This blog was co-authored by Rameeza Abdool Sattar, candidate attorney at Norton Rose Fulbright South Africa
The calculation of interest has significant implications for parties being sued, specifically when liability is not yet fixed or when dealing with unliquidated claims like damages claims. This case demonstrates the consequences of delaying payment of capital and interest claimed where liability is fixed by judgment.
The in duplum rule seeks to ensure that interest stops running once the unpaid interest equals the capital sum claimed. Santam Life Insurance Ltd v South African Breweries confirmed that this rule applies to arrear interest only, that is interest which is due and payable but unpaid.
In this case, the High Court was asked to determine the correct method of calculating interest and the commencement date for the accrual of post-judgment interest, having regard to the timing of previous payments made by the defendant.
As background:
• The plaintiff claimed damages for personal injuries sustained after he fell from a moving train in 2001. The date of summons was 23 August 2013.
• On 3 June 2020, the trial court ordered the defendant to pay R3 246 484, with interest from the date of service of summons to date of payment.
• The judgment was appealed to the Supreme Court of Appeal and final judgment was handed down on 28 November 2023 upholding the trial court’s decision.
• In February 2024, the plaintiff issued a writ of execution for the attachment and execution of movable goods from the defendant’s office up to the value of R10 143 617.02. The interest portion of the debt was calculated as R3 246 484 from date of summons in accordance with the in duplum rule. The additional post-judgment interest was calculated as R3 650 649.02 from date of judgment to date of writ.
• The defendant paid R6 835 881.32 in satisfaction of the principal debt and interest accrued up to 16 April 2024. In the defendant’s view, no outstanding balance was payable to the plaintiff.
The court held that:
• The claim was for unliquidated damages and that the claim only became fixed when the trial court awarded damages to the plaintiff with interest calculated from date of summons. The defendant’s obligation was only due when the trial court made its order.
• Interest runs on the capital sum plus pre-judgment interest, which total sum forms the judgment debt. The in duplum rule does not apply to the award of pre-judgment interest. Interest on the total judgment debt must be calculated from the date when the trial court hands down its judgment.
• The running of interest on the total judgment debt had not become capped by the in duplum rule because it was less than the capital amount. The defendant was liable for an additional R2 320 322.58.
Passenger Rail Agency of South Africa v Bisschoff N.O. obo Reyners 2024 ZAWCHC 207