The Municipality failed to deduct and remit correct pension fund contributions from its employees between 2007 and 2013, breaching section 13A of the Pension Funds Act 24 of 1956. On 26 November 2019, the court granted default judgment against the Municipality ordering payment of R3,805,608.68 plus statutory interest from the date contributions became due until payment. An application for rescission was dismissed, as were subsequent appeals to the Full Court and SCA. On 15 January 2024, the Fund issued a warrant of execution claiming the capital amount plus interest of R30,052,166.09 (approximately seven times the capital). The Municipality paid the full capital and tendered R8,450,751.19 in interest (limited by applying the in duplum rule). The Municipality then brought an urgent application to stay execution and sought a declaratory order that the interest payable was limited by the in duplum rule. The matter was heard by a full court.
1. The writ issued by the first respondent is set aside. 2. It is declared that the interest payable by the applicant to the first respondent in terms of the order of 26 November 2019 (case number 3016/2019) is limited by application of the in duplum rule. 3. The first respondent is directed to pay the costs of suit, including the costs of two counsel to be taxed in accordance with Scale C, set out in rule 69(7) of the Uniform Rules of Court.
The in duplum rule is a common law norm that limits arrear interest to an amount equal to the outstanding capital, preventing total unpaid interest from exceeding the principal debt. The rule applies to all debts bearing interest, regardless of whether the debt arises from contract, delict, or statute. Once interest becomes payable on a debt, the rule potentially comes into play. Statutory provisions do not displace the common law in duplum rule unless the legislature's intention to do so is clearly expressed or arises by necessary implication; no such intention appears in the Pension Funds Act. A court judgment ordering interest does not require express reference to the in duplum rule for the rule to apply; the rule operates as a common law limitation on the amount of interest recoverable and applies unless a court expressly orders otherwise. The rule applies both to pre-judgment and post-judgment interest.
The court observed that approximately 12,600 employers were reported to have contravened the Pension Funds Act as of December 2023 by failing to remit pension contributions, indicating the widespread nature of the problem. The court noted that any prejudice to the Fund and its members could have been avoided by obtaining judgment at an earlier date. The court commented that interpreting the PFA to exclude the in duplum rule would result in oppressive consequences for the Municipality, requiring payment of interest some seven times the capital amount. The court expressed the view that while some cases have incorporated explicit reference to the in duplum rule in orders for interest, this appears to have been done ex abundanti cautela (out of an abundance of caution) and is not strictly necessary. The court noted that courts would obviously not order interest in contravention of the in duplum rule.
This judgment provides important clarification on the scope and application of the in duplum rule in South African law. It confirms that: (1) the rule applies to all debts bearing interest, whether arising from contract, delict, or statute; (2) the rule is not limited to contractual interest but extends to statutory interest, including under the Pension Funds Act; (3) statutes do not displace the rule unless express intention or necessary implication appears; (4) courts need not expressly reference the rule in judgments for it to apply—it operates as a common law limitation on interest recovery unless expressly excluded; (5) the rule continues to apply post-judgment to limit total interest recoverable. The decision has significant implications for pension fund collections, municipalities, and any creditor seeking to enforce interest on long-outstanding debts. It reinforces the protective public policy foundation of the in duplum rule in preventing oppressive interest accumulation.