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IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

 

 

Case Number: 5575/2015

Reportable

In the matter between:

 

 

EMANUEL ENRICA SAMARA DUNN                                                   Plaintiff/Applicant

 

and

 

ROAD ACCIDENT FUND                                                             Defendant/Respondent

 

JUDGMENT

Mbatha J

 

[1] The plaintiff Emanuel Enrica Samara Dunn (Dunn), instituted an action against the Road Accident Fund (RAF), which claim was settled on 17 August 2016. The parties agreed, amongst other things that she would receive the monetary payment on 17 December 2016. However, the RAF made payment to the applicant on 16 January 2017. As a result thereof the applicant brought the application before this court seeking the following orders:

‘1. That it be and it is hereby declared that upon a proper interpretation of the Court Order granted 17 August 2016 as read with s 17(3)(a) of the Road Accident Fund, the Defendant is obliged to pay interest on the judgment debt of R5, 934,730.00 with effect from 31 August 2016, being fourteen (14) days after the date of the Order granted 17 August 2016, at the prescribed rate of 10,5% per annum to 16 January 2017, being the date of payment of the capital sum. (138 days)

2. The Respondent is ordered to make payment of the said interest in the amount of R235,600.66 forthwith.

3. The Defendant is directed to make payment of the Applicant’s attorneys trust account, details as follows:-

Friedman & Associates, Nedbank, Branch Smith Street,

Trust Account No. 1359288759, Branch Code: 130526

4. That the Respondent pay the costs of this application.’

The respondent has since made payment to the applicant of interest a tempore morae from date of payment of the capital amount. The applicant persists that she is entitled to interest from the date of judgment. The final settlement was as a result of a tender made by the respondent to the applicant, which was initially rejected by the applicant and a second tender was made with certain adjustments. Finally, a draft order was made after further negotiations. This culminated in the agreement which was by consent made an order of the court.

 

[2] The bone of contention in these proceedings between the two parties, is whether interest is claimable from the date of the judgment or from the date of payment of the lump sum due to the applicant in terms of the judgment order of 17 August 2016.

 

[3] The issue lies in the interpretation of the court order taken by consent on 17 August 2016, in the determination of whether the applicant as a matter of law is entitled to interest on the judgment amount from fourteen (14) days after the date of judgment, 17 August 2016 or only from the date of payment, 18 December 2016. The relevant part of the order granted on 17 August 2016, by consent reads as follows:

‘1. Judgment is entered in favour of the Plaintiff against the Defendant for R5 934 730.00 (FIVE MILLION NINE HUNDRED AND THIRTY FOUR THOUSAND, SEVEN HUNDRED AND THIRTY RANDS), payment to be made on or before the 17^th December 2016.’      

The order is silent on interest.

 

[4] The applicant’s made reference to s 2A(1) of the Prescribed Rate of Interest Act[1] (the PRI Act) which provides that every unliquidated debt as determined by the court or by agreement between the parties shall bear interest at the rate prescribed in s 1 of the PRI Act, and s 17(3)(a) of the Road Accident Fund Act[2] (the RAF Act) which prescribes that no interest is payable on compensation awarded by a court unless fourteen (14) days have elapsed from the date of the relevant order.

 

[5] Counsel for the applicant submitted that interest a tempore morae at common law would arise when a demand is made by placing the debtor in mora. In unliquidated claims mora interest would arise once the parties agree as to ‘the amount of damages sustained, and from that moment the liability of the debtor for interest upon the agreed amount may well, be considered to have commenced’ as stated in West Rand Estates Ltd v New Zealand Insurance Co Ltd. [3]  However, in respect of the claims against the respondent, it was submitted that s 17(3)(a) of the RAF Act should apply, which deals with interest once the claim becomes liquidated. The provisions of s 17(3)(a) of the RAF Act provides as follows: ‘No interest calculated on the amount of any compensation which a court awards to any third party by virtue of the provisions of subsection (1) shall be payable unless fourteen (14) days have elapsed from the date of the court’s relevant order.’ In that regard counsel for the applicant submitted that the period stated in s 17(3)(a) was the only period of grace given to the respondent. In the light thereof it was contended that though payment was due on 17 December 2016, interest should run from fourteen (14) days after date of judgment.

 

[6] It was further submitted that the period between judgment and payment is not an interest free period. The court was referred to the provisions of s 2 of the PRI Act which deals with interest on a judgment debt as well as the provisions of s 2A of the same Act, which deals with interest on unliquidated debts. In terms of the amended provisions of s 2A of the PRI Act it provides for interest on unliquidated debts only. The argument went on to say that had it not been for the provisions of s 17(3)(a) of the RAF Act, interest would have been determined in terms of s 2A of the PRI Act. The law is trite in that in RAF matters interest runs from fourteen (14) days after judgment as stated in Kwezi obo Kwezi v Road Accident Fund.[4]

 

[7] The respondent raised a number of defences including a defence of res judicata on the basis that the lis between the parties was extinguished. In respect of this defence counsel for the respondent submitted that the court order merely gave effect to what was agreed upon. He went on to state that if the res judicata defence was not accepted by the court, the court should look at the court order. The court order fixed the date of payment to 17 December 2016, therefore in applying the common law principles mora interest will be payable only from 17 December 2016, if the capital sum was not paid at that date. The respondent also introduced a supplementary affidavit, requesting the court to interpret the RAF legislation in line with s 39(2) of the Constitution, which will give in respect of s 17(3)(a) give an interpretation which will be consistent with the purport, spirit and objects of the RAF Act. The late submission of the supplementary affidavit was opposed by the applicant’s counsel, though he consented that it be provisionally accepted by the court. 

 

[8] In consideration of the defence of res judicata the court has taken into account the requirements of res judicata which are trite.[5] The agreement settled the original dispute between the parties. The issue of interest arose from the non-settlement of the payment by the respondent at an agreed time. This was not the original dispute between the parties. It is common cause that due to the delay in payment the RAF paid interest to the applicant as from 17 December 2016 to the date of payment, 17 February 2017, on the capital amount. Irrespective of that payment of interest the applicant contends that it is entitled to a further sum of R191 212.13, as interest ought to have run from fourteen (14) days after the date of judgment. As far as I am concerned this is a new issue which arose from the non-payment of the capital amount by the respondent. In consideration of this issue I have considered what was stated in Eke v Parsons,[6] where the Constitutional Court held that though the agreement may be clear and unambiguous in settling the original dispute, but subsequent litigation may relate to non-compliance with the settlement order, not the original underlying dispute. I also find that the agreement that was made an order of the court on 17 August 2016 is binding on the parties concerned. It is res judicata as between the parties in regard to the matters covered thereby, and that the settlement agreement is valid, enforceable and lawful. See Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd and another.[7]

 

[9] Counsel for the respondent submitted that on a proper construction of s 17(3)(a) of the RAF Act interest is payable from 17 December 2016, which was the operative date in the court order, which would be in line with the common law interest which is payable from the date fixed by the judgment on the capital amount. Counsel for the respondent referred the court on this aspect to the judgment in Schenk v Schenk.[8]   

 

[10] Counsel for the respondent went on further to state that mora starts from the date of default of payment of the capital sum and not before that date. His submission was that this is a proper construction of s 17(3)(a) of the RAF Act, as it refers to an ‘award’. He submitted that the applicant failed to make a distinction between an ‘award’ and an ‘order’. He submitted that ‘awards’ refer to the various items agreed upon on the order and not only the monetary award. Therefore interest cannot be calculated from the date of the ‘award’. In that regard interest can only run on the monetary award only, from the date of payment, 17 December 2016 and not on the date of the award. He submitted that the distinction between ‘award’ and ‘order’ is apparent in s 17(3)(b) of the RAF Act which states as follows:

‘In issuing any order as to costs on making such award, the court may take into consideration any written offer, including a written offer without prejudice in the course of settlement negotiations, in settlement of the claim concerned, made by the Fund or an agent before the relevant summons was served.’

He went on to state that provision is also supported by the wording of the provisions of s 17(4)(b) which reads as follows:

’Where the claim for compensation under subsection (1)-

(a)….

(b) includes a claim for future loss of income or support, the amount payable by the Fund or the agent shall be paid by way of a lump sum or in instalment as agreed upon.’

He submitted that interest would run only upon when the respondent defaults on payment. The provisions of the RAF Act as submitted by the counsel for the respondent contemplate payment in a lump sum or by instalments. He submitted that the mere fact that payment by instalments is contemplated, it cannot be construed that interest would run from the date of the ‘award’, but it should run from the date of the relevant ‘order’. This is a very sophisticated way of interpreting the Act, but it does make sense.

 

[11] Counsel for the respondent contended further that the offer was made in full and final settlement to the applicant, the acceptance by the applicant of a later date of payment was an express waiver of the provisions of s 17(3)(a).

 

[12] It is common cause that the applicant recognises that the respondent’s liability to pay compensation arises from the provisions of s 17(1) of the RAF Act. Furthermore the RAF Act, in terms of s 17(3)(a) ameliorates the interest liability by providing that

‘no interest calculated on the amount of any compensation which a court awards to any third party by virtue of the provisions of subsection (1) shall be payable unless fourteen (14) days have elapsed from the date of the court’s relevant order.’

 Accordingly, interest in terms of the common law read with the provisions of s (17)(3)(a) of the RAF Act runs after the lapse of fourteen (14) days from the date of the court order.

 

[13] It is common cause that the settlement agreement was a product of a negotiated settlement between the parties. It is clear from the language and text of the agreement that it was meant to be final as it is inclusive of all the issues that related to the lis. It is clear that the capital amount of over R5 million was not to be made available to the applicant within a period of fourteen (14) days after judgment, payment of the capital sum was deferred to 16 December 2016. The agreement provides a future date for payment, without an additional fourteen (14) day period as envisaged in s 17(3)(a) of the RAF Act. It is silent on interest, which is the subject matter of this application.

 

[14] In this regard I therefore have to consider the principles applicable in interpreting a court order and the provisions of an Act of Parliament. It is trite that the reading of the order as a whole should be given the ordinary meaning as expressed in Firestone South Africa (Pty) Ltd v Gentiruco AG:[9]

‘The basic principles applicable to construing documents also apply to the construction of a court's judgment or order: the court's intention is to be ascertained primarily from the language of the judgment or order as construed according to the usual, well-known rules.’

 

[15] To resolve the contentious issue between the parties the court must first consider the terms of the settlement agreement which were made an order of the court. The court order must be interpreted in its context. In doing so one has to consider all the relevant circumstances including the words used, internal context of the document, and the factual matrix at the time of the conclusion of the agreement, as well as ascertaining the intention of the parties thereto.[10]

 

[16] When one interprets the provisions of an Act of Parliament, one has to adopt a purposive interpretation. The legislature’s purpose in s 17(3)(a) by stating that interest will not be payable in the first fourteen (14) days of the order, could only mean that the legislature was cognisance of the administrative issues relating to the processing of payments by the respondent, who are dealing with multitudes of payments and claims. It is also inconceivable that in this case, that it was the intention of the legislature that the respondent should derive interest at the expense of the applicant, as it is common knowledge that the RAF is subsidised mostly by fuel levies. Had the respondent been in a position to pay immediately, there would have been no need to defer payment.

 

[17] Section 39(2) of the Constitution directs every court when interpreting legislation to view legislation in line with the spirit, object and purport of the Bill of Rights. I am of the view that such legislation must be read in line with the objectives of the RAF Act, which is payment of compensation for loss or damage suffered by the wrongful driving of motor vehicles, but not as a mechanism to gain interest.

 

[18] The applicant accepted a late payment, without raising the issue that it was entitled to interest from the date of judgment. It is surprising that the applicant did not raise the issue of interest as the circumstances of payment were different in that payment of the capital amount was deferred to a later date, unlike in other RAF court orders, where mora interest runs from fourteen (14) days after the date of judgment. In the absence of a specific clause in the agreement that provides that though payment is deferred to a later date, interest shall run from the date of judgment, I find it difficult to accept that that should be the case. If I accept the proposition by the applicant this would amount to a misinterpretation of the order.

 

[19] Generally mora interest arises from default of payment when mora is fixed by the time. It would not even be necessary to demand interest, as it would arise from the terms of the agreement itself.[11] A debtor is in mora ex re if the contract stipulates a time for performance but the debtor fails to perform within the time frame agreed upon. When this occurs the obligations would arise from the breach of the agreement by the debtor. It is trite that mora may arise in three forms, namely by operation of the law (mora ex lege), by the terms of the contract (mora ex re) or by the demand duly made by the creditor (mora ex persona). Christie’s Law of Contract South Africa[12] classifies mora ex re and mora ex persona as mora ex lege. The learned author at 13.2.2(b) states that

‘When the contract fixes the time for performance, mora is said to arise from the contract itself (mora ex re) and no demand (interpellatio) is necessary to place the debtor in mora because, figuratively, the fixed time makes the demand that would otherwise have to be made by the creditor (dies interpellat pro homine).’

In this matter performance was deferred to a specific date fixed by the parties to the agreement.

 

[20] This issue came before the Supreme Court of Appeal (the SCA) in Scoin Trading (Pty) Ltd v Bernstein,[13] where the court held that where the date for payment has been agreed upon, the debt was not paid on that date, mora ex re applies. It emphasised in paragraph 18 as follows:

‘It requires emphasis that unlike damages for delict, in cases of breach of contract, damages are not intended to recompense the innocent party for their loss, but to put them in the position in which they would have been if the contract had been properly performed.’

 

[21] It is my view that the respondent was not in mora from the date of judgment but only when it failed to perform on the date agreed upon. The terms of the agreement were agreed upon and there is no express provision which entitles the applicant to interest from the date of judgment. The applicant has not advanced any reason why the issue of interest from the date of judgment was not canvased with the respondent. Had the applicant intended that interest should run in terms of s 17(3)(a) of the RAF Act, entitling her to payment of interest from fourteen (14) days after the date of judgment, such a clause would have formed part of the terms of the agreement as it goes against the recognised mora ex re interest.

 

[22] Various authorities support my view in this regard, in General Accident Versekeringsmaatskappy Suid-Afrika Bpk v Bailey No.[14] The headnote of the case read as follows:

‘Every judgment debt bears interest, in terms of s 2(1) of the Prescribed Rate of Interest Act 55 of 1975, from the day on which such judgment debt is payable. A judgment debt is payable on the day upon which the trial Court hands down its judgment, irrespective of whether the judgment is substituted or amended on appeal, so that the eventual judgment debt is only determined on appeal. Where an appeal against a judgment succeeds and the amount of the judgment debt is altered, there is no question of a new judgment, but of an amended judgment which the trial Court should have given and such judgment is of force and effect retrospectively to the date of the trial Court's judgment.’ (my emphasis).

In Intramed (Pty) Ltd (In Liquidation) and another v Standard Bank of South Africa Ltd and others[15] the Court held:

‘[14] More than 80 years ago in West Rand Estates Ltd v New Zealand Insurance Co Ltd  1926 AD 173 at 182 this court said the following:

“Here, however, the amount of the loss incurred in respect of each item of the claim was ascertained by agreement between the parties before issue of summons, so that the defendant knew exactly what was the value of the property destroyed, for which he was held liable, and his failure to pay that amount constituted mora on his part. It follows therefore, that by our law interest began to run on the amount of defendant's liability from the date of mora. And that brings me to consider the question of what that date is.”

[15] In Thoroughbred Breeders' Association v Price Waterhouse  2001 (4) SA 551 (SCA) at 594G - 595B this approach was reaffirmed. The following appears at 594G - E [in para 86 - Eds]:

“The only remaining issue regarding TBA's claim for mora interest relates to the date from which such interest should be calculated. TBA's contention is that the commencement date should be a date earlier than the date of summons because the quantum of its damages was readily ascertainable by PW at such earlier date. I disagree. In the first place the quantum was by no means capable of easy and ready proof and the fact that Reid reported on it cannot be held as an admission by PW against itself. In the second place it fails to recognise the fundamental principle that, however liquidated a plaintiff’s claim for damages may be, mora interest can only be calculated from the date when mora commenced.”

[16] In VG Hiemstra and HL Gonin's Trilingual Legal Dictionary 3 ed (1992) at 147 the phrase a tempore morae is defined as follows:

“vanaf die tydstip wanneer die skuldenaar in gebreke is; vanaf die tydstip van wanbetaling / / from the moment the debtor is in default.”’(my emphasis)

Also see Malatji v Minister of Home Affairs and another[16] at paragraph 17 and the authorities referred to in the preceding paragraphs give expression to this meaning. The phrase always has to be viewed in the context in which it is used and in particular, in relation to the attendant claim and the debtor's knowledge or ascertainment of the amount due.’

 

[23] There was no default of payment on the part of the respondent, when the settlement agreement was made an order of the court. Default is defined as follows in The Concise Oxford English Dictionary:[17]

‘…failure to fulfil an obligation, a pre-selected option adopted by a computer program or other mechanism when no alternative is specified.’

 

[24] I do not agree with submissions made on behalf of the applicant that if she is not paid interest from date of judgment that the applicant would have advanced an interest free loan to the respondent, disadvantaging the applicant, where such conduct would be regarded as contra bono mores. These are very strong words, when one considers that there is nothing contra bono mores where payment and time of payment is agreed upon by the parties. This was a negotiated settlement. 

 

[25] In conclusion it is my view that the parties intended to by bound by the terms of the agreement. By so doing the applicant waived the right, if any, to claim interest in terms of the provisions of s 17(3) of the RAF Act. The court order was made merely to give effect to what the parties had agreed upon. Nowhere, does it appear that the parties intended that interest should run form fourteen (14) days after judgment. This is the only business-like and common sense interpretation that I can accord to this contentious issue. I accept that once the payment is deferred interest can arise once the default arises, where the parties have agreed on a date of payment. When one defaults on payment, mora interest will arise.

 

[26] The court allows the admission of further affidavits filed late by the respondent on the basis submitted by counsel for the respondent. The admission thereof will not cause any prejudice to the applicant in anyway, as the court, in dealing with interpretation of statutes, often take into account the purpose and objects of the particular statute.   

 

[27] I therefore find that the applicant was only entitled to interest only from the date when the respondent failed to make payment in terms of the court order.

 

[28] Accordingly, the application is dismissed with costs, including the costs of two counsel.    

 

 

MBATHA J

 

Date of Hearing:                                                       05 June 2018 (C & H Court  Durban)

Date of Judgment:                                                   19 September 2018

 

Appearances

 

For Plaintiff/Applicant:                                         Adv M Pillemer SC

Instructed by:                                                      Friedman & Associates

                                                                                    44 Saint Andrews Drive

                                                                                    Durban North

                                                                                    Pigeon Hole 70

                                                                                                                                   

 

For First Defendant/Respondent:                       Adv TN Aboobaker SC      

                                                                                    Adv M Sewpal (Junior Advocate)

Instructed by:                                                      Dwarika, Naidoo & Company,

Suite 1601, 16^th Floor

320 Pixley

320 Dr Pixley Kaseme Street

Durban

 

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