Fedsure Participation Mortage Bond Managers (Pty) Ltd and Another v Sandlundlu (Pty) Ltd (AR409/12) [2013] ZAKZPHC 54 (18 October 2013)

Fedsure Participation Mortage Bond Managers (Pty) Ltd and Another v Sandlundlu (Pty) Ltd (AR409/12) [2013] ZAKZPHC 54 (18 October 2013)

The court held that Clause 8 of the mortgage bond required a demand before legal costs could be debited to Sandlundlu's account, and no such demand was made. The monthly payments made by Sandlundlu were intended to discharge its interest obligations under the mortgage bond and should have been credited to the bond...

Source-derived case information.

Citation
[2013] ZAKZPHC 54
Parties
Appellant: Fedsure Participation Mortgage Bond Managers (Pty) Limited; Appellant: Fedbond Nominees (Pty) Limited; Respondent: Sandlundlu (Pty) Limited
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
18 October 2013
Case Number
AR409/12
Procedural Posture
Civil Appeal / Appeal From Judgment of Van Heerden AJ Delivered on 20 September 2011
Outcome
Appeal dismissed with costs. The order of the court a quo is amended as agreed by the parties.
Judges
Kruger, Ndlovu, Madondo
Legal Topics
Mortgage Bond Liability, Compound Vs Simple Interest, Demand for Legal Costs, Novation of Contract, Interest Rate Variation
Commercial and Corporate Civil Procedure Mortgage Bond Liability Compound Vs Simple Interest Demand for Legal Costs Novation of Contract Interest Rate Variation

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Parties

Fedsure Participation Mortgage Bond Managers (Pty) Limited

Appellant

Fedbond Nominees (Pty) Limited

Appellant

Sandlundlu (Pty) Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment of Van Heerden AJ Delivered on 20 September 2011

Legal Issues

  1. 1 Whether Fedbond was entitled to debit Sandlundlu's mortgage bond account with legal costs without prior demand.
  2. 2 Whether monthly payments made by Sandlundlu should have been credited to the mortgage bond account or treated as trust deposits.
  3. 3 Whether Fedbond was entitled to compound and vary interest after judgment, or only simple interest applied.

Ratio Decidendi

The court held that Clause 8 of the mortgage bond required a demand before legal costs could be debited to Sandlundlu's account, and no such demand was made. The monthly payments made by Sandlundlu were intended to discharge its interest obligations under the mortgage bond and should have been credited to the bond account, not held in trust. The judgment of 5 August 2002 novated the underlying contractual rights, restricting Fedbond to simple interest at the rate ordered by the court and precluding variation or compounding of interest. The appeal on all grounds failed, and the quantum was amended by agreement between the parties.

Court Disposition

Appeal dismissed with costs. The order of the court a quo is amended as agreed by the parties.

Orders

  • The appeal is dismissed with costs.
  • The First and Second Defendant, jointly and severally, the one paying the other to be absolved, are ordered to pay to the First Plaintiff: