MEC Police, Roads & Transport (Free State Provincial Government) v Bovicon Consulting Engineers CC and Another (3797/2014) [2021] ZAFSHC 152 (7 June 2021)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case number: 3797/2014

In the matter between:

THE MEMBERS OF THE EXECUTIVE

Applicant

COUNCIL, POLICE, ROADS & TRANPSORT

(FREE STATE PROVINCIAL GOVERNMENT)

And

BOVICON CONSULTING ENGINEERS CC First Respondent

P ROODT, NO Second Respondent

SHERIFF BLOEMFONTEIN EAST

HEARD ON: 04 MARCH 2021

JUDGMENT BY: DANISO, J

DELIVERED ON: This judgment was handed down electronically by circulation to the parties' representatives by email and by release to SAFLII. The date and time for hand-down is deemed to be 15h00 on Monday 07 June 2021.

[1] The applicant, the Members of the Executive Council of the Police, Roads and Transport of the Free State Provincial Government, (the MEEC) seeks an order for: the writ of execution as well as the notice of attachment issued against its movable assets to be declared invalid and set aside; the second respondent (the Sheriff of the court) to be interdicted from selling and/or disposing in execution any of the applicant’s assets; and the respondents to pay the costs of the application jointly and severally one paying the other to be absolved in the event that they oppose the application.

[2] The application was initially brought on an urgent basis. The first respondent, an erstwhile service provider for the applicant opposed the application and filed a counter-application, thereafter the parties agreed to enrol the applications for hearing on the ordinary opposed roll.

[3] During August 2014 the first respondent instituted a claim against the applicant for services rendered in the amount of R1 171 744.85. The applicant defended the action. The trial served before Chesiwe J, on 05 December 2019 judgment in the said amount together with interest and costs was granted in favour of the first respondent.[1] On 19 March 2020 the first respondent applied and obtained an order for the variation of the costs order.[2]

[4] On 14 July 2020 the applicant paid an amount of R2 343 549.66 made up as follows: R1 171 774. 83 in respect of the capital amount and a further R1 171 774.83 in respect of the mora interest capped as per the in duplum rule. Despite the payment, the respondents caused a writ of execution and a notice of attachment (the execution processes) to be issued against the applicant’s movable assets on 14 and 21 August 2020, respectively.

[5] It is the applicant’s case that the execution processes are invalid and cause to be set aside for lack of compliance with s3(4), (5) and (6) of the State Liability Act[3] (The Act) in that the first respondent had not served the final court order on either the applicant’s accounting officer or Treasury Department for payment prior to issuing the execution processes. Furthermore, at the time the execution processes were issued, the applicant had not only satisfied the judgment debt in full, the first respondent was overpaid with an amount of R69 159.19.

[6] The first respondent does not dispute that at the date of judgment, 05 December 2019 the mora interest due by the applicant was capped to equal the capital amount through the application of the in duplum rule with the result that the amount due by the applicant was R2 343 549.66 and that the said amount was duly paid on 14 July 2020. The first respondent also concedes that the execution processes are invalid and stand to be set aside for want of compliance with the provisions of s3 (4), (5) and (6) of the Act.

[7] The first respondent denies that the payment made by the applicant fully discharged the applicant’s debt specifically the interest thereon which brings me to the first respondent’s counter-application. The dispute between the parties is essentially with regard to the computation of the interest payable by the applicant, namely, from which date the interest is to be calculated and whether the applicant is also liable for interest relating to arrear interest.

[8] It is the first respondent’s contention that the applicant still owes the first respondent an amount of R220 332.09 being post judgment interest. On 05 December 2019, being the date of the final court order, the judgment debt owed by the applicant was the amount of R2 343 549.66. The amount remained unpaid for about seven months. Payment was only made on 14 July 2020 at that time the post judgment interest that had accrued on the judgment debt was R220 332.09 calculated at the rate of 15.5% per annum from 06 December 2020 to 14 July 2020. The interest is still unpaid therefore the applicant is also liable for further interest which will accrue on the said arrear interest at the rate of 15.5% per annum until the date of final payment.

[9] The applicant counters that the first respondent’s contention that the date of the final order is 05 December 2019 is erroneous. According to the applicant the correct date is 19 March 2020 being the date on which the judgment handed down on 05 December 2019 was varied. The mora interest that was due on 19 March 2020 was R1 053 425.57. The post judgment interest calculated from 20 March 2020 to 14 July 2020 (3 months and 24 days) was R49 190.07. The applicant paid R1 171 774.83 in respect of both the mora interest and the post judgment with the result that the first respondent was overpaid with R69 159.19.

[10] It is trite that Mora interest runs from the date payment is due. On the facts germane to this matter already by the 31st of March 2013 the applicant was indebted to the first respondent in the sum of R1 171 774.83. A judgment for the payment of the said amount and the mora interest thereon was granted on 05 December 2019 at the rate reckoned at 15.5% per annum which totalled the amount of R1 171 854.06 as at the date of the judgment. The amount was consequently capped to the amount equivalent to the capital amount of R1 171 774.83 as provided for by the in duplum rule.

[11] The interest ordered therein prevails until the applicant fully satisfies the judgment debt and this is irrespective of the subsequent variation order. See Davehill (Pty) Ltd & others v Community Development Board 1988 (1) SA 290 (A). The applicant’s assertion that the mora interest at the date of the judgment was on the capital was only R1 053 425.57 can therefore not be correct.

[12] As regards the so called “double interest.” Mora interest is categorized as damages, accordingly, ‘a debtor who is in mora in regard to a contractual obligation to pay interest, is liable for payment of mora interest on the unpaid interest calculated at the prescribed rate.’[4] This dictum, in my view is the answer to the applicant’s contention in this regard.

[13] Having regard to the facts of this matter and the case law to be applied, the writ of execution as well as the notice of attachment is susceptible to be set aside as applied for by the applicant. I’m also persuaded that the first respondent has made out a proper case for the orders it seeks in the counter-application.

[14] For the above reasons, I make the following orders:

1. The writ of execution and the notice of attachment in execution issued against the applicant’s movable assets on 14 and 21 August 2020, respectively are declared invalid and set aside.

2. The second respondent is interdicted from selling and/or disposing in execution any of the applicant’s assets under the said attachment.

3. The first respondent shall pay the costs of the application to set aside the writ of execution and the notice of attachment on a scale as between attorney and own client.

4. The applicant is ordered to pay the first respondent the amount of R220 332.09.

5. The applicant is ordered to pay interest on the said amount of R220 332.09, calculated at the rate of 15.5% per annum from 14 July 2020 to date of final payment.

6. The applicant shall pay the costs of the counter-application on a scale as between attorney and own client.

NS DANISO, J

APPEARANCES:

Counsel on behalf of Applicant: Mr. JN Lebea

Instructed by: Lebea & Associates

C/O Phatsoane Henny Inc.

BLOEMFONTEIN

Counsel on behalf of First Respondent: Advocate S Grobler SC

Instructed by: Schoeman-Law Inc.

[1] Annexure “SSM1” is a copy of the judgment by Chesiwe J.

[2] Annexure “SSm2” is a copy of the court order in that regard.

[3] Act No 20 of 1957.

[4] Land & Agricultural Development Bank of SA v Ryton Estates (Pty) Ltd & others 2013 (6) SA 319 (SCA).