally different ways to
develop the common law under section 39(2), all of which
might be
consistent with this provision.
[166]
This Court in
Thebus
also held that the Constitution embodies an “objective
normative value system” and that the influence of the
fundamental
constitutional values on the common law is authorised by
section 39(2).
[167]
It
is within the matrix of this objective normative value system that
the common law must be developed.  Thus, under
section 39(2),
concepts which are reflective of, or premised upon, a given value
system “might well have to be replaced,
or supplemented and
enriched by the appropriate norms of the objective value system
embodied in the Constitution”.
[168]
[119]
But for the residual difference I have
outlined, I support the outcome of the main judgment that the order
of the Supreme Court
of Appeal be set aside.  That Court
sanctioned the validity of a R12 million loan agreement and found
sureties to that
agreement liable for up to R72 million, made
up of the capital sum of R12 million and accrued interest of a more
than handsome gain
of R60 million.  I respectfully disagree.
CAMERON
J
[120]
I
have had the benefit of reading the judgments of Madlanga J (main
judgment) and Moseneke DCJ (concurring judgment).  I endorse
the
main judgment’s conclusion that this Court has jurisdiction to
hear the matter and that the credit agreement was valid,
on the basis
of the interpretation of the Act set out in the judgment.
[169]
But I do not agree that the Supreme Court of Appeal’s decision
in
Oneanate
[170]
should be overruled.  Nor do I agree with the main judgment’s
approach to the development of the common law in this
case.  In
that respect, I endorse the reasoning in [113] and [115] through
[118] of the concurring judgment.
[121]
In my view,
Oneanate
was right.  Once a creditor institutes legal proceedings,
Oneanate
lifts
the operation of a common law rule that caps the maximum arrear
interest the creditor may claim.  This is the
in
duplum
cap on accumulated arrear
interest.  It is just, and constitutionally proper, that the
rule barring a creditor from claiming
full interest at the rate the
debtor agreed should be suspended once the creditor has issued court
process to recover the debt.
[122]
There
is no doubt that the
in
duplum
cap on accumulated arrear interest is firmly embedded in our
law.
[171]
It has
ancient roots in the common law that forms part of our legal
system.
[172]
Before
the Constitution came into effect the Appellate Division, the
predecessor of the Supreme Court of Appeal, rejected
an argument that
the cap on interest should be scrapped as obsolete.
[173]
So solidly embedded is the
in
duplum
cap that contracting parties cannot waive it, nor can banking
practice alter it.
[174]
As the main judgment explains, the cap the rule imposes is part of
our Roman Dutch legal heritage.  Its purpose
is to prevent
lenders from exploiting borrowers.
[175]
[123]
But
of this there can equally be no doubt: the cap is at odds with
contractual autonomy.  The difficult question is how far

contractual autonomy extends.  The court in
Oneanate
re-asserted the importance of keeping promises.  It held that
the debtor’s promise to pay interest at the agreed rate
should
resume as soon as the creditor institutes court proceedings to
recover the debt.  So it placed a limitation on the
operation of
the
in
duplum
cap.  Was it right to do so?  The main judgment says
No.
[176]
Its principal
reason is that the Supreme Court of Appeal did not consider the
effect on the debtor’s constitutional
right of access to
courts.
[177]
[124]
I disagree.
Oneanate
justifiably and sensibly interpreted common law authority when it
concluded that the interest the debtor agreed to pay should again

accumulate once litigation starts.  And the result is
constitutionally compliant.
[125]
The reasons are three.  First, the
main judgment understates the importance of contractual autonomy.
Second, it overstates
the implications for a debtor’s access to
courts of allowing agreed interest to resume accumulating
post-litigation –
and it overlooks the parallel implications
for the creditor if
Oneanate
were
overruled.  Third, it fails to consider the effect of inflation,
which is that the cap on agreed interest unjustly erodes
the
creditor’s money.  Far from being wrong, the check
Oneanate
imposed
on the
in duplum
cap on interest advances our constitutional values and accords with
the rule’s original purpose and operation.
[126]
So the underlying question is to what
extent the law should intervene in private contracts to protect
parties from agreeing to burdensome
terms that may harm the public
interest.  Respect for contractual autonomy, expressed in the
common law maxim that promises
should be kept (
pacta
sunt servanda
), has long been a
principle of our law.  But freedom of contract is not absolute.
Private agreements have always been
subject to limitations imposed by
common law principles.
[127]
And
courts must now develop these common law principles in keeping with
the values in the Bill of Rights.
[178]
It is settled law that, shorn of unsightly excesses, contractual
autonomy advances the constitutional values of freedom and

dignity.
[179]
In
Barkhuizen
,
this Court said so:
“
This
consideration is expressed in the maxim
pacta
sunt servanda
which, as the Supreme Court of Appeal has repeatedly noted, gives
effect to the central constitutional values of freedom and dignity.

Self-autonomy, or the ability to regulate one’s own affairs,
even to one’s own detriment, is the very essence of freedom
and
a vital part of dignity.”
[180]
(Footnotes omitted.)
The
capacity to contract freely – which expresses the
constitutional values of freedom and dignity – must have its
place in the development of common law principles.
[181]
Absent adequate justification, promises willingly undertaken should
be kept.
[128]
In
this case there is no suggestion that the Paulsens were misled or
coerced into signing the suretyships Slip Knot seeks to enforce.

And they were fully aware of the loan’s tough interest
provisions.  So the spectre of “financially ruinous
interest”
[182]
the
main judgment invokes should not blind us to the facts.  The
Paulsens, acting as sound, forward-looking and tough-minded
business
entrepreneurs, agreed to pay precisely this when they concluded their
contract with Slip Knot.  And they happily
took Slip Knot’s
money in the expectation that they would mint huge profit with it.
That is the way of enterprise.
The stiff interest rates they
undertook to pay were the corollary of the considerable benefits they
expected to reap from Slip
Knot’s money.
[129]
This points to a further reason why freely
concluded commercial agreements should be upheld.  It is
instrumental.  Enforcing
freely agreed contracts means parties
can and will agree to deals that confer a net benefit on them both,
and so vitalise our economy.
This includes deals – like
the one here – whose viability depends on a very high rate of
return for the lender.
[130]
The
law of contract provides safeguards to debtors upon whom creditors
have preyed.  Here, if the Paulsens had been misled
or coerced,
all the contracts at issue could have been set aside.
[183]
If they had been reasonably ignorant of the interest provisions,
those could not have been enforced against them.
[184]
Rightly, the Paulsens did not try to run these defences.  If
they had been vulnerable consumers, stout statutory protections
would
have shielded them from excessive harm.
[185]
The Paulsens tried to find ways in which to undo the agreement by
invoking consumer protections.  But they could not.
The
main judgment rightly puts paid to their attempts.  The promises
they made stand.
[131]
So the Paulsens acted autonomously and
contractual autonomy matters to our dignity and to our economy.
Even so, the
in duplum
cap
on accumulated arrear interest affords considerable protection.
It does so, under
Oneanate
,
at least until litigation commences to claim the debt.  The
issue the Supreme Court of Appeal had to decide in
Oneanate
was whether the parties’
agreement on interest should take effect again from the moment the
creditor institutes legal proceedings
to recover the debt, or only
from the date of judgment.
Oneanate
imposed a limitation on the operation of the
in
duplum
cap.  Interest should
resume running immediately when the creditor initiates legal process.
[132]
To reach that conclusion, the court
carefully canvassed the historical development of the rule.  It
noted that two authoritative
sources on Roman-Dutch law, Ulrik Huber
(1636 – 1694) and Dionysius Godefridus van der Keessel (1738 –
1816), reached
opposite conclusions on whether the
in
duplum
cap applied once litigation to
recover the debt had started.  The court chose to rely on the
formulation proposed by Van der
Keessel.  He was the later, more
modern, writer.  The court rightly preferred his reasoning.
This is because his
approach aligns more closely with how the
in
duplum
cap functions in the South
African common law.  The court, in substantiating its preference
for Van der Keessel, noted that—
“
[n]o
principle of public policy is involved in providing the debtor with
protection
pendente
lite
against interest in excess of the double.  Since the rule as
formulated by Huber does not serve the public interest, I do
not
believe that we should consider ourselves bound by it.”
[186]
[133]
So the court adopted the historical basis
for suspending the
in duplum
cap that Van der Keessel propounded.  But the court’s
reason for doing so was more fundamental.  It turned on
well-wrought policy considerations.  These originated in the
fact that the debtor had agreed to pay interest at the stipulated

rate.  The
in duplum
rule interfered with this agreement.  Before litigation
commences, there is good reason for this.  But once proceedings

to recover the debt have been initiated, there is no justification
for affording the debtor protection against agreed interest.

The common law justification for subverting the parties’ agreed
deal was always that the debtor is vulnerable to the creditor’s

unscrupulous wiles.  But once litigation starts, that vanishes.
The position fundamentally changes.  And the justification
for
interfering with the parties’ agreement is radically
attenuated.
[134]
First, after litigation starts, the
creditor loses control over the enforcement of the debt, and over the
accrual of interest.
Further delays will be because of the
legal process, and rarely the creditor’s wiles.  Second,
the debtor can wield
the power that existed all along to avoid costly
and time-consuming litigation, and to stop interest from running, by
repaying
the debt.  The Supreme Court of Appeal thus developed
the application of the rule quite properly so as to advance public
policy
and constitutional values.
[135]
For at the base of this debate lies the
debtor’s capacity to make a binding agreement.  The
agreement stands.  Promises
made should be enforced –
especially where two stout-boned commercial parties make contractual
promises to each other in
pursuit of big profits.  All that
Oneanate
decided is that their agreement to pay interest at the agreed rate
should resume as soon as proceedings to recover the debt are

initiated.  For then, the spectre of the dilatory creditor no
longer exists.  Rather, there is now a dilatory debtor.
[136]
In
addition, as
Oneanate
noted,
[187]
the rule came
into operation at a time when credit markets functioned differently
from present-day markets:
“
Because
of the low rates of legal interest in olden times, this question
could not have been one that would have arisen readily
before the era
of hyperinflation and excessively high rates of interest.”
[188]
[137]
In times of low or no inflation, it may
suit a lender to let a loan lie, while the burden on the debtor grows
and grows.  For,
under these conditions, unscrupulous lenders
can delay collection of loans at little cost.  As interest
quietly accumulates,
the unwary borrower racks up huge additional
debt.  So, when interest rates are low, the
in duplum
cap is a stop-gap measure to prevent abusive lenders from delaying
enforcement of the debt.  The cap means they extract no
extra
benefit from delay once the total interest equals the sum originally
borrowed.
[138]
Both
inflation and interest rates in early modern Europe were low in
comparison to present-day inflation.  Even during the
“Price
Revolution”, a time of historically rampant inflation in Europe
during the 16th century, the average annual
price increase was less
than 1% per year.
[189]
Interest rates were similarly low when compared with modern
mezzanine financing.  Rates ranged from 4% to 8% in early
17th
century Holland.
[190]
[139]
All
this stands in stark contrast to what the Paulsens promised to pay.
In 2006, when they received Slip Knot’s money,
the inflation
rate in South Africa was 4.8%.  Since then, the annual rate has
fluctuated between 3.9% and 11.5%.
[191]
But they promised to pay interest vastly in excess of inflation.
The original agreement between Winskor and Slip Knot
provided for an
effective interest rate of 142%.  That was quite legitimate: our
law allows stout-boned business-people, dealing
at arm’s length
with each other in pursuit of big profits, to make deals like this.
[140]
So, in today’s circumstances, the
effect of the
in duplum
cap is very different.  It does not merely deter unscrupulous
lenders from leaving the debt to lie low in order to exploit
unwary
borrowers.  The rule also disincentivises sound deals that
enable our economy to function and flourish.
[141]
Before
Oneanate
,
the rule imposed a cost on lenders who institute proceedings against
a debtor but who do not manage to collect the debt before
the
interest exceeds the original capital.  Once legal proceedings
are instituted against a debtor and the
in duplum
cap hits home, inflation eats every day into the value of the amount
the lender may recover.  The lender can never recoup
this loss
because, even if its claim eventually triumphs in court, the
in
duplum
rule puts an absolute cap on
recovering any interest that accrued during proceedings, before
judgment on the debt is granted.
No allowance is made for
depreciation pending judgment.
[142]
So
it was right and appropriate for the Supreme Court of Appeal to limit
the operation of the rule to allow interest to run during
litigation,
to recover the debt.  The court in
Oneanate
was doing what appellate courts ought to do: it was moulding the
common law according to justice and good sense in accordance with

modern requirements.
[192]
There is thus no basis for the main judgment’s suggestion that
the court’s policy-based rationale for adjusting
the
in duplum
rule was too weak.
[193]
[143]
But,
the main judgment says, the Supreme Court of Appeal overlooked the
chilling effect the
in
duplum
cap has on debtors’ right of access to court.
[194]
It
is true that suspending the rule may deter some debtors from pursuing
valid defences because they do not want to risk being held
liable for
a large interest payment should they lose.  But enforcing the
in
duplum
cap after litigation starts simply shifts the risk to lenders.
They may be deterred from pursuing claims against defaulting
debtors
if the
in
duplum
cap prevents interest from accumulating once litigation has started.
Lenders who choose to pursue a claim must now bear the
inflationary
costs imposed by dilatory debtors who may extend legal processes as
long as possible, to avoid paying a debt that
is becoming less
valuable every day.
[144]
This is no imaginary spectre.  We see
it often enough in our courts, where debtors pursue tenuous
arguments, knowing full well
that the debt they will eventually have
to repay diminishes daily because of inflation.  And the court
process affords adequate
protection to debtors with genuinely sound
defences.  They will be vindicated.  They will not be
liable for interest
if their agreements are found to be invalid.
By contrast, the successful creditor has no way of recovering the
money lost
to inflation during the delay inherent in legal processes.
[145]
Allowing interest to run at the parties’
agreed rate does not bar access to courts.  It merely shifts
part of the risk
the litigation process imposes from the creditor to
the debtor.  It does so in a way that respects the dignity and
agency
of promises solemnly made by the parties.  And it is
right to let interest run again as agreed once the creditor has come
to law.  For then the creditor has done all it can to recover
the debt and the court will protect and vindicate a debtor with
sound
defences.
[146]
In short, the “chilling effect”
that may deter debtors with marginal or even good defences must be
weighed against both
the chilling effect on creditors’ access
to courts, and the cost of not respecting promises solemnly made –
particularly
those freely undertaken in the expectation of making
large profits with someone else’s money.
[147]
The facts before us show why
Oneanate
was right to shift the risk.  The Paulsens have now litigated
their claim that the loan agreement was invalid four times,
and they
have lost all four times.  Their arguments regarding the
interpretation of the statute are simply not tenable.
The only
argument they have advanced with any prospects of success related to
the application of the
in duplum
rule.  The effect has been that Slip Knot has been deprived of
its money for years while waiting for this litigation to be
resolved.
[148]
This
delay has a real cost because of inflation.  It cannot be right
to make the lender incur this loss
[195]
rather than to require a debtor, who holds the power to forestall or
end the litigation by repaying the debt, to incur liability
for the
interest accruing during litigation.
[149]
The Paulsens’ case surely illustrates
just the type of defence that should be discouraged.  Far from
denying the Paulsens’
access to courts, suspending the
in duplum
cap on arrear interest in this case would likely have encouraged them
to do what they promised to do when they set out to make
their huge
profit – which is, to repay the loan quickly.
[150]
The Supreme Court of Appeal in
Oneanate
soundly developed the common law to bring just balance to the
operation of the
in duplum
rule in accordance with our constitutional values.  I would
affirm it.
For
the Applicants:
W
G Burger SC and J C Swanepoel instructed by Joubert Attorneys.
For
the Respondents:
R
Stockwell SC
and
J
F Pretorius
instructed by Sim & Botsi
Attorneys Inc.
[1]
Paulsen
v Slip Knot Investments
[2014] ZASCA 16
;
2014 (4) SA 253
(SCA);
[2014] 2 All SA 527
(SCA)
(Supreme Court of Appeal judgment).
[2]
34
of 2005.
[3]
As
explained in much greater detail below (see [42] to [45]), the
common law
in
duplum
rule,
precludes the recovery of arrear interest in excess of the capital
amount.
[4]
The
Paulsens are two of the three trustees of this Trust.
[5]
Slip
Knot is a provider of short-term “bridging” or
“mezzanine” finance to large-scale property developers.

In the context of property development, “bridging”
and “mezzanine” finance are synonymous terms
referring
to short-term loans provided to property developers who are in need
of immediate cash flow in order to fully finance
development
projects.  Significantly, because of their short-term and
relatively high-risk nature, such loans are generally
accompanied by
exceedingly high interest rates.  It is common cause that Slip
Knot was not at any relevant time registered
as a credit provider in
terms of section 40 of the NCA.
[6]
Under
clause 6 of the loan agreement, Slip Knot was entitled to an
additional payment “which shall be calculated at 25%
(twenty
five percent) of the nett profit in the development, [Winskor]
having however guaranteed a minimum interest repayment
of
R17 000 000”.  Both the Full Court and the
Supreme Court of Appeal concluded that this clause provided
for the
payment of interest (rather than of a profit share), and that the
in
duplum
rule functioned to limit the amount of interest which could accrue
prior to the beginning of litigation to R12 million.
(See the
Supreme Court of Appeal judgment above n 1 at paras 15-9 and Full
Court judgment at paras 15 24.)  Slip Knot
does not
challenge this finding and has abandoned its pursuit of any
pre-litigation interest above the amount of R12 million.
[7]
This
is discussed fully at [32] to [41].
[8]
The
foundation of this defence was that, as mere sureties, the Paulsens’
liability could never exceed that of Winskor.
Since interest
against Winskor would remain at R12 million as proceedings had not
been instituted against it, the Paulsens’
liability for
interest had to be capped at this amount as well.
[9]
The
claims were dismissed against the two trusts because only the
Paulsens, and not all the trustees, had purported to bind the
trusts
as sureties and co-principal debtors.  Relying on
Thorpe
v Trittenwein
[2006]
ZASCA 30
;
2007 (2) SA 172
(SCA) at 176H, the High Court held that
all the trustees ought to have signed the deeds of suretyship on
behalf of the trusts
and, as that was not the case, the Paulsens by
themselves could not incur liability for the trusts.  High
Court judgment
at paras 33 and 41.
[10]
The
Full Court proceeded from the underlying reasoning of the High Court
that, once proceedings had been instituted, the operation
of the
in
duplum
rule was suspended with the effect that interest began to run
again.  But, reasoned the Full Court, at the time of judgment

against the Paulsens interest against Winskor, the principal debtor
which was cited with no relief sought against it and
was as
good as not being a party to the proceedings   would remain
limited to R12 million by the
in
duplum
rule.  That being the case, the Paulsens, whose liability as
sureties was accessory to that of Winskor, could not be liable
for
more interest than Winskor.
[11]
Section
89(2) reads:
“
Subject
to subsections (3) and (4), a credit agreement is unlawful if—
.
. .
(d)
at the time the agreement was made, the credit provider was
unregistered and this Act requires that credit provider to be

registered.”
The
qualification in subsections (3) and (4) is irrelevant for present
purposes.
[12]
Section
40(4) provides:
“
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
.”
(Emphasis added.)
[13]
For
the text of section 4 of the NCA, see [35].
[14]
Supreme
Court of Appeal judgment above n 1 at para 21.
[15]
Standard
Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in
liquidation)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) (
Oneanate
).
[16]
Id
at 834H.
[17]
Supreme
Court of Appeal judgment above n 1 at paras 23-6.
[18]
Willis
JA id at paras 33-58.
[19]
Id
at paras 50-7.  Willis JA concurred in the majority’s
decision that the loan agreement was not invalid, albeit for

different reasons.  He also agreed with the majority that the
accessory nature of a suretyship agreement could not serve
to limit
the amount of interest which could be recovered to R12 million.
[20]
Id
at para 53.
[21]
Id.
[22]
Id
at paras 55 and 57.
[23]
Id
at paras 55-7.
[24]
I
note that, as discussed in more detail at [14], the interpretation
of the NCA and the constitutionally informed policy debate
regarding
the
in
duplum
rule could have been brought under this Court’s constitutional
jurisdiction.
[25]
72
of 2012.
[26]
Kubyana
v Standard Bank of South Africa Ltd
[2014] ZACC 1
;
2014 (3) SA 56
(CC);
2014 (4) BCLR 400
(CC)
(
Kubyana
)
at paras 16-7 and
Sebola
and Another v Standard Bank of South Africa Ltd and Another
[2012]
ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) (
Sebola
)
at para 36.
[27]
Gcaba
v Minister for Safety and Security and Others
[2009] ZACC 26
;
2010 (1) SA 238
(CC);
2010 (1) BCLR 35
(CC) at para
75.
[28]
Du
Plessis et al “Jurisdiction” in
Constitutional
Litigation
(Juta & Co Ltd, Cape Town 2013) (Du Plessis) at 33.
[29]
In
Van
der Walt v Metcash Trading Limited
[2002]
ZACC 4
;
2002 (4) SA 317
(CC);
2002 (5) BCLR 454
(CC) at para 32
Ngcobo J observed that—
“
[w]hether
one can speak of a non-constitutional issue in a constitutional
democracy where the Constitution is the supreme law
and all law and
conduct has to conform to the Constitution is not free from doubt.
However . . . we must accept that such
distinction exists and try to make sense of that distinction.”
(Footnotes omitted.)
[30]
See
Du Plessis above n 28 at 33-4.
[31]
See
Minister
of Safety and Security v Van Niekerk
[2007] ZACC 15
;
2007 (10) BCLR 1102
(CC) at para 10;
Minister
of Safety and Security v Luiters
[2006] ZACC 21
;
2007 (2) SA 106
(CC);
2007 (3) BCLR 287
(CC) at para
28; and
S
v Boesak
[2000] ZACC 25
;
2001 (1) SA 912
(CC);
2001 (1) BCLR 36
(CC) (
Boesak
)
at para 15.
[32]
The
first two are closely related.
[33]
R
v Baloi
1949 (1) SA 523
(A) at 524.
[34]
31
of 1917.
[35]
Beatley
& Co
v
Pandor’s Trustee
1935
TPD 365
at 366.
[36]
Quoted
with approval in
Baloi
above n 33 at 524.  Emphasis added.
[37]
SATAWU
and Another v Garvas and Others
[2012] ZACC 13
;
2013 (1) SA 83
(CC);
2012 (8) BCLR 840
(CC) at para
33.
[38]
This
may arise in instances where, for example, leave to appeal is sought
from this Court without an approach to the Supreme Court
of Appeal.
[39]
Although
in
De
Klerk v Griekwaland Wes Korporatief Bpk
[2014] ZACC 20
;
2014 (8) BCLR 922
(CC) at para 14 this Court
assumed, without deciding, that it had jurisdiction in terms of the
Constitution Seventeenth Amendment
Act, what it itemised in para 13
is consonant with the view I take here.
[40]
Nedbank
Ltd and Others v National Credit Regulator
[2011] ZASCA 35
;
2011 (3) SA 581
(SCA) (
Nedbank
)
at para 2.  See also
Sebola
above
n 26 at para 66 and
Starita
v Absa Bank Ltd and Another
2010 (3) SA 443
(GSJ) at para 18.9.
[41]
See
Sanderson
v Attorney-General, Eastern Cape
[1997] ZACC 18
;
1998 (2) SA 38
(CC);
1997 (12) BCLR 1675
(CC) at
para 26 where this Court said “[c]omparative research is
generally valuable and is all the more so when dealing
with problems
new to our jurisprudence”.
Of
course, “[w]e can derive assistance from . . . foreign case
law, but we are in no way bound to follow it”.
S v
Makwanyane
[1995] ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR
665
(CC) at para 39.
[42]
Article
163(4)(b) of the Constitution of Kenya.  Similarly, the United
Kingdom Supreme Court’s jurisdiction is limited
to “arguable
point[s] of law of general public importance which ought to be
considered by the Supreme Court at that time”.
(UKSC
Practice Direction 3 at 3.3.3.)  This is because the Court—
“
must
necessarily concentrate its attention on a relatively small number
of cases recognised as raising legal questions of general
public
importance.  It cannot seek to correct errors in the
application of settled law, even where such are shown to exist.”
House
of Lords, in
R v Secretary of State for Trade and Industry, ex
parte Eastaway
[2000] UKHL 56
;
[2000] 1 WLR 2222
at 2228.  See also
Uprichard v Scottish Ministers and Another
[2013] UKSC 21
at
para 60.
[43]
At
the risk of being repetitive, section 167(3)(b)(ii) of our
Constitution gives this Court jurisdiction in respect of only points

of law, not matters of fact.
[44]
SAJ
v AOG & 2 Others
,
Supreme Court of Kenya Petition No. 1 of 2013; [2013] eKLR at para
31 (available online at
http://kenyalaw.org/caselaw/cases/view/84298/)
and
Hermanus
Phillipus Steyn v Giovanni Gnecchi-Ruscone
Supreme Court of Kenya Application No. 4 of 2012; [2013] eKLR
(
Hermanus
Steyn
)
at para 58 (available online at
http://kenyalaw.org/caselaw/cases/view/88828).
[45]
See
Pioneer
Shipping Ltd and Others v BTP Tioxide Ltd; The Nema
[1981] 2 All ER 1030
; and
Glancare
Teorada v A. N. Board Pleanala
[2006] FEHC 250, as quoted in
Hermanus
Steyn
id at para 57.
[46]
R
(on the application of Compton) v Wiltshire Primary Care Trust
[2008] ECWA Civ. 749;
[2009] 1 All ER 978
(
Wiltshire
Primary Care Trust
)
at para 16, quoting with approval Holman J in
The
Queen on the Application of Val Compton v Wiltshire Primary Care
Trust
[2008] EWHC 880
(Admin) at paras 32 and 36.
[47]
See
Du Plessis above n 28 at 33.
[48]
Compare
Malcolm
Bell v Daniel Toroitich Arap Moi & Another
Supreme
Court of Kenya Application No. 1 of 2013; [2013] eKLR at para 53(vi)
(available online at http://kenyalaw.org/caselaw/cases/view/91707).
[49]
Kubyana
above
n 26 at para 17.
[50]
Boesak
above
n 31 at paras 11-2.  See also
Magajane
v Chairperson, North West Gambling Board and Others
[2006] ZACC 8
;
2006 (5) SA 250
;
2006 (10) BCLR 1133
(CC) (
Magajane
)
at para 29 and
National
Education Health and Allied Workers Union v University of Cape Town
and Others
[2002] ZACC 27
;
2003 (3) SA 1
(CC);
2003 (2) BCLR 154
(CC) (
NEHAWU
)
at para 25.
[51]
Id.
[52]
I
have noted that in the case of appeals emanating from the Supreme
Court of Appeal this Court has not always been consistent
on what
the basis for reliance on interests of justice is.  Is it
section 167(6) of the Constitution?  Is it the Court’s

inherent jurisdiction provided for in section 173?  Or, is it
some other basis?  A number of our decisions, including
Prophet
v National Director of Public Prosecutions
[2006]
ZACC 17
;
2007
(6) SA 169
(CC)
[2006] ZACC 17
; ;
2007 (2) BCLR 140
(CC) at paras 45 and 48 read
with fn 29;
Radio
Pretoria v Chairperson, Independent Communications Authority of
South Africa and Another
[2004]
ZACC 24
;
2005 (4) SA 319
(CC);
2005 (3) BCLR 231
(CC) at para 19
read with fn 12;
Boesak
above n 31 at paras 10-2; and
Frasier
v Naude and Others
[1998] ZACC 13
;
1999 (1) SA 1
(CC);
1998 (11) BCLR 1357
(CC) at para
7 read with fn 10
,
grounded
this approach in the language of section 167(6), which requires that
national legislation provide the means for any person
to “bring
a matter directly” or “appeal directly” to the
Constitutional Court.  Further, in
S
v Pennington and Another
[1997]
ZACC 10
;
1997 (4) SA 1076
(CC);
1997 (10) BCLR 1413
(CC)
(
Pennington
)
at para 10, this Court explicitly stated that “the words ‘any
other court’ [in section 167(6)] would include
the Supreme
Court of Appeal”.  In contrast, this Court held in
Director
of Public Prosecutions: Cape of Good Hope v Robinson
[2004] ZACC 22
;
2005 (4) SA 1
(CC);
2005 (2) BCLR 103
(CC) at para
22 that “[s]ection 167(6)(b) does not concern itself with
appeals to this Court in the ordinary course . .
. it is concerned
with a situation in which the SCA . . . is bypassed”.
Although
Pennington
said the source of applying the “interests of justice”
test was section 167(6), it held at para 22 that another viable

alternative was this Court’s “inherent power to regulate
its own process” under section 173 of the Constitution.

In
Pennington
,
applicants appealing a decision of the Supreme Court of Appeal could
not rely on section 167(6) because the national legislation
required
to give effect to that provision had not yet been adopted.  It
was because of this that the Court looked to section
173 and held at
para 26 that because “[l]eave to appeal is also a requirement
needed to protect the process of this Court
against abuse by appeals
which have no merit, and it is in the ‘interests of justice’
that this requirement be imposed”
section 173 granted it the
authority to apply the “interests of justice” test to
determine whether leave to appeal
should be granted.  I do not
find it necessary to decide what the true origin of the “interests
of justice test”
is in the context of appeals from the Supreme
Court of Appeal.  It suffices that the test is firmly
entrenched.
[53]
See
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd and Others
[2013]
ZACC 48
;
2014 (5) SA 138
(CC);
2014 (3) BCLR 265
(CC) at para 53;
Boesak
above n 31 at paras 11-2; and
NEHAWU
above n 50 at para 25.
[54]
The
discussion on general public importance above demonstrates as much.
As we noted in
Khumalo
and Others v Holomisa
[2002] ZACC 12
;
2002 (5) SA 401
(CC);
2002 (8) BCLR 771
(CC) at para
14, “[a] further consideration relevant to the interests of
justice is the question of the public interest
in a determination of
the constitutional issue”.  See also
National
Union of Metal Workers of South Africa and Others v Bader Bop (Pty)
Ltd and Another
[2002] ZACC 30
;
2003 (3) SA 513
(CC);
2003 (2) BCLR 182
(CC) at para
16.
[55]
See
Bertie
Van Zyl (Pty) Ltd and Another v Minister for Safety and Security and
Others
[2009] ZACC 11
;
2010 (2) SA 181
(CC);
2009 (10) BCLR 978
(CC) where
this Court held at para 21 that “[o]ur Constitution requires a
purposive approach to statutory interpretation”.
[56]
“
The
interpretation of the NCA calls for a careful balancing of the
competing interests sought to be protected, and not for a
consideration of only the interests of either the consumer or the
credit provider.”
Nedbank
above n 40 at para 2.  Thus we must consider the
administrative and regulatory burdens that otherwise exempt credit

providers would be subjected to if required to register.
Moreover, requiring funders who only do business outside the ambit

of the Act to register may well prove to be counterproductive for
consumers, as it may stifle an effective and accessible credit

market for large-scale consumers and investors who do not need the
Act’s protection.
[57]
Supreme
Court of Appeal judgment at para 46.
[58]
See
id.  See also Van Zyl “Registration and the Consequences
of Non-registration” in Scholtz (ed)
Guide
to the
National Credit Act
SI
5 (LexisNexis, 2013) at 5.2.2.1:
“
It
stands to reason that only credit agreements to which the Act
applies should be taken into account when determining whether
a
person is required to register as a credit provider.  If this
were not the case, even the South African Reserve Bank,
whose credit
agreements are all excluded from the application of the Act [by
section 4(1)]
, would have had to register as a credit provider and
report to the National Credit Regulator on all its credit
agreements.”
(Footnotes omitted.)
[59]
Section
40(4)
is quoted in full at n 12.
[60]
Section
89(2)(d)
is quoted in full at n 11.
[61]
See
Supreme Court of Appeal judgment above n 1 at paras 9-13.
[62]
Id
at para 13.
[63]
LTA
Construction Bpk v Administrateur, Transvaal
[1991] ZASCA 147
;
1992 (1) SA 473
(A) (
LTA
Construction
)
at 482A-B and
Bellingan
v Clive Ferreira & Associates CC and Others
1998 (4) SA 382
(W) (
Bellingan
)
at 399B-D.
[64]
Leech
and Others v ABSA Bank Limited
[1997]
3 All SA 308
(W)
(
Leech
)
at 313C-G.  In fn 1 of
Commercial
Bank of Zimbabwe Ltd v MM Builders & Suppliers (Pvt) Ltd and
Others and Three Similar Cases
1997 (2) SA 285
(ZHC) (
Commercial
Bank of Zimbabwe
),
Gillespie J gives an interpretation of the original Justinian maxim:
“Interest, and interest on interest . . .
can neither be
stipulated for nor recovered beyond twice the amount, and if paid,
may be recovered.”
[65]
See
Union
Government v Jordaan’s Executor
1916 TPD 411
(
Union
Government
)
at 412-3, which refers to the writings of Van der Keessel, Voet,
Grotius and Groenewegen, and
Leech
id
which refers to the writings of Huber.  This is how Van der
Keessel in his
Praelectiones
(English translation of Van der Keessel by Lorenz
Select
Theses on the Law of Holland and Zeeland
2
ed (Juta and Co Ltd, Cape Town, 1901) (Lorenz translation)) at 192
para DLXIX captured the rule: “The amount of unpaid
interest
may not exceed the principal”.  See also
Huber
Heedensdaegse
Rechtsgeleertheyt
at 3.37.38-43.
[66]
Union
Government
id at 413.
[67]
Niekerk
v Niekerk
(1828 -
1849) 1 Menz 452
at 454, a judgment of the Supreme Court of
the Cape of Good Hope.  Even articulating the rationale, the
Supreme Court of
the Transvaal in the 1886 case
Taylor
v Hollard
(1885
- 1888) 2 SAR TS at 85 said of the rule:
“
In
like manner the provisions of the Roman-Dutch law, that the interest
may not exceed the capital or be turned into capital,
are still
observed in practice.  This Court will refuse to enforce, to
its full extent, a contract made by our citizens,
in which double
the amount advanced, with interest, is stipulated for, not so much
in protection of the promissor, but because
to countenance such
proceedings would be contrary to good morals, the interests of our
citizens, and the policy of our law.”
(Citation
omitted.)
In
this, one observes the articulation of the basis of the rule as,
inter alia
, public policy.
[68]
LTA
Construction
above
n 63 at 482F.
[69]
Id,
where Joubert JA described the
in
duplum
rule as “alles behalwe ’n anachronisme”
“anything but an anachronism” (my translation).
[70]
Leech
above
n 64 at 313-4;
Taylor
v Hollard
above
n 67 at 85; Vessio “A Limit on the Limit on Interest?  The
In
Duplum
Rule and the Public Policy Backdrop” (
2006)
39
De
Jure
25 at 32; Vessio
The
Effects of the In Duplum Rule and Clause 103(5) of the National
Credit Bill 2005 on Interest
(LLM Dissertation, University of Pretoria, 2006) (Vessio UP) at
53-4; and
Huber
above n 65 at 3.37.39
.
[71]
Bellingan
above n 63 at 401C.
[72]
Id
at 482E-F. My translation of this is: “It forms part of our
daily economic life.  It fulfils the economic function
of
helping those debtors who find themselves in a financial plight.”
[73]
Oneanate
above
n 15.  Lest there be any confusion about the meaning of this
Latin term, it may be helpful to quote the Supreme Court
of Appeal
judgment above n 1 in the present matter, which noted at para 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’, 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.”  (Footnote omitted.)
[74]
Stroebel
v Stroebel
1973
(2) SA 137
(T) (
Stroebel
).
[75]
Oneanate
above
n 15 at 833D.
[76]
Huber
above n 65 at 3.37.38-43.
[77]
Oneanate
above n 15 at 832I-833C.
[78]
Id
at 832I.
[79]
Afrikaans
translation of Van der Keessel by Gonin
Voorlesinge
Oor Die Hedendaagse Reg na Aanleiding van de Groot se “Inleiding
tot de Hollandse Rechtsgeleerdheyd”
1 ed at 239 (AA Balkema, Cape Town 1966) (Gonin translation).
[80]
My
translation of this is as follows: “It is, however, claimed
that this rule allows for an exception in respect of interest
which
runs
pendente
lite
,
and I have found it written somewhere that such a decision was given
by the Dutch Hooge Raad.  A further exception, and
this one is
indisputable, applies in the case of annuities.”
[81]
Above
n 79.
[82]
Dissenting
judgment at [132] to [133].
[83]
I
also note that there appears to be a discrepancy between the Gonin
and Lorenz translation.  The Lorenz translation does
not
mention the exception at all.  I place reliance on the Gonin
translation.
[84]
Stroebel
above
n 74 at 139C, wherein Cillié JP stated:
“
Na
my mening moet aan die stelling van Huber en Carpzovius voorkeur
gegee word omdat dit konsekwent is en ook duideliker as die
van Van
der Keessel.”
I
translate this as follows: “In my opinion, preference must be
given to the view of Huber and Carpzovius as it is consistent
and
also clearer than that of Van der Keessel.”
[85]
LTA
Construction
above n 63;
Administrasie
van Transvaal v Oosthuizen en 'n Ander
1990 SA (3) 387 (W) at 397E-H; and
Commercial
Bank of Zimbabwe
above n 64 at 300D-F.
[86]
Oneanate
above n 15 at 834B-F.
[87]
In
our law, the concepts “public policy” and “public
interest” are often used interchangeably.  See,
for
example,
Minister
of Education and Another v Syfrets Trust Ltd NO and Another
[2006] ZAWCHC 65
;
2006 (4) SA 205
(C) (
Syfrets
Trust
)
at para 24, where the High Court referred to “public policy”
and “its synonyms,
boni
mores
,
public interest and the general sense of justice of the community”
and
Curators,
Emma Smith Educational Fund v University of KwaZulu-Natal and Others
[2010] ZASCA 136
;
2010 (6) SA 518
(SCA), where the Supreme Court of
Appeal, citing
Syfrets
Trust
,
echoed this understanding, stating “public interest (the term
is a synonym of ‘public policy’)”.
[88]
Carmichele
v Minister of Safety and Security
[2001]
ZACC 22
;
2001 (4) SA 938
(CC);
2001 (10) BCLR 995
(CC) (
Carmichele
).
[89]
Section
12(2) of the Constitution provides that “[e]veryone has the
right to bodily and psychological integrity”.
[90]
Section
10 of the Constitution provides that “[e]veryone has inherent
dignity and the right to have their dignity respected
and
protected”.
[91]
The
primary dispute in this case was whether the common law should be
developed such that the Minister of Police could be held
liable for
the failure by the police and prosecutor to oppose bail for a serial
violent and sexual offender.  The Court
found that the police
and prosecutor owed Ms Carmichele a legal duty to act positively to
prevent the offender’s release
and that there were no
considerations of public policy militating against the imposition of
such a duty.  The police had
control over the offender, who was
known to be likely to commit further sexual offences against women
should he not be detained.
The Court found further that
reasonable and practical measures could have been taken to prevent
his subsequent attack on
Ms Carmichele.
[92]
If
I were obliged to make a choice, I would opine that these
countervailing public policy considerations are much weightier than

those that led to the decision in
Oneanate
.
[93]
I
say “at the moment” because I do not know if different
considerations may be at play at some future time.
[94]
Above
n 88 at para 36.
[95]
Masiya
v Director of Public Prosecutions, Pretoria and Another
[2007] ZACC 9
;
2007 (5) SA 30
(CC);
2007 (8) BCLR 827
(CC) (
Masiya
)
at para 31.
[96]
Compare
R
(on the application of ProLife Alliance) v British Broadcasting
Corporation
[2003] UKHL 23
at paras 75-6.  These paragraphs were quoted
with approval in
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC);
2004 (7) BCLR 687
(CC) (
Bato
Star
)
at para 47.  At para 46
Bato
Star
also quoted
Minister
of Environmental Affairs and Tourism and Others v Phambili Fisheries
(Pty) Ltd; Minister of Environmental Affairs and
Tourism and Others
v Bato Star Fishing (Pty) Ltd
[2003] ZASCA 46
;
2003 (6) SA 407
(SCA) at para 50 where Schutz JA
said “[j]udicial deference does not imply judicial timidity or
an unreadiness to perform
the judicial function”.
[97]
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC)
(
Barkhuizen
)
at paras 28-9;
Carmichele
above n 88 at para 56;
Du
Plessis and Others v De Klerk and Another
[1996]
ZACC 10
;
1996 (3) SA 850
(CC);
1996 (5) BCLR 658
(CC) (
Du
Plessis v De Klerk
)
at para 110; and Cameron JA’s concurring judgment in
Brisley
v Drotsky
[2002]
ZASCA 35
;
2002 (4) SA 1
(SCA) (
Brisley
)
at para 91.
[98]
Section
34 of the Constitution provides:
“
Everyone
has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before
a court
or, where appropriate, another independent and impartial tribunal or
forum.”
[99]
Barkhuizen
above n 97 at paras 31-3 (quoting
Zondi
v MEC for Traditional and Local Government Affairs and Others
[2004] ZACC 19
;
2005 (3) SA 589
(CC);
2005 (4) BCLR 347
(CC) at para
61).
[100]
Chief
Lesapo v North West Agricultural Bank and Another
[1999] ZACC 16
;
2000 (1) SA 409
(CC);
1999 (12) BCLR 1420
(CC) at
para 22.  See also
Mukaddam
v Pioneer Foods (Pty) Ltd and Others
[2013] ZACC 23
;
2013 (5) SA 89
(CC);
2013 (10) BCLR 1135
(CC) at
para 29.
[101]
Road
Accident Fund and Another v Mdeyide
[2010] ZACC 18
;
2011 (2) SA 26
(CC);
2011 (1) BCLR 1
(CC) at para 1
and
Barkhuizen
above n 97 at para 31.
[102]
Government
of the Republic of Zimbabwe v Fick and Others
[2013] ZACC 22
;
2013 (5) SA 325
(CC);
2013 (10) BCLR 1103
(CC) at
para 63.
[103]
What
Blignault J said of the defences made in the High Court is worth
noting:
“
Winskor
has thus far defended Slip Knot’s payment application on
grounds such as the invalidity of the loan agreement by
reason of
the provisions of section 40 of the NCA and the application of the
in duplum
rule.  Neither of these defences can be described as frivolous
or
mala fide
.”
(High Court judgment at para 56.)
[104]
The
maximum that the Paulsens would have been required to pay under the
Supreme Court of Appeal order was R72 million, R36 million
of which
consisted of the judgment debt.  (Supreme Court of Appeal
judgment above n 1 at fn 14.)  However, the Supreme
Court of
Appeal used 24 February 2012 – the date upon which Blignault J
at the court of first instance handed down judgment
– as the
judgment date for its order.  Before us, both parties have
agreed that this Court’s date of judgment
should replace that
of the High Court.  (See [96].)  On the authority of
Oneanate
,
interest would be continuing to accrue at 3% per month from the date
of service of process to the date of this Court’s
judgment.
Thus, the liability of the Paulsens would exceed even the numerical
cap given in the Supreme Court of Appeal
judgment above n 1.
[105]
Van
Zijl v Hoogenhout
[2004] ZASCA 84
;
[2004] 4 All SA 427
(SCA) at para 7.  See also
Shange
v MEC for Education, KwaZulu-Natal
[2011] ZAKZDHC 28;
2012 (2) SA 519
(KZD) at para 40.
[106]
Dissenting
judgment at [143] to [145].
[107]
Id
at [143].
[108]
This
is because the interest rate will usually be significantly higher
than the rate of inflation.  For example in this case,
the
agreed interest rate between the parties amounts to 43% per annum,
while the most recently available data indicates that
the current
inflation rate in South Africa is 3.9% per annum, down from 4.4% in
January 2015.  Statistics South Africa “CPI
History 1960
Onwards”, available at
http://beta2.statssa.gov.za/publications/P0141/P0141February2015.pdf
.
The interest rate is over ten times the current inflation rate.
Thus, the passage of a year with interest accruing
will result in
the Paulsens facing a debt, the value of which is more than 37%
greater in constant value terms; while the passage
of a year without
interest accruing will result in a 3.9% loss in the value of Slip
Knot’s money in constant value terms.
[109]
For
the relationship between public policy and the Constitution see
Barkhuizen
above
n 97 at paras 28-9;
Carmichele
above
n 88 at para 56; and
Du
Plessis v De Klerk
above
n 97 at para 110.
[110]
Barkhuizen
id
at para 57.
[111]
Meaning:
“agreements must be kept”.
[112]
Well-established
common law rules render certain contractual provisions void or
unenforceable, even when contained in an otherwise
valid and binding
contract, including provisions that: tend to produce forced labour;
oust the jurisdiction of the courts; provide
for excessive
attorney’s fees or witness expenses; permit
parate
executie
(right of a creditor to execute without a court order) of immovable
property; are injurious to the institution of marriage; constitute

an unreasonable restraint of trade; contain certain penalty clauses;
relate to time-bar; or provide for conclusive proof.  See

Christie “Illegality and Unenforceability” in his
The
Law of Contract
6 ed (LexisNexis, Pietermaritzburg 2011) at 351.
[113]
Barkhuizen
above
n 97 at para 57.
[114]
Id
at para 30.  This Court’s recent opinion in
Country
Cloud Trading CC v MEC, Department of Infrastructure Development,
Gauteng
[2014] ZACC 28
;
2015 (1) SA 1
(CC) at para 65 further underscores
that
Barkzuizen
id
stands not for the proposition that the freedom of contract is
inviolate, but merely that “within bounds, contractual

autonomy claims some measure of respect”.
[115]
Barkhuizen
id at para 55.
[116]
As
stated in the preamble of the Constitution, “[w]e, the people
of South Africa, . . . through our freely elected representatives,

adopt this Constitution as the supreme law of the Republic so as to
. . . [i]mprove the quality of life of all citizens and free
the
potential of each person”.
[117]
The
preamble of the
Broad-Based Black Economic Empowerment Act 53 of
2003
warns that “unless further steps are taken to increase
the effective participation of the majority of South Africans in the

economy, the stability and prosperity of the economy in the future
may be undermined to the detriment of all South Africans
irrespective of race”.
[118]
Oneanate
above n 15 at 834E-F.
[119]
See
dissenting judgment at [133].
[120]
A
similar critique of the holding in
Oneanate
was argued by Vessio:
“
It
is submitted that exactly because the
in
duplum
rule is, as stated by the court
[in
Oneanate
],
concerned with public interest, that its scope should not be limited
in terms of the public policy issues which it seeks to
protect and
which it has been held to protect.  The rule should therefore
not be perceived as only protecting borrowers
from exploitation by
lenders.  In addition, it prevents the over-extending of
debtors by limiting their liability in terms
of debt.  . . .
While it is true that the creditor cannot control delays caused by
litigation, the two-pronged policy effect
of the
in
duplum
rule should be considered and
the debtor should be protected from incurring an unforeseen and
burdensome amount of interest,
especially in light of the fact that
the judgment, as shall be seen, will cause interest to run on the
whole judgment debt.”
Vessio UP above n 70 at 53-4.
[121]
Commercial
Bank of Zimbabwe
above n 64 at 321F-I.
[122]
Which
also may accumulate, but is limited to an amount equal to the whole
of the judgment debt.  See [96] to [100].
[123]
See
[96] to [98] where the implications of this subject are discussed.
[124]
There
is also the possibility – explained ably by Chinhengo J in the
Zimbabwean case of
Conforce
(Pvt) Ltd v City of Harare
2000
(1) ZLR 445
(H) at 458C-F, and quoted with approval in
Zimbabwe
Development Bank v Salons and Others
[2006]
ZWHHC 43
(
Zimbabwe
Development Bank
)
at 12 – that creditors could exploit the suspension of the
in
duplum
rule created by
Oneanate
to avoid the application of the rule entirely:
“
In
my view, the danger in adopting the approach in
Oneanate
. . . is that an unscrupulous creditor only has to institute action
to defeat the
in duplum
rule.
He may so act as to ensure that the institution of proceedings and
the attainment of the double coincide with the
result that the rule
is rendered inoperative.  I do not see anything that is against
the public interest or the interest
of modern finance, if the
in
duplum
rule operates in the manner
outlined by Gillespie J and the old Roman Dutch authorities which
espouse the view that once the
double has been reached, interest
must stop to run regardless of the institution of proceedings or
that the stage of
litis contestatio
has been reached. . . .  I am therefore unpersuaded by the
conclusion reached on this point in
Oneanate
.”
[125]
See
[56] to [58].
[126]
See
concurring judgment at [113].
[127]
The
views of the High Court of Zimbabwe in
Zimbabwe
Development Bank
above
n 124 at 9-10 are worth noting:
“
[Zulman
JA] held that public policy considerations would not favour the
debtor who kept the creditor who had timeously instituted
recovery
but was frustrated by delays endemic in the legal system out of his
money when interest is the lifeblood of finance
in modern times.
It was his conclusion that such a creditor could not be held to have
exploited the debtor.
The
conclusion of Zulman JA, with respect, is difficult to follow, and
appears out of sync with his reasoning on the entrenchment
of the in
duplum rule in our law
.”
(Emphasis added.)
[128]
Based
on the fact that public policy is now informed by the Constitution
(
Barkhuizen
above
n 97 at paras 28 9;
Carmichele
above n 88 at para 56;
Du
Plessis v De Klerk
above n 97 at para 110; and
Brisley
above
n 97 at para 91), the decision in
Oneanate
could, even at that time, have been appealed to this Court.
[129]
Masiya
above n 95 at para 31.
[130]
Pursuant
to the discussion at [56] to [58], canvassing
Carmichele
above
n 88 and
Masiya
above n 95.
[131]
Again,
I say so because I have no idea what tomorrow’s public policy
may tell us.
[132]
See
Oneanate
above n 15 at 834H;
Stroebel
above n 74 at 139D-E;
Commercial
Bank of Zimbabwe
above n 64 at 300B-C; and
Absa
Bank Ltd v Erasmus
[2006] ZAWHCC 25;
2007 (2) SA 545
(C) (
Erasmus
)
at paras 29-30.
[133]
See
Occupiers
of Saratoga Avenue v City of Johannesburg Metropolitan Municipality
and Another
[2012] ZACC 9
;
2012 (9) BCLR 951
(CC) at paras 7-8 which quoted,
with approval,
General
Accident Versekeringsmaatskappy Suid-Afrika Bpk v Bailey NO
1988 (4) SA 353
(A) at 358H I.
[134]
In
a dissent in
Certain
Underwriters at Lloyds v South African Special Risks Association
[2000] ZAGPHC 2
;
2001 (1) SA 744
at para 15, Labe J explained that
it is “common sense” that interest should run from the
date of judgment in the
court of first instance and not from the
date of the judgment in the court of appeal because “it is
unthinkable that a
[losing] party . . . should be entitled to lodge
a frivolous appeal against an award, and thereby delay the period
from which
interest should run on the award”.  This
reasoning plainly does not apply to meritorious, successful appeals.
[135]
Supreme
Court of Appeal judgment above n 1 at para 3(d) of the order.
[136]
There
does appear to be conflicting authority on this point.  The
Supreme Court of Appeal’s approach in this case is
in accord
with other recent cases including
Oneanate
above n 15 at 833G-I;
Commercial
Bank of Zimbabwe
above n 64 at 300G-301A; and
Erasmus
above
n 132 at paras 28-30 (quoting
Oneanate
with approval).  However,
Stroebel
above
n 74 at 139H, which I have generally approved of as an accurate
reflection of the state of our common law at the time, held
that
post judgment interest would only run on the original capital
amount, and would be capped once it reached a sum equal
to this
amount.
[137]
Supreme
Court of Appeal judgment above n 1 at para 3(d) of the order.
[138]
See,
for example,
Stroebel
above n 74 at 139E (“Omdat die rente uit die ooreenkoms van
die partye vloei, is die koers ook die een waarop die partye

ooreengekom het” – which I translate as “[b]ecause
the interest flows from an agreement by the parties, the
rate is
also that to which the parties had agreed”);
Oneanate
above n 15 at 836B-C;
and
Commercial
Bank of Zimbabwe
above n 64 at 325H.  The language of the
Prescribed Rate of
Interest Act 55 of 1975
at
section 1(1)
also makes it clear that the
prescribed rate of interest is to be used when “the rate at
which the interest is to be calculated
is not governed by any other
law
or
by an agreement
”.
(Emphasis added).  As the loan agreement concluded between Slip
Knot and Winskor expressly provides for interest
to be calculated at
3% per month, there is no reason to have resort to the prescribed
statutory rate.
[139]
According
to fn 14 of the judgment of Wallis JA in the Supreme Court of Appeal
above n 1, this would have amounted to around R72
million in total,
as opposed to the R24 million to which they would now be entitled,
excluding post-judgment interest.
Based on the parties’
positions with respect to the proper judgment date, the Paulsens
could have been liable for an amount
above even this figure had they
been entirely unsuccessful in their arguments before this Court.
(See [63] and n 104.)
[140]
Section
167(3) of the Constitution now provides:
“
The
Constitutional Court—
(a)
is the highest court of the Republic; and
(b)
may decide—
(i)
constitutional matters; and
(ii)
any other matter, if the Constitutional Court grants leave to appeal

on the grounds that the matter raises an arguable point of law of
general public importance which ought to be considered by that

Court; and
(c)
makes the final decision whether a matter is within its
jurisdiction.”
[141]
Above
n 2.
[142]
Main
judgment at [41].
[143]
Id
at [100].
[144]
Ethekwini
Municipality v Verulam Medicentre (Pty) Ltd
[2005]
ZASCA 98
;
[2006] 3 All SA 325
(SCA) (
Ethekwini
)
at paras 9-10;
Leech
above
n 64 at para 9;
LTA
Construction
above
n 63 at 482B-C;
Sanlam
Life Insurance Ltd v South African Breweries Ltd
2000
(2) SA 647
(W) at 652F-G; and
Union
Government
above
n 65 at 413.
[145]
Oneanate
above n 15 at 834H.
[146]
Stroebel
above n 74.
[147]
Oneanate
above
n 15 at 834C-D.
[148]
Main
judgment at [89] to [90]
[149]
In
K
v Minister of Safety and Security
[2005] ZACC 8
;
2005 (6) SA 419
(CC);
2005 (9) BCLR 835
(CC) at paras
16-7, this Court sets out some of the ways in which the common law
can be developed.
[150]
Main
judgment at [57].
[151]
Id
at [91].
[152]
Id
at [60].
[153]
Id
at [73] to [74].
[154]
See
Nedbank
above
n 40 at paras 36-8;
Ethekwini
above
n 144 at paras 9-10; and
F
& I Advisors (Edms) Bpk & ‘n Ander v Eerste Nasionale
Bank van Suidelike Afrika Bpk
[1998]
ZASCA 65
;
1999 (1) SA 515
(SCA) at 522G-H.
[155]
Main
judgment at [68].
[156]
In
respect of judicial deference, see
S
v Lawrence; S v Negal; S v Solberg
[1997] ZACC 11
;
1997 (4) SA 1176
(CC);
1997 (10) BCLR 1348
(CC) at
para 42
and
Du
Plessis v De Klerk
above
n 97 at para 180.  In respect of separation of powers, see
National
Treasury and Others v Opposition to Urban Tolling Alliance and
Others
[2012] ZACC 18
;
2012 (6) SA 223
(CC);
2012 (11) BCLR 1148
(CC) at
para 65;
Law
Society of South Africa and Others v Minister for Transport and
Another
[2010] ZACC 25
;
2011 (1) SA 400
(CC);
2011 (2) BCLR 150
(CC) (
Law
Society)
at paras 40, 54, and 70-1;
S
v Dodo
[2001] ZACC 16
;
2001 (3) SA 382
(CC);
2001 (5) BCLR 423
(CC) at
paras 22-3;
Pharmaceutical
Manufacturers Association of South Africa and Another
;
In
re: Ex parte President of the Republic of South Africa and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC);
2000 (3) BCLR 241
(CC) at para
26; and
Executive
Council of the Western Cape Legislature and Others v President of
the Republic of South Africa and Others
[1995] ZACC 8; 1995 (4) SA 877 (CC); 1995 (10) BCLR 1289 (CC).
[157]
See
Carmichele
above n 88 at para 36, in which this Court held that—
“
[i]n
exercising their powers to develop the common law, judges should be
mindful of the fact that the major engine for law reform
should be
the legislature and not the judiciary.”
[158]
See
Law
Society
above
n 156 at para 69, in which this Court held that—
“
the
Constitution [does not] limit . . . the legislative power of
Parliament in relation to adapting or abolishing parts of the
common
law”.
[159]
Section
39(2) of the Constitution.
[160]
See
K
v Minister of Safety and Security
above n 149 at para 17.  See also
Fourie
and Another v Minister of Home Affairs and Others
[2004] ZASCA 132
;
2005 (3) SA 429
(SCA);
2005 (3) BCLR 241
(SCA) at
paras 39 40, where the Supreme Court of Appeal held that—
“
[d]evelopment
of the common law entails a simultaneously creative and declaratory
function in which the Court perfects a process
of incremental legal
development that the Constitution has already ordained.  Once
the Court concludes that the Bill of
Rights requires that the common
law be developed, it is not engaging in a legislative process, nor,
in fulfilling that function,
does the Court intrude on the
legislative domain.
It
is precisely this role that the Bill of Rights envisages must be
fulfilled, and which it entrusts to the Judiciary. . . .

Section 8(3) envisages just . . . [such situations where]
legislation to give effect to a fundamental right is absent.

In this circumstance, the Constitution deliberately assigns an
imperative role to the court.  Subject to limitation, it
is
obliged to develop the common law appropriately.”
[161]
K
v Minister of Safety and Security
id.
[162]
Section
173 of the Constitution provides—
“
the
Constitutional Court, the Supreme Court of Appeal and the High Court
of South Africa each has the inherent power to protect
and regulate
their own process, and to develop the common law, taking into
account the interests of justice.”
[163]
Carmichele
above
n 88 at para 39.
[164]
See
Amod
v Multilateral Motor Vehicle Accident Fund
[1998]
ZACC 11
(CC);
1998 (4) SA 753
;
1998 (10) BCLR 1207
at paras 21-2;
National
Media Ltd v Bogoshi
[1998]
ZASCA 94
;
1998 (4) SA 1196
(SCA) at 1215A-1216-J;
Jajbhay
v Cassim
1939
AD 537
at 542 and 550-1; and
Eastwood
v Shepstone
1902 TS 294
at 302.
[165]
Thebus
and Another v S
[2003] ZACC 12
;
2003 (6) SA 505
(CC);
2003 (10) BCLR 1100
(CC)
(
Thebus
)
at para 27.
[166]
Carmichele
above
n 88 at para 56.
[167]
Thebus
above
n 165 at para 27.
[168]
Carmichele
above
n 88 at para 56.
[169]
NCA
above n 2.
[170]
Oneanate
above
n 15.
[171]
Id
at 827H.
[172]
The
Bill of Rights emphatically recognises both the common law and
customary law roots of our legal system. Section 39 provides
in
part:
“
(2)
When interpreting any legislation, and when developing the common
law or customary
law, every court, tribunal or forum must promote
the spirit, purport and objects of the Bill of Rights.
(3)
The Bill of Rights does not deny the existence of any other rights

or freedoms that are recognised or conferred by common law,
customary law or legislation, to the extent that they are consistent

with the Bill.”
[173]
LTA
Construction
above
n 63.
[174]
Oneanate
above
n 15 at 828D-E.
[175]
Id
at 828D. See also
LTA
Construction
above n 63 at 477C.  “From olden times interest was
limited by government in various ways because of economic
considerations
aimed at cutting off the acquisitiveness of lenders
and so to afford a measure of protection or relief to
interest-payers”
(my translation).
[176]
Main
judgment at [60].
[177]
Id.
[178]
Barkhuizen
above
n 97.
[179]
Brisley
above
97 at para 94.
[180]
Barkhuizen
above n 97 at para 57.
[181]
Id.
[182]
Main
judgment at [63].
[183]
See,
for example, Van der Merwe et al “Consensus obtained by
improper means” in their
Contract:
General Principles
4
ed (Juta, Cape Town 2012).
[184]
Id
at “Elements of consensus” and “Mistake”.
[185]
NCA
above n 2.
[186]
Oneanate
above
n 15 at 834 C.
[187]
Id
at 833C.
[188]
Id.
[189]
Konnert
Early
Modern Europe: The Age of Religious War,
1559-1715
(University
of Toronto Press, Toronto 2008) at 59.
[190]
Fritschy
“A ‘Financial Revolution’ Reconsidered: Public
Finance in Holland during the Dutch Revolt, 1568-1648”
(2003)
56:1
The
Economic History Review
57 at 64 and 74-8.  The comparison is, admittedly, not
perfect.  These were interest rates on short-term loans to the

government, which raised revenue by “selling” debt at
various interest rates.
[191]
Statistics
South Africa “CPI History 1960 Onwards”, available at
http://beta2.statssa.gov.za
.
[192]
See
Pearl
Assurance Co v Government of the Union of South Africa
1934 AD 560
at 563 where Lord Tomlin stated that Roman-Dutch law “is
a virile living system of law, ever seeking, as every such system

must, to adapt itself consistently with its inherent basic
principles to deal effectively with the increasing complexities of

modern organised society”.
[193]
Main
judgment at [55] to [56].
[194]
Main
judgment at [60].
[195]
Main
judgment at [66].