CIV/214/81

IN THE HIGH COURT
OF LESOTHO In the matter of:

THABANG MOSHE Plaintiff

v

DAN PERKINS Defendant

JUDGMENT

Delivered by the Hon. Acting Mr. Justice D. Levy on the
14th day of July, 1986

On the 17th of August 1981, a summons and declaration
were issued against Defendant in which were claimed:

1. (a) Cancellation of a lease agreement
(b) Return
of a leased vehicle

(c) Forfeiture of all paid instalments

4. 
   Damages

   
   

5. 
   Interest at the rate of 21% per annum from
   date of
   issue of summons to date of repayment.

   
   

6. 
   Costs.

   
   

2. Alternatively, payment of the sum of M4,505.34.

Although the Plaintiff was in possession of a consent to
judgment, he did not seek nor did he obtain judgment on such consent
and
the Defendant being in default, judgment was entered against
Defendant in the following terms:

" 31-8-81 - Granted as prayed for M4,505.34 plus
costs and interest."

This citation appears from the entry of the learned
judge who granted the default judgment in the matter.

/It will ...

-2-

It will be seen that Plaintiff did not obtain any order
in terms of Prayer 1 of the declaration, but he was granted a default
judgment
in terms of the alternative prayer 2. The further award of
interest can only relate to prayer 1(e), which the learned judge
granting
the default judgment pre­sumably regarded as part of the
alternative prayer 2. No application for rescission of judgment has
been sought and Plaintiff accepted payment of several sums of money
from Defendant until ultimately, a warrant of execution which
had
been originally issued for M4,505.35 was re-issued by Plaintiff
against Defendant for an amount of M6,808-06.

A dispute over the quantum of this amount and its method
of calculation, are the issues now before the Court in an application
brought
by Defendant to set aside that warrant. In the re-issued
warrant the Plaintiff acknowledged payment of an amount of M3,200.00,
leaving
a balance of M1,305.35 to which were added costs of M905.36
and interest expressed to be from date of issue of summons to 22nd
February,
1986, at 21% per annum on a diminishing balance for an
amount of M4,669.35, making a total in all of M6,808.06. There was
at first
some dispute in the application as to what further amounts
have been paid since judgment by Defendant to Plaintiff but
ultimately,
Mr. Harley, for Plaintiff, conceded that three further
payments, unknown to him, had been received by his client which also
should
be deducted from the capital of the sum claimed. Mr. Harley
also conceded that several further amounts had been added into the
final
sum in respect of professional fees, M300.00, costs M450.53,
and other sums.

While no doubt, these amounts will ultimately be
recoverable from the Defendant in terms of his agreement with
Plaintiff, they are
not part of the judgment awarded to Plaintiff

/nor has ...

-3-

nor has its bill of costs yet been taxed and the issue
of a writ for such costs is premature. It is clear, therefore, that
the writ
has been re-issued for an amount in excess of Plaintiff's
entitlement and it must be set aside.

As I have already indicated, there are two further
issues between the parties:

1. 
   The rate of interest payable on the unpaid
   judgment
   debt.

   
   

2. 
   The method of calculation of such interest.

   
   

As to (1) judgment has been obtained for interest at the
rate of 21% per annum. In the absence of any application for
rescission,
that portion of the judgment must stand. In terms of the
lease agreement between the parties, the original agreed rate of
18,25%
was subject to increase by the Plaintiff on certain
conditions. I cannot now enquire into the question whether the
Plaintiff did
or did not properly increase the rate to 21%.
Certainly he could have and the matter must stand there.

As to (2), I pointed out in argument that it was not for
me to calculate for the parties the number of days that have elapsed
between
payments and the corresponding calculation of the reduced
capital consequent upon such payment, and the interest payable on
such
reduced capital. I am satisfied that I should only answer the
two questions posed and leave it to the parties to make their
calculation
on the lines of my judgment. If any dispute arises
thereafter, then that dispute, no doubt, can be determined in the
light of appropriate
evidence.

Question (2), can be re-phrased in this form:

If interest is payable at 21%, as I find it is, is such

/interest ...

-4-

interest to be compounded monthly or annually or after
each payment is made or is it to be simple interest on the balance as
reduced
from time to time by the Defendant's payments? I have assumed
in Plaintiff's favour, although there is nothing in the judgment to
support such a view, that interest should be calculated in the manner
required by the lease agreement. I have examined the lease
agreement
and I have not found nor have Counsel pointed out to me any clause
which permits of compound interest on unpaid instalments.
It must be
remembered that the agreement is a lease agreement and there is no
single capital sum owing. In the absence of cancellation
of the
agreement, Plaintiff is entitled only to payment of the balance of
unpaid instalments. In that regard, Clause 19 of the lease
provides
that the Defendant shall pay to the Plaintiff interest on all amounts
overdue in terms of the lease calculated from their
respective due
dates to the actual dates of payment thereof at the rate of 18,25%
per annum. That interest must now, of course,
be rated at 21%, but
the clause itself is a clear expression of simple interest and not of
compound interest. It would require a
further provision that such
interest is to be paid monthly in advance or in arrears or

annually in advance or in arrears, that is, after the
lapse of a specified period, to justify a calculation of interest up
to that
date which could then be compounded by adding it to the
capital sum for the purpose of calculating interest on the new amount
for
the following period. Clause 19 contains no such provision, and
in the absence of agreement, compound interest may not be charged
on
overdue amounts. See:

Barclays Bank International v. Smallman 1977(1)
S.A.

401 Rhodesia.

In my judgment interest should be calculated as simple
interest

on
the unpaid capital balance owing from time to time exclusive

of any unpaid interest owing at that time.

/On
the ...

-5-

On the default judgment as it stands there is nothing to
justify a compounding of interest. Both the prayer in Plaintiff's
summons
and the order itself justify only simple interest on the
balance outstanding from time to time.

To this extent, Defendant's pro-forma calculation is
correct and it would appear prima facie that the amount presently
owing by the
Defendant to the Plaintiff is M2,608.54, but I make no
finding on that point and leave it to the parties' calculation. The
re-issued
warrant of execution is set aside and the Plaintiff is
ordered to pay the costs of this application.

D. LEVY ACTING JUDGE

14th July, 1986

For the Plaintiff : Mr. Harley For the Defendant :
Mr. Mphalane