Adel Builders (Pty) Ltd, a building contractor, constructed a house for Dr J G T Thompson in Port Elizabeth under a written building contract. When a balance of the contract price remained unpaid, Adel Builders sued for payment. Thompson counterclaimed for damages arising from defective workmanship. Adel Builders later abandoned its main claim and purported to submit to a ‘consent to judgment’ admitting liability for the fair and reasonable cost of remedial work, without confessing judgment in a quantified amount. The counterclaim was subsequently amended to include consequential damages, escalation of building costs, and a claim for interest a tempore morae. Before trial, the parties agreed that Thompson’s damages for remedial work as at February 1992 amounted to R330 000. Three issues were referred to the trial court, including whether pre-judgment interest was awardable under s 2A of the Prescribed Rate of Interest Act 55 of 1975. Mpati J awarded pre-judgment interest from 1 February 1992. Adel Builders appealed against the award of interest, and Thompson cross-appealed on consequential damages and escalation.
Both the appeal and the cross-appeal were dismissed with costs.
This case is significant for clarifying the application of s 2A of the Prescribed Rate of Interest Act to unliquidated damages claims, including those pending when the section came into operation. It affirms that courts have a wide discretion under s 2A(5) to award pre-judgment interest and to determine the date from which interest should run, without the application of a strict onus of proof. The judgment also reinforces the principle that amendments to pleadings do not necessarily create a new demand for purposes of interest.