CIV/APN/510/98
IN THE HIGH COURT OF LESOTHO
In the matter between:
KHALAKI SELLO APPLICANT
and
NEDBANK (LESOTHO) LTD 1ST RESPONDENT
MR R. T. NQOSA 2ND RESPONDENT
JUDGMENT
Delivered by the Honourable Mr. Justice G.N. Mofolo on the 7th day of September, 1999.
In this application the applicant, Mr Khalaki Sello approached this court on an urgent basis seeking an order of this court as follows:
The granting of a Rule Nisi calling upon the Respondents to show cause, if any, on a date to be determined by this Honourable Court why.
The judgments, if any, in civil trials 586/93,586/95 and 355/95 shall not be set aside for voidness ab initio.
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1.2 All writs purporting to execute the said judgments shall not be set aside and any attachments levied in execution thereof also set aside.
1.3 The 1st Respondent shall not be ordered to pay costs of this application on a higher scale.
1.4 the applicant shall not be granted further alternative relief.
An order directing that any intended sale of Applicants property in execution of the said judgments be stayed forthwith pending the return date of the above Rule.
On 18th December, 1998, this court granted the rule and made it returnable on 8th February, 1999. There were several postponements
but finally the court heard the application on 03 July, 1999 and reserved judgment to 02 September, 1999. The application was opposed.
The facts of the case seem to be that 1st Respondent issued summons claiming certain sums of money from the applicant. After discussions with Mr Malebanye (1st Respondents counsel) applicant had decided not to defend the action because applicant had faith in the 1st respondent with whom he had had dealings since 1967 when applicant started his law practice. Moreover applicant was influenced in his decision on account of having no reason to believe 1st
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respondent would 'act dishonestly or otherwise to my prejudice when it came to the precise amount which, in law, I was indebted to it.' Applicant after discussions with 1st respondents manager, Mr Rahlao, had started paying at the rate of M5,000.00 per month. In addition, Mr Rahlao had helped himself to the applicants investment in the sum of M10,000.00 towards the reduction of applicants indebtedness.
When, in the meantime, 2nd respondent had served a writ of execution on applicant, the latter had ignored the writ because "I was paying directly to the 1st respondent, judgemnt creditor, at the said Rahlao's specific request." Applicant had then received a statement of account which he querried per annexure 'KS1' dated 14th May, 1998. In it he asked if 'you would kindly give me a statement reflecting my account from this time so that I may be able to ascertain the exact amount I have paid on this loan.' Applicant
further requested that Mohaleroe Sello and Company overdraft be transferred to his personal account. He also requested 'details
showing how this came about.' In his founding affidavit applicant at paragraph 6.3 thereof says: 'I have to date not received any reply to this letter.'
In addition, applicant had brought to 2nd respondents attention "the fact that our law does not allow a party, specifically a banking institution, to levy interest exceeding the amount of the original loan and that if this is what the 1st respondent had done, the judgment granted against him was a nullity. 2nd respondent had accordingly been warned not to levy a writ which violated the in duplum rule and 2nd respondents had promised to comply. According to the applicant, he lay his hands on notice of attachment in civil trial 586 of 1993 dated
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15th September, 1998 for the sum of M65,327.45. Also, there was an additional writ of exectuion (annexure 'KS3') whose original amount was M10,l 13.12 and had escalated to M79,214.50. In the applicants view, annexure 'KS3' "purports to contain an amount consolidated with an amount in CIV/T/355/95 as per my request." Applicant says he is not aware of CIV/T/355/95 for he was never served with any papers thereat. He also says he is not aware of CIV/T/586/95 subject of the alleged consolidation. He says the annexure (presumably 'KS3') does not even attempt to indicate what amount represents capital, interest nor does it show what amounts were paid on the account. Applicant says annexure 'KS4' though ostensibly a writ under CIV/T/586/93 in the sum of M79,214.50 including, as it does, interest, in terms of the judgment, it is silent as to how much was paid before judgment. Also attached under CIV/T/586/93 date 15th September, 1998 under annexure 'KS5'was a writ in the sum of M45,793.45. According to the applicant the last 2 writs are dated 15th September, 1998 whereas the 1st annexed writs bear an earlier date of 7th September, 1998. He says there is no writ in his possession or in existence issued under he said CIV/T/355/95 or CIV/T/856/95. Mr.Sello has submitted the aforesaid attachment was actuated by malice for there is no copy of any such notice on court premises as is usually the case in other matters and consequently the intention was to sell the property surreptitiously.
In his address to court, Mr Sello has said irrespective of whether he consented to judgment, the judgment was nevertheless void ab initio. As for the dummy files, they should have been placed in such a way that he was able to avail himself of the contents and moreover, it was necessary for the two parties to agree on the contents since the files were dummy files by reason of the original files having gone up in smoke as a result of civil disturbances that occurred. Mr Sello
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has said in one file was the amount of Ml 0,000.00 and in another M43,000.00 all including interest. He says this was an overdraft and not a loan; further, the fact alone that he had consented to judgment did not disentitle him to further information, and repeats that the judgment was in violation of the in duplum rule. He says a capital sum has to be separated from interest. According to him, as he is entitled to information, where this is withheld from him he is at large to seek intervention of the court. He says the bank as a financial institution must display principles of uberrima fides. As custodian of clients' assets, a bank may not ignore clients' requisitions. By failing to separate capital from interest in a summons, the procedure is irregular.
According to Mr Rahlao's opposing affidavit, summons was issued against the applicant in CIV/T/586/93 and by consent judgment was granted. Summons was also issued against the applicant in CIV/T/355/95 in respect of which summary judgement was granted.
Also, Mr Rahlao says the applicant negotiated arrangements for repayment and negotiations for repayment were reached. Mr Rahlao further says that after the judgments referred to above applicant had asked for consolidation of the accounts and payment of M5,000.00 per month.
Further, by letter of 2nd January, 1998 applicant had been informed of the consolidation and his indebtedness in the sum of M66,928.95 as at 2nd January, 1998 plus of course his arrear position. Mr Rahlao goes on to say owing to the fact that applicant did not maintain regular payments, the 1st respondent was constrained to re-issue writs of execution. He says irregular and intermittent
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payments were made.
Concerning applicants allegations that he never received a response to his letter of 14th May, 1998, Mr Rahlao has said at paragraph 11 applicants allegations are fundamentally incorrect in that on a continuous basis the applicant has received statements from 1st Respondent regarding applicants consolidated accounts. Mr Rahlao has also said that from a perusal of the proceedings it is amply clear that capital and interest were separated. He says reference to CIV/T/586/95 is a misprint for the correct case number is CIV/T/586/93. He says there are only two judgments as reflected on annexure 'KS4' and the amount reflected is correct. He says the amount outstanding, due and payable was M77,206.89 as at 16th November, 1998 and correspondence addressed to the registrar dated 26 November, 1998 reflects the correct amount owing. He says the amount of M21,455.29 was transferred from Mr Sello applicants business account and consolidated with matter arising from CIV/T/586/93.
Mr Rahlao has also said that in terms of annexure 'B20' applicant had entered appearance to defend and judgment had accordingly been granted against the applicant. He says CIV/T/586/95 should read CIV/T/586/93. He further says as the account was an overdraft, applicant had ipso facto consented to interest being charged. Mr. Rahlao has also deposed that sale of property was published in government gazette and newspapers per annexures 'B21' and 'B22'.
In his address to court on behalf of the respondents, Mr Malebanye has submitted that it is correct to say that once the interest exceeds capital the interest is to stop running. According to him, there is no difference between an overdraft
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and a loan and as for interest, once it equals the capital it is to stop running. He says the in duplum rule had not been violated. He says there are two separate causes of action namely CIV/T/586/93 and CIV/T/355/95 for which 1st respondent claimed M45,793.45 and M10,113.20 respectively from the applicant. The amounts respectively related to overdraft in applicants personal account and business account. According to documents to which Mr Malebanye referred, the deed of Hypothecation shows the overdraft and advances on personal account to amount to M45,793.45. Mr Harley's Power of Attorney also shows the amount of M45, 793.45 as the amount in respect of which he was instructed to recover from the applicant and the summons in CIV/T/586/93 is to the same amount.
In CIV/T/355/95 the capital amount claimed is M10,113.21. Action in CIV/T/586/93 appears to have been launched on 2nd December, 1993 while action in CIV/T/355/95 was launched on 6th July 1995. Noticeably, judgment in CIV/T/586/93 was obtained on 28th February,
1994 plus interest thereon at the rate of 25% per annum being form of 1st December, 1993 to date of repayment plus, of course, taxed costs. A writ of attachment issued on 6th June, 1994 for M45,793.45 plus interest with taxed costs had, when re-issued on 21 February, 1997 amounted to:
amount of original writ M45,793.45
interest thereon at the rate of 25% p.a
from 01-12-93 to November 1996 = 2 years 11 months M33,391.05
Messenger's fees 30.00
M79,214.50
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On this basis it does not appear that interest is equal to or exceeds the capital sum. The 2nd re-issue, being annexure 'KS3' has the following details:
Amount of 1st re-issue under CIV/T/586/93
Amount of original writ under CIV/T/355/95
which has been consolidated with CIV/T/586/93
above at defendants request.
M10,133.12
Total balance outstanding in respect of
CIV/T/586/93 and CIV/T/355/95 as at 27th July 1998
M65,327.45
Note that there has been a correction in pencil for 586 to read 355. This court accept that the insertion of 586 instead of 355 is a genuine mistake. Accordingly, CIV/T/586/95 is allowed to read CIV/T/355/95 because summons in these proceedings was issued only under CIV/T/586/93 and CIV/T/355/95. According to the entries above, it would seem M10,113.12 was consolidated with M79,214.50 above. Considering that amounts comprising M79,214.50 are meticulously broken up, it is clear that M10,113.12 was not consolidated and does therefore not form part of M79,214.50. If there were consolidation, alone, the amount of consolidation would be M55,906.57 plus interest and messenger's fees
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the total amount would be M89,327.62. As it is, it would seem according to the 1st respondent the amount outstanding as at 27th July 1998 was M65,327.62. As it is, there is no explanation how the amount of M89,327.62 plus interest on M10,113.12 is reduced to the sum of M65,327.45 with a shortfall of exactly M24,000.00 for, according to papers before court, it would seem the applicant paid only M15,000.00. Whats odd is that Mr Rahlao who has all the information available to himself has contended himself with saying that applicants payments were irregular and intermittent without saying how much, exactly, applicant paid. Besides, according to Mr Rahlao the consolidated amount as on 02 January, 1998 was M66,928,95 and M77,206.89 as at 16 November, 1998. And yet, none of the writs of attachment or returns of service by the 2nd respondent bear these amounts..
This court is aware of the correspondence between Mr Rahlao and the applicant and accompanying bank statements. But Mr Sellos' contention
has been that respondents have violated the in duplum rule. As I have said, in its computation, this court has not found that at any stage the interest was equal to or exceeded the capital sum.
Regarding the in duplum rule, in Strebel vs Strebel, 1973 (2) SA 137 (TPA) it was held as the amount of interest claimed cannot exceed amount of capital, payment of interest on the capital amount at the rate of 10 per cent per annum from the date of judgment to date of payment was allowed subject to the amounts of the unpaid interest not exceeding the capital amount. Note that the plaintiff had claimed R11,061.00 capital sum and R12,649.00 interest.
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In LTA Construction (BPK) vs Administrators Transvaal, 1992 (1) SA 373 (AA) it was said the prohibition of interest in duplum, viz that interest may not exceed the capital sum, has been applied in a long list of reported cases in South African law and that it is anything but an anachronism as it is part of South African economic life where it fulfils a useful function of aiding debtors in financial difficulties and that there was no available authority, that the prohibition in duplum had been abrogated. As I have said above, since interest has not exceeded the capital sum, the in duplum rule having not been violated, the application on this score is dismissed.
Mr Sello for the applicant has further contended that the writ of execution is irregular as is the summons in that it has not been alleged or shown on the writ of execution the amount he paid in reduction of his indebtness to the 1st respondent. Indeed this court has found as a fact that there is no reflection of what the applicant paid in either the summons or writ of execution or writ of attachment as it were. On this basis, can it be said that the summons like the writ of execution or attachment is invalid?
In Volskas Bank Ltd vs Wilkinson and Three Similar Cases, 1992 (2) SA 388 (CPD) the defendants had not defended an action in which certain capitalised sums were claimed. The court had in motion proceedings referred the matter for a consolidated hearing before a two-judge court and in particular to determine the manner in which the finance charges levied by the various plaintiff banks were computed and capitalised and whether or not there arose, in consequence, a contravention of the Usury Act, 73 of 1968. In particular, what bothered the learned Judge-President in referring the issue to a two-judge tribunal was how the
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court was to deal with applications for default when the claim was unconstested and unchallenged. It was held with regard to the legality of the claims for interest, that the question would unfortunately not be answered in the instant proceedings because the query raised by the court when the applications for default judgment were first made could only properly be answered either when the plaintiffs claim was contested and the action was a defended one in which the issue as to whether excessive interest had been charged was pertinently raised, or if the attention of The Registrar of Financial Institutions has drawn to the question....
Where judgment was brought on an unchallenged basis, the question posed to the court did not arise nor did it fall to be answered, because at that stage, and for the reasons hereunder set out the question was one of academic interest only. Held further, with regard to the nature of the applications that where a plaintiff sues for repayment of a loan (or an overdraft) all that a simple summons need contain is a statement setting out the relief claimed and a succinct outline of the course of action, i.e that an agreement of loan (or of overdraft) was concluded between the parties providing for interest on the balance outstanding from time to time at a specific (or ascertainable) rate and which loan (or overdraft) was repayable on demand (or on a fixed or ascertainable date) and which, despite demand (or the arrival of that date) has not been repaid;...........; it is unnecessary to set out the terms and conditions of the agreement relied on if such was not recorded in writing - indeed, an allegation that the interest claimed in terms of that agreement is calculated daily and capitalised monthly, is strictly superfluous and need not be made.
Held further, accordingly, that all that is required of the summons, as far as
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cause of action need be set out, is that the defendant should be made aware of why (and for which relief) he is being called upon to answer to plaintiffs claim and if the summons adequately serves that purpose, no more is needed of the plaintiff when applying for judgment in cases where the defendant, duly served elects neither to have resort to............The Usury Act, 1968 nor to defend the action. It was held further that the court was not required to be astute in denying a plaintiff default judgement against his debtor on the mere suspicion that the interest has exceeded that which is prescribed by the Usury Act especially where there is no intention to defend the action. Further, that where a defendant is duly served and does not defend the action, it is tacit acknowledgment that he does not contest plaintiff's claim(s). It was also held in the circumstances there was no legal justification for scrutinising a summons issued on behalf of a commercial bank against one of its customers for repayment of moneys lent or disbursed on overdraft, when application is made for a default judgment, more closely than one claiming payment for goods sold and delivered by a merchant to a customer.
In the course of his judgment in Wilkinson and Similar Cases above, Berman et Selikowitz, JJ quoted B.W. Kuttle and Association Inc. v. O'Connell Manthe and Partners Inc., 1984 (2) S.A. 665 at 668 C-D where Tebbutt, J. said :
'The object of a summons is not merely to bring the defendant before court, it must also inform the defendant of the nature of the claim or demand he is required to meet. But it need do no more than that. It need not go into minute particulars.'
Of importance is the fact that certificates of indebtedness by the applicant to 1st
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respondent were issued. Thus in Trust Bank of Africa Ltd v. Senekal, 1977 (2) S.A. 587 (W) the bank had for its action relied on the certificate as evidence of the amount due. One of the defences had been that the bank was claiming interest at a usurous rate (Mr. Sello relied on the in duplum rule). The defendant having presented no evidence in support of his defences as pleaded by him the court per Nesdadt, J. held:
'The certification.... and its consequential establishment as prima facie evidence is not in my view been rebutted by the defendant (even though one suspects that it was calculated partly on the basis of a 14% per annum rate of interest)
Perhaps it will be necessary to add that where a customer receives periodical statements of account (as the applicant received them), it appears that a customer who receives such periodical statements without protest or objection acquiesces in the system and thereby tacitly agrees to be bound thereby (see Senekal v. Trust Bank of Africa Ltd, 1978 (3) S.A. 375 (A)).
As this court has understood the applicant, he is complaining of lack of information regarding his account i.e. how much exactly he owes, what he has paid on the account and the balance owing. He says neither the summons nor writs of attachment have provided sufficient information and though he wrote to one of the servants of the 1st respondent not sufficient information was forthcoming from Mr. Rahlao to enable applicant to say how much he was owing having regard to payments he has been making. On the other hand, Mr. Rahlao says applicants payments were irregular and intermittent without saying how
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much exactly the applicant has paid on account. Having regard to the in duplum rule (which the court has desposed of) and the lack of information as to how much he has paid and owes, the applicant would have both the summons and writ of executions or attachment rendered nugatory.
So far as the summons is concerned, there is ample authority that if the applicant intended challenging the summons he should have done so for failure to do so amounts to acquiescence as to how much applicant is owing though this does not answer the query of as to how much applicant paid in reduction of his overdraft or loan as it were. It seems to this court when the summons was served on applicant it was his chance to defend the action and raise whatever objection(s) he had on the summons. Having allowed the opportunity to slip, it appears the applicant is estopped from raising such an objection for it comes at the wrong time now especially having regard to the bystander test. Similarly, an application to set aside the summons is in the like manner dismissed.
Be this as it may writs of execution or as it were attachment in this matter leave much to be desired. This court does not understand how the amount M79,214.50 representing, as it is alleged, the consolidated sum of M45,799.45 in CIV/T/586/93 and M10,113.21 in CIV/T/355/95 plus interest thereof should, as if by magic, suddenly plummet to a figure of M65,327.45 in July, 1998. The only reasonable explanation is that the applicant could have reduced the amount by further payments after judgment. Unfortunately, there is no reflection of how much the applicant paid nor have writs of execution or attachment informed the court of this fact. Although sums of M10,000.00 and M5,000.00 were adverted to nowhere have these sums been shown on re-issued writs as having reduced
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applicants indebtedness to the 1st respondent. Were these amounts deducted from M79,214.50, the balance is M64,214.50. And were M10,113.21 added to M79,214.50 as I have said above, the total amount would be M89,327.71 and if M15,00.00 were deducted the balance would be M74,327.71.
Mr. Sello for the applicant has said the writs of execution and/or attachment pose too many ambiguities and uncertainties; that, even though he consented to judgment it did not mean that he was not entitled to information of how much money he has paid and is expected to pay especially now that he is soliciting such information by intervention of this court. He says he has been making payments to the 1st respondent but these are not reflected in the writs of execution or attachment. As he got no satisfactory reply from the 1st respondent, he had come to court to solicit and enlist on its assistance to force the 1st respondent supply the information required.
In Bekker, NO v. Total South Africa (Pty) Ltd, 1990 (3) S.A. 159 (T.P.D) a writ of execution was held invalid as its substructure had been removed. Question is whether payment by applicant forms the substratum of the writ. Considering that for every debit entry there must be a corresponding credit entry in mercantile transactions, the omission in a writ of execution of a credit entry has the effect of removing or omitting an essential element of the substructure and it would be illogical to say such a writ is beyond reproach.
For a writ of execution to be unassailable and especially a re-issue, it will be necessary for it to reflect the following information:
balance brought forward from the original writ, interest charged (if any); costs, (if any) including
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messenger's fees and any payments made (unless these are reflected in the original writ of execution - a reflection that is binding on the original writ of execution).
Accordingly the writ(s) of execution or for that matter writ(s) of attachment against the applicant are set aside but the 1st respondent is allowed to issue a fresh writ provided it is displayed on the writ of execution in clear and uncontroverted terms what the consolidated
judgment debt is in respect of CIV/T/586/93 and CIV/T/355/95, interest thereon, costs and less the amount applicant has paid in
reduction of his debt.
As both applicant and 1st respondent have partially succeeded and failed, there will be no order as to costs.
JUDGE
7th September, 1999.
For the Applicant: Mr. Sello
For the Respondents: Mr. Malebanye
