Member of the Executive Council: Police, Roads and Transport, Free State Provincial Government v Bovicon Consulting Engineers CC and Another

Bovicon Consulting Engineers CC issued summons against the MEC on 19 August 2014 for payment of R1,171,774.83 for services rendered to the Department of Police Roads and Transport between May 2012 and March 2013, together with interest at 15.5% from the due date of each invoice. The last invoice became due on 31 March 2013. On 12 September 2019, accrued arrear interest equalled the capital debt, thus capping interest under the in duplum rule at R2,343,549.66. On 5 December 2019, Chesiwe J granted judgment ordering the MEC to pay R1,171,774.83 plus interest from the due date of each invoice to date of final payment. The Department paid R2,343,549.66 on 14 July 2020. Bovicon contended it was entitled to post-judgment interest from 6 December 2019 to 14 July 2020 and issued a warrant of execution. The MEC applied to set aside the writ and attachment, arguing the debt was fully satisfied and non-compliance with the State Liability Act. Bovicon counter-applied for post-judgment interest of R220,332.09.

• Whether the in duplum rule prevents post-judgment interest from accruing after arrear interest ceased to accrue when it equalled the capital debt
• Whether the judgment debt was fully satisfied by the payment of R2,343,549.66
• What the appropriate prescribed rate of interest should be for post-judgment interest
• Whether costs on an attorney-client scale were appropriately awarded

1. Paragraph 5 of the high court's order was set aside and substituted with an order that the MEC pay interest on R2,343,549.66 calculated at the prescribed interest rate prevailing on 6 December 2019 from that date until final payment, less the amount ordered in paragraph 4. 2. Save as aforesaid, the appeal was dismissed with costs.

The in duplum rule permits interest to run anew from the date that a judgment debt becomes due and payable, notwithstanding that arrear interest had previously ceased to accrue when it equalled the capital debt during the pendency of litigation. Post-judgment interest runs afresh at the prescribed rate prevailing on the date of judgment until the judgment debt is fully satisfied. The source of post-judgment interest is the judgment itself, and therefore the applicable rate is the prescribed rate at the time judgment is granted, not any contractual rate that may have applied to the original debt.

The court made significant obiter observations criticizing the inappropriate granting of leave to appeal directly to the Supreme Court of Appeal in circumstances where the matter should have been directed to the Full Court under s 17(6) of the Superior Courts Act. The court noted that single judges in courts of first instance have a duty to consider which court is more appropriate in the circumstances of each case, and that matters involving pure fact or non-controversial law should generally be referred to the Full Court. The court deprecated the failure to provide reasons for awarding costs on a punitive scale, noting that a requirement to give reasons concentrates the mind and results in more soundly based decisions. The court warned that it may in future adopt a more robust stance and invoke its powers under s 17(6)(b) of the Superior Courts Act to set aside inappropriate directions granting leave to appeal to the SCA, given that many previous admonitions have gone unheeded.

This case clarifies the operation of the in duplum rule in relation to post-judgment interest in South African law. It confirms that the in duplum rule does not prevent interest from running anew after judgment has been granted, even where arrear interest had previously been capped at an amount equal to the capital debt during the litigation. The judgment reinforces the principle established in Paulsen v Slip Knot Investments that post-judgment interest runs afresh from the date of judgment until payment. The case also provides guidance on the appropriate rate of interest for post-judgment interest (the prescribed rate at the date of judgment, not the contractual rate). Additionally, it serves as an important reminder to single judges about the proper exercise of discretion when granting leave to appeal, emphasizing that leave to the SCA should only be granted where complex legal issues, questions of law of importance, or novel issues arise, with other matters being more appropriately directed to the Full Court.