IN
THE COURT OF APPEAL OF SWAZILAND
DRAFT
HELD
AT MBABANE Appeal Case No. 50/99
In
the matter between
SHISELWENI
INVESTMENTS (PTY) LTD Appellant
vs
SWAZILAND
DEVELOPMENT AND
SAVINGS
BANK Respondent
Coram
LEON, J.P.
TEBBUTT,
J.A.
SHEARER,
J.A.
For
Appellant Mr. P.
M.
Shilubane
For
Respondent Mr. L.
M.
N.
Khumalo
JUDGMENT
TEBBUTT,
J.A.
On
24 January, 1997 the respondent bank applied for, and obtained,
default judgment against the appellant in the following terms:-
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1. payment
of the sum of E212 604.35;
2. interest
thereon at the rate of 22.5% per annum calculated from 30th April,
1996 to date of final payment;
3. costs
of suit.
By
Notice of Motion dated 12 July 1999, the appellant in the High court,
in terms of Rule 42 of the Rules of Court, sought the following
order:-
"1 That
judgment obtained by respondent against the applicant dated 24
January, 1997 be rescinded alternative (SIC) be varied as follows:
"Payment of the sum of E150.000.00. "
2. That
the respondent renders a detailed statement of the applicant's
account it has with respondent at its Nhlangano Branch from 5
February, 1996 to date within 21days.
3. Debatement
of the said account.
4. Payment
to applicant of whatever amount appears to be due to applicant upon
debatement of the account.
5. Costs
of suit in the event the respondent opposes this application.
6. Alternative
relief".
The
learned judge a quo upheld two points in limine raised by the
respondent namely:-
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1. That
the application did not fall within the ambit of Rule 42, and
2. That
the application for rescission of judgment had not been brought
within a reasonable time, i.e. sixteen months after the appellant
became aware of the judgment having been granted against it.
The
court held that the inaction by the appellant showed that it accepted
the judgment or that it was guilty of inordinate delay.
The
Court a quo consequently refused the application. The default
judgment accordingly remained undisturbed as set out above.
It
is with the refusal to rescind or vary the default judgment that this
court, on appeal, is concerned.
The
appellant is a customer of the respondent, its banker. In its
founding affidavit to its notice of motion, it avers that on the 5th
February 1990 respondent lent and advanced to the appellant the sum
of E75 000.00 payable within 48 months at the rate of E2 000.00 per
month plus interest thereon at the rate of 22.5% per annum. A letter
from the bank granting the loan refers to its purpose being "to
amalgamate and convert all the other overdrafts and loan amounts with
upper limit of E75 000.00 to a loan (Business)"
In
an opposing affidavit on its behalf the respondent admitted these
facts but said that the letter did not constitute the only loan
liability the appellant had with it and that its claim for E212
604.35 was in respect of only one of appellant's accounts with it.
Other amounts which it had
4
claimed
and received from the appellant were set out in the affidavit.
Details of these are that a total amount of E368 304.60 had been paid
to the respondent by the appellant less an amount due by the latter
of E320 466.16 less interest from 1.7.98 to 18.9.98 of E10 484.65
less legal costs and related court charges of E9 232.26. These
amounts left a balance in favour of the appellant of E28 120.62 which
the appellant had apparently overpaid the respondent. The figures
reflected that the respondent owed the appellant the amount of E28
120.62.
In
so far as the loan of E75 000.00 is concerned it was averred by the
appellant that, in accordance with the in duplum rule, once the
interest reaches the amount of the capital sum it cannot be increased
further. The appellant accordingly admitted owing the respondent
E150.000.00 i.e. a loan of E75 000.00 and interest of E75.000.00. It
was this that caused the appellant to aver that it would be "fair
and just" to vary the judgment of the court a quo by
substituting the sum of E150 000.00 for the sum of E212 604.35
granted in the default judgment, which appellant would then pay to
respondent.
The
appeal, which was not only directed against the refusal to vary the
amount of the default judgment but was primarily directed against the
upholding by the Court a quo of the points in limine, originally came
before this court during the session of the Court in May 2000. It was
then informally suggested to the parties that they should themselves
discuss the amounts each said was owed to the other and resolve what
amount the appellant owed to the respondent. The matter was
inconsequence postponed to the present session of this court.
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When
the matter was called for hearing last Thursday the court was
informed that, despite its suggestion, the parties had not met to
resolve their dispute. It would appear, however, that other events
had occurred in the interim to which I shall refer later herein.
The
Court then also informed Mr. Khumalo, counsel for the respondent,
that whether it upheld the decision of the Court a quo on the points
in limine or whether it reversed it, the fact remained that the
original default judgment in the amount of E212 604.35 could not be
sustained and would have to be varied. On the respondent's own
affidavit it owed the appellant an amount of E28 120.62 so that, at
best for it, it could get judgment against the appellant for E184
483.74 being E212 604.35 less E28 120.62. If the appellant was
correct, on its reliance on the in duplum rule, by reason of which it
averred that it owed the respondent no more than E150 000.00, the
respondent, if the appellant's contention was upheld, could only get
judgment for E150 000.00.
Mr.
Khumalo submitted that the Court should remit the matter to the High
Court so that the appellant's account with the respondent could be
debated and the amount of the appellant's indebtedness to the
respondent determined. He submitted that the question of the costs of
appeal be, at that stage, decided by the High Court.
To
the utter amazement of this Court it was, however, informed by Mr.
Shilubane, for the appellant, that in a judgment by Sapire, CJ in the
High Court given on 29th October, 1999, i.e. between the previous
session of this Court and the present one, the respondent had been
ordered to pay
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the
appellant E28 120.62 - which respondent had done - and the matter
had, for the rest, been ordered to go to the High Court for
debatement of account. Pursuant to that order the appellant's
attorney filed an affidavit averring that the accounts showed that
the appellant had overpaid further amounts and that the respondent
owed it an additional amount of E19 717.91. In response to this, in a
letter dated 8 February, 2000, signed by Mr. Khumalo himself, an
offer of settlement on behalf of the respondent that it would pay the
sum of E19 717.91 to the appellant was made, which the appellant
accepted on 10 February 2000. That amount, too, had since been paid
by the respondent, the Court was told.
I
must express the Court's dismay at Mr. Khumalo's suggestion that the
matter be referred back to the High Court for debatement of account
and that the costs of appeal be decided then, when he knew full well
- or ought to have known - that such debatement had already occurred
and had been settled. Mr. Khumalo's explanation was that he had
forgotten about this and about the judgment of Sapire, CJ. I find
this difficult to accept as his client had paid the E28 120.62
ordered by Sapire, C.J. to be paid by it and it was he who had
written and signed, in respect of the debatement issue, the letter on
behalf of his client offering to pay to the appellant the sum of E19
717.91. His submissions to this Court were, to say the least,
disingenuous and would appear to be designed to prevent an adverse
finding by this Court against his client on costs.
As
set out above, the appellant submits that it only owes the respondent
the sum of E150 000.00. The respondent's averments in regard to this
are singularly lacking in particularity. In Commercial
7
Bank
of Zimbabwe v W.M. Builders Supplies (Pty) Ltd 1997(2)285® the
following passage is quoted as to what should be shown by a bank:
"The
amount of the capital due, the total amount of interest due thereon
as at a specified date, whether or not interest on the total amount
is claimed and, if so, the amount in respect of which the interest is
claimed and the date with effect from which the interest will run in
the case of a claim relating to a bank overdraft, the papers should
show the total amount of the debt claimed and, separately, the total
capital amount loaned by the bank to the client, the total amount of
interest due thereon as at a specified date, and if appropriate the
total amount due in respect of bank charges, cheque books etc and the
interest, if any, due thereon at a specified date. If the client has
made any payments in respect of the overdraft account, the papers
should specify the total amount paid and also indicate how the
payments have been appropriated".
The
respondent does not in the papers even set out the amount which it
actually lent to the appellant: let alone any of the other details
referred to above.
In
Standard Bank of South Africa Ltd v Oneate investments (Pty) Ltd
1988(1)
SA 811 (SCA) the court dealt, inter alia, with the in duplum rule. It
held that the rule, which provides that interest stops running when
unpaid interest equals the outstanding capital, is a rule based on a
public policy designed to protect borrowers from exploitation by
lenders. As such it cannot be waived by borrowers, and cannot be
altered by banking practice. The practice by bankers of capitalising
unpaid interest does not result in interest losing its character as
interest, and certainly not for the
8
purposes
of the in duplum rule (see the judgment of Zulman J.A. at p 828 D - E
and E - I and the cases there cited).
On
the papers before this Court the appellant's averment that, applying
the in duplum rule, it owes the respondent only E150 000.00, i.e. E75
000.00 on the loan and E75 000.00 in interest is unanswered.
No
other amount of indebtedness by the appellant is alleged.
The
amount of the judgment obtained on 24 January 1997 must therefore be
altered from E212 604.35 to E150.000.00.
The
Court was informed from the bar that the appellant has, pursuant to
the default judgment against it, paid the sum of E212 604.35 and
interest to the respondent. It is therefore entitled to recover from
the latter the amount overpaid, viz E62,604.35.
I
turn to the question of costs. The respondent is obviously entitled
to its costs in the default judgment proceedings. On the appeal,
having succeeded in obtaining a variation of the judgment amount, as
was its alternative prayer in the notice of motion, the appellant is
entitled to its costs of appeal. In regard to the costs of the
rescission proceedings in the Court a quo, this Court has not
considered or come to a conclusion of that Court's decision of the
points in limine. The learned judge should, however, as was clear
from the figures before him, have varied the amount for which
judgment had been granted. It seems to us, therefore, that the
fairest order for this Court to make in respect of those proceedings
is that each party should bear its own costs.
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The
following order is therefore made:-
1. The
appeal succeeds to the extent that the amount of the default judgment
granted against the appellant is varied;
2. The
appellant is declared to be indebted to the respondent in the sum of
E150.000.00
3. The
respondent is ordered to repay to the appellant from the amount of
E212 604.35 paid by the appellant to it, the sum of E62. 604.35
together with interest thereon a tempore morae from date of this
judgment to date of payment.
4. As
to costs:
(i) The
appellant is ordered to pay the costs involved in the default
judgment application;
(ii) The
respondent is ordered to pay the costs of appeal;
(iii) In
respect of the costs in the rescission proceedings in the Court a
quo, each party is to bear its own costs.
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P.H.
TEBBUTT, J
A
I
AGREE
R.N.
LEON, JP
I
AGREE
D.L.
SHEARER, J
A
Dated
at MBABANE this
.13th.....day
of December, 2000
