On
19 July 2006, the applicant obtained judgment in this Court in Case
No. HC2433/2005 in the sum of $485,316,000=. The order provided for
interest in the following terms:
“Interest
is due on the above amount at the prevailing overdraft interest rate
as quoted by Stanbic Bank Limited.”
On
10 September 2007, the applicant filed the present application
seeking the following relief:
“1.
That the applicant be and is hereby entitled to levy interest on the
capital debt in Case No. HC1929/2005 from 4th
February 2005 to date of payment.
2.
Costs on the legal practitioner/client scale (sic).”
The
material facts giving rise to this application are that the
applicants issued summons on 22 April 2005 in case No. HC1929/05
claiming the sum of $485,316,000=, interest at the rate of 115%
calculated from 4 February 2005 to the date of payment and costs on a
higher scale. The claim arose from an agreement of sale between the
applicant and the first respondent in terms of which the applicant
was required to deliver flour to the value of $485,316,000= to the
first respondent. The flour was duly delivered on 25 January 2005.
The first respondent was obliged, under the agreement, to pay the
purchase price for the flour by 4 February 2005. The second
respondent bound himself as surety and co-principal debtor in respect
of the first respondent's liability. The purchase price was not
paid on the due date resulting in the claim.
The
respondents defended the claim.
On
27 May 2005 the applicant filed an application for summary judgment
in case No. HC2433/05. The judgment was duly granted in favour of the
applicant on 19 July 2006. The respondent appealed against that
judgment on 26 July 2006. However, on 22 March 2007, the respondents
tendered payment of $970,632= being the judgment debt plus interest.
In a letter dated 13 April 2007, the applicant accepted the payment
on a without prejudice basis and reserved their right to claim
interest accrued on the sum of $970,632=. Following the payment, the
Notice of Appeal was withdrawn on 26 March 2007.
On
18 November 2007, the applicant then filed the present application
claiming interest on the capital debt in case No. HC1929/2005 from 4
February to the date of payment.
Before
the applicant addressed me on the merits of the application, I
queried the nature of relief that the applicant sought and whether or
not the applicant had, in view of the judgment in Case No 2433/05,
adopted the proper procedure.
Counsel
for the applicant submitted that the applicant was seeking a
declarator that interest was due from 4 February 2005 to the date of
payment. He submitted that the applicant was not seeking a variation
of the order in Case No. HC2433/05.
Counsel
for the respondent submitted that the matter, and, in particular, the
question of interest, had already been adjudicated on in Case No.
HC2433/05. He submitted that the applicant was seeking a variation of
the order. The applicant could only do so in terms of Rule 449 of the
High Court Rules. He further submitted that as the applicant had
adopted the wrong procedure, the application should be dismissed with
costs.
Despite
counsel for the applicant's submissions, it appears to me that
counsel for the respondent is correct in stating that the effect of
the relief sought by the applicant is a correction of the order
granted on 19 July 2006. The question of interest was indeed
determined in HC2433/05 and an order was granted by this court.
However, it appears to me that there was an apparent omission as to
the date when interest was to commence running. The applicant had
clearly stated in its prayer in the declaration the date from which
interest would commence running. The order is therefore incomplete
and inoperative. It is for this reason that I am of the view that I
can proceed to determine the matter in terms of Rule 449(1)(b). The
Rule provides that:
“(1)
The court or a judge may, in addition to any other power it or he may
have, mero
motu
or
upon the application of any party affected, correct, rescind, or vary
any judgment or order —
(a)
That was erroneously sought or erroneously granted in the absence of
any party affected thereby; or
(b)
In
which there is an ambiguity or a patent error or omission, but only
to the extent of such ambiguity, error or omission;
or
(c)
That was granted as the result of a mistake common to the parties”…,.
The
court in HC2433/05 did not indicate, in the judgment, why the
effective date when interest would run was not included. Had it so
indicated, the matter would have been res
judicata
as contended by counsel for the respondent. It would have been
difficult for this court to evoke its powers in terms of Rule 449.
The silence in the judgment, and the order itself, appears to me to
have been a clear omission.
The
next issue for determination is whether or not it is competent for me
to correct the order and provide, as requested by the applicant, that
interest should have commenced to run from 4 February 2005 to date of
payment despite the in
duplum
rule.
The
applicant contended that the in
duplum
rule
does not apply in the present case because proceedings had already
been instituted and the delay was attributable to the justice
delivery system. In support thereof, the applicant referred me to the
case of Standard
Bank of South Africa v Oneanate Investments (Pty) Ltd
1998 (1) SA 811 (SCA) and Ehlers
v Standard Chartered Bank Zimbabwe Limited
2000 (1) ZLR 136 (H).
Counsel
for the applicant
contended
that the effect of the order sought by the applicant is that interest
continues to run until payment in full is made irrespective of the in
duplum
rule.
The
respondent urged me to follow the case of CBZ
Limited v MM Builders & Suppliers (Private) Limited & Ors
1996 (2) ZLR 420 (H) and Conforce
(Pvt) Ltd v City of Harare
2000 (1) ZLR 445 (H).
The
proposition that interest ceases to run when it has reached the
capital amount and only commences to run afresh upon judgment is
found in CBZ
Limited v MM Builders & Suppliers (Private) Limited & Ors
1996 (2) ZLR 420 (H)…, where GILLESPIE J states that:
“Upon
judgment being given interest on the full amount of the judgment debt
commences to run afresh but will once again cease to accrue when it
waxes to the amount of the judgment debt, being the capital and
interest thereon for which the cause of action was instituted.”
Therefore,
the in
duplum rule
applies where the interest reaches the judgment debt.
It
appears to me that the reasoning by MALABA J…, in Ehlers
v Standard Chartered Bank Zimbabwe Limited
2000 (1) ZLR 136 (H) does not take into account the fact that the
debtor is equally not in control of the process by which interest
accumulates. At
page 139G-140B he stated:-
“The
learned judges preferred the view that interest only commences to run
anew as from the date of judgment. I must, with respect, express my
dissent from the decision in Commercial
Bank of Zimbabwe's case supra
on the date on which interest commences to run afresh in a case where
the in
duplum
rule applies. This view of the law does not give effect to the policy
behind the in
duplum
rule, nor does it recognize the discretion enjoyed by the court in
the matter. In Georgias
& Anor v Standard Chartered Finance Zimbabwe Ltd
1998 (2) ZLR 488 (S) at 495D GUBBAY CJ said that the in
duplum
rule is based upon a public policy designed to protect borrowers from
the exploitation of lenders by prohibiting usurious abuse. The
principle that interest commences to run afresh from the date of
litis
contestatio,
which, in this case, is the date of service of summons,
is based upon the recognition of the fact that from that date the
creditor ceases to be in control of the process by which interest
accumulates.”
In
the present case, the respondent cannot be held accountable for the
delays caused by the legal system. It therefore should not be
penalised for enforcing its own rights to defend an action
particularly, in such a case where there is a divergence of views on
the application of the in
duplum
rule. I do not believe that it would be in the public interest to
penalise the debtor.
I
am, however, persuaded by the remarks of CHINHENGO J in Conforce
(Pvt) Ltd v City of Harare
2000 (1) ZLR 445 (H)…, which seems to reflect the true position
regarding the application of the in
duplum
rule
on a judgment debt. At page 458A-F he noted:-
“I
venture to say that the public interest served by the in
duplum
rule is not identified with sympathy for the debtor so as to protect
him. I view the public interest involved as encompassing a wider
spectrum of interests, from the protection of the debtor to securing
fiscal discipline on the part of lenders to considerations of
justification for charging interest in the first place i.e. to
compensate the creditor for deprivation of use of the money due until
payment (Mawere
v Mukura
1997 (2) ZLR 361 (H) at 364G) and to the interests of commerce
generally and perhaps many more interests.
Thus,
the public interest cannot be restricted to one or two considerations
i.e. the protection of the debtor and the dictates of modern
commerce.
But,
even if it were so restricted, I cannot see anything incompatible
with the rule serving those interests if it were applied in the
manner advocated for in
MM Builders case.
The creditor's claim for interest would be limited to an amount
that does not exceed the capital. In my view, the danger in adopting
the approach in Oneanate
and Ehlers cases supra
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 in-operative.
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. Where, in particular, the double has not been
reached, I find no relevance at all of the event of institution of
proceedings. Interest must continue to run until it equates to the
capital amount soon after or long after the institution of
proceedings, but that is immaterial. I am therefore un-persuaded by
the conclusion reached on this point in Oneanate
and Ehlers cases.
I must respectfully express my dissent from those judgments.”
As
rightly submitted by counsel for the respondent,
the
decision in Standard
Bank of South Africa v Oneanate Investments (Pty) Ltd
1998 (1) SA 811 (SCA) is merely persuasive. The decision in CBZ
Limited v MM Builders & Suppliers (Private) Limited & Ors
1996 (2) ZLR 420 (H) was decided by a full bench of the High Court
and is therefore binding on me.
In
the result, it is ordered that:
1.
The application be and is hereby granted.
2.
The order granted in HC1929/05, on 19 July 2006, be and is hereby
amended by the deletion of paragraph 2 and substitution with:
“Interest
is due on the above amount at the prevailing overdraft interest rate
as quoted by Stanbic Bank Limited with effect from 4th
February 2005 to date of payment.”
3.
The
respondent shall pay the costs of the application.
