IN THE HIGH COURT OF LESOTHOIn the matter of
:THE STANDARD CHARTERED BANK LESOTHO LTD Plaintiff
EVERISTUS RETSELISITSOE SEKHONYANA 1st
'MALEROTHOLI JOSEPHINE SEKHONYANA 2nd
'MASENATE AGNES MOPELI 3rd Defendant
Delivered by the Honourable Mr Justice ML. Lehohla on
the 29th day of
Because the 1st Defendant died before the
closure of the defence case he was substituted by the second
defendant who for convenience will be referred
to as the 1st
defendant and the 3rd defendant as the 2nd
defendant while the deceased shall be referred to either as such or
by his name Retelisitsoe Sekhonyana.
On the procedural aspect relating to the filing of the
heads of arguments it should be observed that after leading the
the 1st and only defence witness
2 Mrs E. van der Linde, Mr Mphalane indicated, on the
resumption of the hearing after a postponement that was required in
find the deceased's substitute, that he was left with no
option but to withdraw as legal representative for the defendants
of differences that seemed impossible to resolve then.
In the result the two defendants were virtually left in
the lurch. What is more they were not even present when the matter
Thereupon Mr Hoffman for the plaintiff started moving the
Court for dismissal of the defendants' case. It was while he was
his submission in this regard and was about fifteen minutes
into his arguments that the 2nd defendant pitched into
Court. Having been given an audience she pleaded that she would seek
the indulgence of the Court to find a
legal representative for her
and her co-defendant.
Mr Hoffman while agreeable to this sought to persuade
the Court that Judgment should be granted against the defendant who
The Court mindful of one of the aspects it took into
account when giving a ruling earlier following an application for
from the instance was constrained to refuse Mr Hoffman's
prayer. In that ruling the Court had taken into
3 consideration that the two defendants had pinned their
colours to the deceased's mast. Further that in terms of the
to that ruling all the defendants were to be
treated as one. Thus it couldn't have made sense that when one
defendant was present
before Court and the other absent Judgment
should be entered against that other even though the one present
sought an indulgence
to secure legal representation for both
defendants. Refusal to grant this indulgence would have undermined a
principle on which the
previous ruling turned. Moreover the deceased
was the life-blood of the fight waged against the plaintiff It
wouldn't be fair to
incline to the suggestion by Mr Hoffman that a
lone woman in these circumstances should be asked to say what the
lawyer she was going
to look for would say failing which the matter
should be decided against the defence. Her very plight was a factor
crying out for
The matter was accordingly postponed. On the day when it
resumed Mr Mphalane informed Court that he was once more appearing
defendants. He there and then closed the case for the
Mr Hoffman addressed Court without benefit of heads of
arguments. Understandably so. For who would have thought that the
4 going to call further evidence, especially in the
light of the fact that PW1 Rahlao's evidence was not contradicted in
respects which were fatally adverse to the defence
Mr Mphalane for his part had his heads of arguments
ready and was able to guide the Court along them in his closing
address to which
Mr Hoffman replied. At the close of the addresses Mr
Hoffman was directed by the Court to formalise his oral address by
heads of arguments covering his main address and reply to Mr
Mphalane's address. The learned Counsel duly complied by filing them
some days later.
In its Summons the plaintiff instituted action against
the deceased and the two defendants, jointly and severally, the one
the others to be absolved for :
Payment of the sum of Ml 847 122-94. This amount was
amended laterclaim by 50 lisente.
Interest thereon at the rate of 18,5% per annum
calculated from 9th December 1994 to date of payment.
The date calculation was later amended during
proceedings to 04-01-1995. Application for amendements in paragraphs
1 and 2 was granted.
order declaring the following properties specially mortgaged under
Deeds of Hypothecation executable, namely:-
Plot No. 17684-009, situate at Lower Moyeni,
QuthingUrban Area in the district of Quthing, as held under
Deedof Transfer No. 22881, registered on 19th
Plot No. 12281-008, situated at Maseru West,
MaseruUrban Area, in the District of Maseru, as held under
LeaseNo. 12281-008, registered on 29th June 1981.
Costs of suit.
Further and/or alternative relief.
Paraphraseology of contents of page 10 of the Ruling
dated 4th November, 1998 in the instant matter reflects
the following which is essential for providing the basis for this
On 18th June 1993, 'Malerotholi the 1st
defendant as a surety and co-principal debtor secured indebtedness of
the deceased who was the principal debtor by way of registration
continuing covering Deed of Hypothecation No. 23724 in favour of the
Plaintiff in the office of the Deeds Registry, Maseru,
Deeds Registry Act of 1967.
The defendants admit Ad Paras 6 through 14 that the
Mortgage Bonds were
6 registered over the property reflected in the
Declaration and that the Deed of
Suretyship was signed by the 2nd defendant
'Masenate. But the defendants plead that the deceased denies
indebtedness towards the plaintiff, therefore they maintain
plaintiff is not entitled to rely on the security set out in the
Mortgage Bond or in regard to the suretyship.
It should be noted that the 1st defendant is
the deceased's wife married to him, during his life time, in
community of property and duly assisted by him with chosen
citandi et executandi for the purposes of the instant action in
respect of plot No. 17684-009.
The 2nd defendant is described as
a major spinster and Lesotho
citizen with chosen domilium citandi et executandi for
the purposes of the present action is (sic) Plot No. 12281-008 Maseru
Maseru Urban Area.
The plaintiff sets out in its declaration that the
deceased entered into an oral agreement with it at Maseru at the
instance and request that plaintiff lend and
advance money to him from time to time on overdraft facility. This
oral agreement also
provided for the repayment of the said money on
7 reflected at page 16 of Volume 1 of the defendants'
plea this is indeed common cause.
The defendants however deny in their plea that it was
ever the specific term of the said oral agreement that the said
would carry interest at the prime lending rate of
the Central Bank, which at all material times till issuance of
summons was 18.5%.
The defendants challenged the plaintiff to furnish
proof of this allegation.
The defendants further deny in their plea contents of
paragraph 5 of the plaintiff's declaration that on 9th
December, 1994 and again on 31st January, 1995 the
plaintiff demanded in writing from the deceased payment of the sum of
Ml 847 122-94, being monies advanced in terms
of the aforesaid oral
agreement. The defendants are emphatic that the deceased is not
indebted to the plaintiff in the amount of
Ml 847 122-94 or any other
amount and put the plaintiff to the proof thereof.
Otherwise the defendants' attitude towards paragraphs
and 14 of the plaintiffs declaration was covered in the
reasons for the previous ruling made following an application for the
from the instance.
8 Suffice it to say the defendants admitted that
Mortgage Bonds were registered
over the property reflected in the plaintiff's
declaration and that the Deed of Suretyship was signed by the present
2nd defendant 'Masenate Mopeli who was originally the 3rd
However the defendants pleaded that as the deceased
denied indebtedness towards the plaintiff the latter, they maintain,
is not entitled
to rely on the security set out in the Mortgage Bonds
or in regard to the Suretyship. Thus they therefore deny that these
may be called upon by the plaintiff and put the plaintiff to
proof that it might.
In response to the plaintiff's charge and complaint that
the defendants have failed to pay the indebtedness of the deceased,
in unison, plead that they were entitled to refuse payment for
reasons set out above.
Given the above scenario it remains to see by reference
to evidence led in this proceeding if the defendants' stance has any
But before then it is worth mentioning that the
pleadings make it abundantly
9 clear that the deceased conducted a bank account with
the plaintiff bank, and that monies were lent to him from time to
'Malerotholi the deceased's substitute, admits passing a
security bond over the Lower Moyeni property in order to secure the
to the bank of the deceased up to an amount of Ml - million.
'Masenate Mopeli admits signing a deed of suretyship
guaranting the debt to the deceased's bank up to an amount of Ml 200
passing a covering bond to support that suretyship in terms
of which she hypothecated the plot 12281-008 Maseru West in favour of
the bank. The accuracy of these observations is gathered from
paragraphs 6 to 13 of the declaration read with paragraph 4 of the
defendants' plea at page 67.
The plaintiffs only witness who was called is S.M.
Rahlao who testified on oath that he started his employment with the
of South Africa Limited on 5th May 1966.
This came to later be known as the Standard Chartered Bank in 1969.
This in turn was taken over by the present NedBank
January 1997. The take over was achieved through negotiations in
consequence of which accounts
10 previously conducted under the name Standard
Chartered Bank were not affected.
Instead they remained the same. The debts which were in
the books are still in those books. The account numbers haven't
has the manner in which the bank conducts its business.
The modus operandi.
PW1 is presently a senior manager of the plaintiff and
as such has dealt over an extended period, with the deceased.
He testified that from time to time, overdraft
facilities were extended and increased, and that by late 1994 the
bank was extremely
concerned at the state of the account. This is
adequately borne out by the number of letters written by the
plaintiff to the deceased;
placing on record the fact that the
account was over its limit.
PW1 stated that he knew the deceased for a long time in
a personal capacity, but later got to know him as a Bank client from
This witness indicated that the deceased enjoyed
considerable banking facilities in the early nineties going on
Towards the end of 1993 the bank was gravely concerned
with the way the accounts were being conducted by the deceased who
exceeding the limits allocated in respect of his overdraft.
PW1 testified that the deceased had two accounts. The
concern was particularly in respect of the hotel business of Orange
in Quthing. The bank facility allowed this particular
account some advance for working capital purposes.
The witness was led to refer the Court in this regard to
page 78 of Volume II (the discovered documents) where a letter marked
was written on 13-08-93 by the bank and addressed to E.R.
Sekhonyana to the effect that:
"Our records show that your Account No. 027042 13
756 was overdrawn to the extent of Ml 343 352-60 on 12-08-93.
Please adjust. Yours faithfully Manager."
Further credence to the state of the deceased's account
is reflected in the discovered letters addressed to the deceased by
They consist of a letter
12 dated 06-09-93 at page 79 showing debit on current
account as Ml 417 210-58 and
debit on business account as M10 087-28. This letter
opens up by referring the addressee to "previous verbal
the facilities extended to" the deceased
reflected in the heading of the letter. The heading consists of the
two amounts reflected
in this paragraph of my judgment.
At page 80 of the discovered documents bundle PW1
further indicates in a note addressed to the deceased that as of
No. 027042 13 7561 was overdrawn to the extent of Ml
As of 12-11-93 this account was overdrawn to the extent
of Ml 629 953-85. As of 22-11-93 the amount overdrawn was 1 666
09-12-93 the amount was Ml 719 280-10.
The increase in this pattern is reflected for the dates
: 21-12-93; 24-12-93 and 29-12-93 culminating in the overdrawn amount
No evidence was led on behalf of the defendants to
counteract this serious worsening of the deceased's financial
position in the Bank.
On the contrary Mr Mphalane in argument
contents himself with submitting that there is no proof that Mr
Sekhonyana received this
and other forms of correspondence on the
13 But while as indicated earlier that the deceased and
his co-defendants deny owing the bank anything, the deceased's own
tells a different story that is enough to thwart any
contention to the effect that he never received the correspondence in
from the bank.
At page 103 of the discovered documents bundle, in a
letter dated 29-11-1994 addressed to PW1 the deceased writes as
Re: Overdue-Account E.R. Sekhonyana
I have received several letters from you drawing me to
the gravity of the status of abovementioned account "
If one may pause here and reflect one would indeed be in
agreement with the writer of this letter that not only were numerous
which were not responded to, written to the deceased as
stated by PW1 but that the gravity of the status of the deceased's
was not in doubt.
It is in this connection that the submission by Mr
Mphalane is in serious conflict with the deceased's state of mind as
in this letter which further continues :
"I am aware that I have in the past few months
promised you a partial
injection of substantive funds towards a situation
whereby a full settlement could be realised. I am aware that other
only partially meet my indebtedness to the Bank, and
it is the latter situation which has led me to attempt securing
to cover the account. There is yet no basis to abandon
this attempt and I am frantically working for a settlement at the
end of January/February 1995".
Once again a pause and reflection would enable one to
quickly discern a sharp conflict between the allegation in the plea
defendants owe nothing, buttressed by argument in that
regard by their Counsel, and the plain admission borne out by the
reference to his indebtedness to the Bank Coupled with
this indebtedness there is clear indication that the deceased had no
means of reducing or putting right his account with the
Bank hence his allusion to looking overseas for unguaranteed hope
might secure the funds to settle his account.
The date of this letter and the projected period i.e.
January/February when hopefully there would be settlement of this
preceded by numerous and obviously unanswered letters
written by PW1 spanning the dates 05-05-94; 19-05-94; 04-08-94;
-5-11-94 showing the debit in the account to have
steadily risen from upwards of M2.1 Million (Maloti) to M2 420 424-45
In all humility the deceased concluded his letter by
"Once again please bear with me and I sincerely
apologise for what may seem to have been lack of taking your warnings
I take them
15 seriously indeed.
E.R. Sekhonyana signed"
I agree therefore with the submission made by Mr Hoffman
as even supported by evidence of PW1 that at no stage did the
the amount of his overdraft as reflected in the
correspondence sent by the bank to him. If he indeed queried the
amount of his overdraft
how else would his above-quoted letter be
reconcilable with any such contention.
There is substance in Mr Hoffman's submission with which
I agree that statements were sent to the deceased by post from month
as uncontroverted evidence of PW1 established. None of these
were either queried nor put in dispute in any way. The statements
from page 117 to 282 of the discovered documents bundle Volume
II barring some five odd pages constituting Plaintiff's Further and
Better Discovery Affidavit.
It would thus be bizarre to expect the Court to
entertain any wild notion that these documents are faulty when none
of them was queried
at the time they were being sent to the deceased
who must have received them.
16 The Court paid particular attention to the
cross-examination of PW1 in order
to learn and determine what case was being put by the
defence to the plaintiff. PW1 was not tackled on the evidence he gave
The thrust of the cross-examination as later urged on the
Court by Mr Hoffman, was devoted entirely to finding if PW1 could
out interest from capital with reference to the bank
statements. Of course PW1 said he could not do so nor did he see the
The Court was not told through cross-examination of the
plaintiff's witness what the defendants were going to say in an
to alert the Court to what could seriously be regarded to
be their defence to this action. This stands out significantly in the
of the fact that PW1's evidence was that the statements were
sent and never queried by Mr Sekhonyana. No question was put to the
effect that Mr Sekhonyana would testify to the contrary or what
exactly would be his version in the face of PW1's story.
Indeed contrary to the contentions insisted on by the
defendants' Counsel the deceased's conduct has, through his rare ever
that he responded to the plaintiff, been consistent with
his implicit acceptance of liability.
For instance in a letter written by him on 26th
April, 1994 addressed to the plaintiff he says at page 93 of Vol 2 :
"I apologise for delay to reply to your several
(sic) querries re the current overdraft excess on Account,
At a personal level I have had several close deaths and
a major ongoing sedition case which ends at the close of the month of
I have detailed my younger brother, Morena Bereng
Sekhonyana to follow up on the issue in accordance with the details I
gave you during
the verbal brief.
I have thus been assured that we should be in a position
to liquidate the excess perhaps during the first week of June if not
In the meantime 1 humbly request for normal facilities
to avoid catastrophic consequences.
Yours sincerely E.R.Sekhonyana"
From all this one gathers an attitude of a man who is in
no illusion about the worrying state of his ever-growing debt but who
so steeped in Micawberian optimism that something good will turn
up despite the absence of any tangible or visible evidence of the
basis for such hope barring perhaps the infinitely remote possibility
that by wielding of some magical wand; dust and ashes can be
into gold. I am afraid that no commercial institution worth its salt
can fall for that.
It is also significant that Morena Bereng Sekhonyana
made mention of in the above letter did not come to testify in
support of contentions
made by defence counsel especially after the
deceased's death vet he was assigned the task of looking after the
18 affairs of the deceased when the latter was fast held
by matters that caused him to delay replying to plaintiffs letters.
inference to make is that Chief Bereng failed to step into
the breach because he felt that doing so would be inconsistent with
true state of affairs he discovered when performing duties
assigned him by his brother during the letter's stated inability to
At the close of the plaintiffs case DW1 Mrs van der
Linde came to the stand and testified on oath for the defence. DW1
said that by
profession she is an accountant at Ladybrand and has
been in practice as such for the last four years. She further
she is a Member of the Commercial and Financial
Accounts Institute. She holds a Bachelor of Commerce Degree and has
done her articles
through the Institute of Commercial and Financial
DW1 testified that she had occasion to look at the bank
statements involving E.R. Sekhonyana at the standard Bank.
She said she compiled a record of her exercise in a
document entitled Notice to Discover (in terms of) Rule 34(1).
The plaintiff's discovery affidavit and the deceased's
statements were attached in the document she prepared. These were
and marked Exhibits "C" and
19 "D" respectively.
She testified in-chief that she could not give an
opinion on the beginning balance of M372 000-00 because she did not
have he documentation
necessary for the purpose. Apparently her
analysis only commenced from a point when the account was already
overdrawn to the extent
of M372 000-00.
This is not the only disadvantage that bedevilled her
efforts to adduce evidence that would be of assistance to the Court
but as Mr
Hoffman pointed out her analysis is flawed in that it makes
no provision for bank charges. This was a legitimate criticism of her
evidence because it seemed that she made an assumption that all
debits other than those relating to cheques are to be considered
Apart from the disadvantage of inadequate information
DW1 found herself being compelled to work under the results emanating
wrong assumption she made cannot be reliable at all.
In no time DW1 was out of her depth while under
cross-examination. In the result she conceded a number of vital
points raised on behalf
of the plaintiff. In her concessions the
Court was able to discern lack of bias in her character. At least she
didn't give the impression
of having come to Court to give a story
20 favoured the defence.
She conceded that hers was only to do an arithmetic
calculation. She was led to this concession as the next logical step
as follows at page 156-157
"You have totalled the cheques written ? Yes
You have totalled the deposits ? Yes
And you have said that there is a difference between
those two ? Yes.
And you have said that the remaining amount of the
overdraft is taken
of by way of interest and bank charges ? That we have
added up as well as it appeared on the bank statements"
The Court has had a look at various bank statements in
this proceeding and observed that apart from interest, various other
were passed from time to time; and that interest is invariably
shown as a separate debit in each and every month. Mr Hoffman took
random the Bank statement 47 which he referred to as a typical one
when putting it to DW1 who conceded it was.
The witness was guided through entries in this statement
which reflected debits column and bank charges showing typical
commission of M2-00 and a service charge of M28-26.
DW1 conceded that these indeed were normal sort of entries to expect
on a bank
statement. She also conceded that she could not say
21 whether the commissions were properly charged or
whether the bank charges were
raised or not as that was not her mandate.
From the above background that in effect constitutes
DW1's evidence under cross-examination it is easy to observe that
are charged on country cheques, that bank charges were
issued for M12 742-55 and M4 066-00. Further that commissions were
on bank cheques and cash paid in the sum of Ml 2 000-00.
Other statements follow this pattern in a more or less typical
Clearly as pointed out earlier the sort of evidence that
van der Linde was called to lead is of no assistance to the
to the Court in view of concessions she made when
confronted with what the case is about. As pointed out by Mr Hoffman
in cross-examination that her calculations were based
on the difference between monies deposited and cheques written by the
and that the difference represents interest and charges.
Apart from the fact that this is incorrect, she did not even seek to
interest from charges. See pages 157-158 of the record.
Having briefly dealt with evidence set out above it
remains to deal with the law. It has previously been demonstrated
that the deceased
did not at any stage dispute his indebtedness to
the plaintiff. Had he done so, no doubt he would have
queried the bank statements which he kept on receiving.
He would have written in
response to the numerous letters received by him and
stated that he disagreed with the extent of his indebtedness. Instead
his unsolicited admissions of his liability
notwithstanding his counsel's submissions to the contrary is his
letter of 19-11-94 referred
to earlier. See page 103 Vol 2 of
In Benefit Cycle Works vs Atmore 1927 TPD p.524 which
turned on more or less a similar principle to the instant matter De
"Now what are the other circumstances in this case,
apart from the evidence of the two witnesses, Maltz and the
is the circumstance that a letter was written on the
day which the conversation took place in which Spitz placed on record
conversation of that date, that is, that the defendant
had undertaken personally to make payment of the amount owing by
To that letter no reply was vouchsafed, nor was a reply
vouchsafed to the letter of the 7th February, nor to the
letter of the 18th February, in all of which the defendant
is referred to the terms of his verbal undertaking to be personally
responsible for Solomon's
indebtedness. That is a circumstance to my
mind which drops the scale in favour of the probability that the
evidence given by the
plaintiff is the true evidence. I am quite in
agreement with Mr. Price that a letter which places on record
something false does
not necessarily call for a reply from the person
to whom it is addressed. If for instance a letter is written by A to
that B owed A a certain amount of money, and B has had no
prior dealings with A, there would be no obligation on the part of B
reply to that letter; but where, as in this case, negotiations had
taken place immediately preceding the writing of the letter, and
writer then places on record his version of what had taken place
during the negotiations, and there is no reply by the other
then the Court is bound to attach the greatest importance to that
fact. In Wiedeman vs Walpole (1891, 2 QB at 534), the question
determined was whether the plaintiff in an action for damages for
breach of promise of
marriage could rely on the fact that she had written a
letter to thedefendant to which no reply had been vouchsafed. In
dealing with thematter the MASTER OF THE ROLLS said this at p.537
: 'Now theallegation in the present case was that the defendant,
had promised to marry the plaintiff. Suppose, however, the letter had
against him some grievous offence or misconduct, and the
writer had stated that unless the defendant paid something he would
The argument, if true at all, must be that by not
answering such a letter the man who receives it must be taken to
admit that he
is guilty of the charges contained in it. Now there are
cases, business and mercantile cases, in which the Courts have taken
that in the ordinary course of business if one man of business
states in a letter to another that he has agreed to do certain
the person who receives that letter must answer it if he
means to dispute the fact that he did not so agree. So, where
are in dispute one with the other' but you promised me that
you could do this or that,' if the other does not answer the letter,
but proceeds with negotiations he must be taken to admit the truth of
the statemen1st; and Lord Kay says at p.541 : There are certain
letterswritten on business matters and received by one of the
parties to the litigation before the Court, the not answering of
been taken as very strong evidence that the person
receiving the letter admitted the truth of what was stated in it. In
that is the only possible conclusion that could be
drawn ' ".
I agree entirely with the exposition of the law
distilled from the above statement and would venture to say in the
instant case circumstances
point to the deceased as having admitted
his liability to the plaintiff because the writing of letters by the
plaintiff to the deceased
who either didn't reply to or took a long
time to respond to some of them without denying contents of those
letters when he did so,
was preceded by negotiations over bank
facilities between the plaintiff and the deceased.
24 I take further comfort from Hoffmann &
Zeffert1sts invaluable works On
pp 180-181 where the learned authors say :
"The question is always whether it would be
reasonable to infer that the party concerned did not answer because
that the facts stated in the letter were true... The
principle was summed up by Miller J.A. in Me Williams vs First
1982(2) S A 1 (A):
'In general, when according to ordinary commercial
practice and human expectation firm repudiation of an assertion would
norm if it was not accepted as correct, a party's silence and
inaction unless satisfactorily explained may be taken to constitute
an admission by him of the truth of the assertion, or at least will
be an important factor telling against him in the assessment
probabilities and in the final determination of the dispute. And an
adverse inference will the more readily be drawn when
unchallenged assertion had been preceded by correspondence or
negotiations between the parties relative to the subject-matter
the assertion.' ".
A matter of some nicety was raised in argument by Mr
Mphalane for the defendants. That matter relates to the principle
that it is
not permissible that interest should exceed capital debt.
While I agree with the salutary effect of this principle
and do acknowledge the binding nature of its application by our Court
Appeal wherever such was pronounced I do not for a moment think
that this principle could be capriciously and whimsically resorted
at any stage during proceedings in Court and without having
25 been properly pleaded.
It is one of the basic requirements in civil litigation
that pleadings should be conducted with discipline. A practical
of this requirement is that a defendant "must
clearly and concisely state all material facts upon which he relies".
Herbstein & van Winsen : The Civil Practice of the Supreme
Court of South Africa p.462.
At page 463 the Learned authors say that apart from
denying allegations with which the defendant disagrees "if any
or qualification of a denial is necessary it must be
stated in the plea".
I am aware that Mr Mphalane came into the scene long
after pleadings had been closed and that he is not the one who drew
But since there was no attempt to apply for amendment
of pleadings he had no option but to toboggan within the confines of
corridor set and designed for him by someone else.
Furthermore it is a cardinal rule in civil procedure that no side
should be allowed
to spring a surprise on the other.
The principle that Mr Mphalane sought to invoke albeit
at a wrong stage of the proceedings is one based on and generally
in duplum rule. But in all
26 occasions where this rule has been raised it has
always been by way of a plea. Nor has it ever been suggested that a
will suffice to enable a defendant to raise the
As satisfactorily summarised in Standard Bank of South
Africa Ltd vs Oneanate Investments Pty Ltd (In Liquidation) 1998(1)
(SCA) the salutary benefit of In duplum rule is that as it
ordains that interest has to stop when it equals unpaid capital this
is based on public policy designed to protect borrowers from
exploitation by lenders.
But the practical application of this rule has been
shown not to exist in a vacuum. Factors of relevant concern require
it to be applied
with discipline. At pages 827 J to 828 A Sulman J.A.
succinctly deals with a point of moment when generally addressing
the question of Capitalisation in this regard by saying
u when summons was served the interest
element of the claim
did not exceed the amount of the outstanding capital
and, for that simple reason, the application of the rule did not
arise at that
stage. Because of the delays in the litigation the in
duplum rule only became of concern well into the life of the
Because of this, a number of subsidiary questions
arise. The first concerns capitalization. It reared its head in
the plea of in duplum. What the bank then alleged was
that, due to the practice of banks to capitalise interest, interest
loses its character and becomes capital. Therefore
the in duplum rule cannot apply to overdraft accounts. This practice,
it was alleged,
is long established, notorious, reasonable,
27 certain and does not conflict with the positive law".
At page 828 H - J the learned Judge went further to say
and with his statement I agree :
"An examination of the bank statements in this
matter reveals simply that the compound interest was charged and
added to the
previous balance. Plainly if the bank was entitled to
capitalise interest in the sense suggested by the plaintiff, namely,
each charge of interest as going to increase the capital
amount of the debt, this would make serious inroads upon the in
If interest were to become capital the capital amount of
the debt would always be increasing and the bank would run no risk of
lesser capital amount being the subject-matter of the rule.
As correctly pointed out by Mr Rogers the practice of
'Capitalisation' of interest by bankers does not result in the
its character as such for the purposes of the in
duplum rule. Furthermore it lenders were entitled to employ the
expedient of a book
entry to convert what is interest into capital,
this would afford an easy way to avoid not only the in duplum rule
but also the provisions
of the Prescription Act and Usury Act 73 of
1968 When interest is compounded it remains interest".
The learned Judge cited with approval the words of
Selikowitz J. :
"After considering the evidence and weighing the
views of the many eminent Judges referred to above, 1 conclude that
no basis for saying that the interest debited by a bank to
an overdrawn current account and added to the total amount
loses its character as interest and becomes capital or
anything else. The debit balance shown in a customer's bank statement
up of separate debits, each one of which has its own identity
and origin. Some arise from moneys lent and advanced, others from the
banker's service charges or commissions, still others from taxes or
even from the sale to the customer of stationery such as cheque
deposit books. Lumping together all the amounts which are owed to the
bank and which remain unpaid does not change their origin
at 834 Sulman J.A. cautiously adds at letter C, after indicating that
the rule protects borrowers from exploitation by lenders
interest to accumulate, that:
"If that is so, I fail to see how a creditor, who
has instituted action can be said to exploit a debtor who, with the
of delays inherent in legal proceedings, keeps the
creditor out of his money. No principle of public policy is involved
the debtor with protection pendente lite against
interest in excess of the double. Since the rule as formulated by
huber does not
serve the public interest, I do not believe that we
should consider ourselves bound by it. A creditor can control the
of litigation and can, by timeously instituting action,
prevent the prejudice to the debtor and the application of the rule.
creditor, however, has no control over delays caused by the
1 am in respectful agreement with the above passage. I
am particularly enamoured of the phrase no principle of public policy
in providing the debtor with protection pendente lite
against interest in excess of the double. I don't think any such
is involved in the instant matter either. Summons was
timeously issued in 1995 but delays for which plaintiff bears no
dogged this matter and militated against its speed
Before concluding I may just indicate that in his
strenuous effort to strike blows for the defendants in paragraph 8 of
of arguments and during addresses Mr Mhalane rightly
pointed out that the plaintiff bears the onus of proving its case on
of probabilities. However elaborating on the rationale on
which the burden and standard of proof are based he put a spanner in
29 saying that the Court, when finding for the
plaintiff, should feel comfortable, and convinced. There should not
be a slight doubt
that (sic) injustice is done. (Emphasis laid).
The standard of proof to meet which there should not be
a slight doubt is one required in criminal proceedings. The matter
with here is a civil one in which the plaintiff is
required only to discharge the onus on a balance of probabilities
which is a lower
standard. It would therefore be wrong and
unconscionable to subject the plaintiff to meet and satisfy a higher
and more stringent
standard than one imposed by land.
In conclusion therefore I find for the plaintiff and do
order as follows :
1. As against the 1st defendant 'Malerotholi
Sekhonyana (in her representativecapacity)
Payment of the sum of M1 847 122-44
Interest on the sum of Ml 847 122-44 at the rate of
18.5% per annumfrom 29th January 1995 to date of
2. As against the 1st defendant 'Malerotholi
Judgment is entered in the sum of M1. Million
Interest on the sum of Ml. Million at the rate of 18.5%
per annumFrom 29th January 1995 to date of payment
2.3 An order is made declaring executable the
property situate at plot No.
30 1784.009 Lower Moyeni, Quthing Urban Area, in the
against the 2nd Defendant 'Masenate Mopeli
Judgment is entered in the sum of Ml 200 000-00
Interest on the sum of Ml 200 000-00 at the rate of
18.5% per annumfrom 29th January 1995 to date of
an order is made declaring executable the property
situate at Plot No.12281 -008 Maseru West, Maseru Urban Area, in
the District of Maseru.
The defendants are held jointly and severally liable
the one paying the other tobe absolved.
The plaintiff is awarded costs of suit.
29th November, 1999
For Plaintiff: Mr Hoffman, S.C. For Defendants : Mr
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