Stewarts and Lloyds Holdings (Pty) Ltd v Solid Steel Construction (Pty) Ltd (A3070/2021) [2021] ZAGPJHC 739 (10 November 2021)

Stewarts and Lloyds Holdings (Pty) Ltd v Solid Steel Construction (Pty) Ltd (A3070/2021) [2021] ZAGPJHC 739 (10 November 2021)

The court held that the contract between the parties fixed the time for payment and the rate of interest applicable to overdue amounts. The respondent was in mora ex re from 1 September 2019, and no demand was required to trigger liability for interest. The magistrate erred in substituting the contractually agreed interest rate and commencement date with his own discretion, contrary to the principle of pacta sunt servanda and the provisions of the National Credit Act regulating incidental credit agreements. The prescribed rate of interest was inapplicable due to the express agreement, and the penalty clause argument was irrelevant as no penalty or damages were claimed. The appeal was...

Citation
[2021] ZAGPJHC 739
Parties
Appellant: Stewarts and Lloyds Holdings (Pty) Ltd; Respondent: Solid Steel Construction (Pty) Ltd
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
10 November 2021
Case Number
A3070/2021
Procedural Posture
Civil Appeal / Appeal Against Order for Interest Following Default Judgment in Magistrates Court
Outcome
Appeal upheld with costs on attorney and client scale; order for interest below set aside and replaced with contractually agreed interest.
Judges
A. Maier-Frawley, R. Sutherland
Legal Topics
Incidental Credit Agreement, Contractual Interest, Mora Ex Re, Pacta Sunt Servanda, Prescribed Rate of Interest, Penalty Clause
Commercial and Corporate Civil Procedure Incidental Credit Agreement Contractual Interest Mora Ex Re Pacta Sunt Servanda Prescribed Rate of Interest Penalty Clause

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Parties

Stewarts and Lloyds Holdings (Pty) Ltd

Appellant

Solid Steel Construction (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal Against Order for Interest Following Default Judgment in Magistrates Court

Legal Issues

  1. 1 Whether the magistrate erred in awarding interest at a rate and from a date different to that provided for in the contract.
  2. 2 Whether the principle of pacta sunt servanda required the court to enforce the contractually agreed interest rate and commencement date.
  3. 3 Whether a demand was necessary to place the respondent in mora where the contract fixed the date for performance.

Ratio Decidendi

The court held that the contract between the parties fixed the time for payment and the rate of interest applicable to overdue amounts. The respondent was in mora ex re from 1 September 2019, and no demand was required to trigger liability for interest. The magistrate erred in substituting the contractually agreed interest rate and commencement date with his own discretion, contrary to the principle of pacta sunt servanda and the provisions of the National Credit Act regulating incidental credit agreements. The prescribed rate of interest was inapplicable due to the express agreement, and the penalty clause argument was irrelevant as no penalty or damages were claimed. The appeal was...

Court Disposition

Appeal upheld with costs on attorney and client scale; order for interest below set aside and replaced with contractually agreed interest.

Orders

  • The appeal is upheld with costs on the scale as between attorney and client.
  • The order of the court below in respect of interest is set aside and replaced with: 'Interest at the rate of 2% per month on the reducing capital balance a tempore morae as from 1 September 2019 to date of final payment, both days inclusive.'