COURT OF SWAZILAND
the matter between:
CHARTERED BANK (SWD) PLAINTIFF
THABILE MATSEBULA DEFENDANT
PLAINTIFF MR. FLYNN
DEFENDANT MR. SIMELANE
the amended particulars of claim plaintiff alleges that it lent in
advance to the defendant as a house loan an amount of E68 250.00 and
that the said amount would be repaid in three hundred and twenty-four
equal monthly instalment of E367.06 each month. Plaintiff would be
entitled to charge interest on the capital amount outstanding at a
rate of 5% per annum while defendant remained in plaintiff's
employment. Plaintiff also alleges that the said loan was subject to
plaintiff's usual rules and conditions pertaining to the staff loan
scheme contained in annexure "A". Annexure "A" is
in a form of a letter addressed and directed to defendant.
"A" is signed by the plaintiff's agent and by defendant
herself. It is proper that I refer to annexure "A" as if it
"has been read into my judgment because it forms part of the
proceedings, it will form part of this judgment. The reference to
subject to the "bank's usual rules and conditions pertaining to
the staff and loan scheme" is further explained in paragraph 5.4
of the particulars of claim which in turn refers to annexure "B".
Annexure "B" appears at page 9 to 10 of the book of
pleadings. An important paragraph of annexure "B" is
paragraph 5 which reads and I quote:,
his/her leaving the bank services for any reason whatsoever
outstanding loans and advances to the officer concerned becomes
automatically payable in full although at its discretion, the bank
may agree to accept repayments by instalments subjected to normal
commercial rates interests being charged."
above quoted paragraph is important as it encapsulate the reason why
in the final analysis the bank exercises its discretion in terms of
the applicability of the application of the in duplum rule it charges
interest at normal commercial rate notwithstanding the agreement
reached between the plaintiff and defendant before and after
defendant left the plaintiff's employment.
terms of annexure "A" dealing with the application for a
loan of E68 250-00 by the defendant dated the 27th August 1991 she
subsequently tendered a letter of resignation dated the 7th January
1992. It is not clear from the pleadings or the viva voce evidence if
she had by that time of resignation made any appreciable payments
towards servicing her loan account. What is clear is she "is
requesting a period of six months within which she hopes she would
have some alternative arrangement of payment of the same." The
alternative arrangement of payment of the same is contained in a
letter from her erstwhile attorneys Masina, Mazibuko & Company
which is annexed here and marked annexure "D". In annexure
"D" defendant requests to make payments of the balance loan
of El 000-00 in monthly instalments. Her attorneys enclosed a cheque
in the amount of El 000-00 payable to the plaintiff.
response to annexure "D" plaintiff turned down the offer of
El 000-00 per month per letter dated 6th April 1993. The offer of El
000-00 per month is according to annexure "E" by plaintiff,
is not even sufficient to service the interest accruing every month
let alone the capital sum".
suggests that the defendant pays at least E2 000-00 per month.
could accommodate the interest charges, and reductions to the
its letter, in response, plaintiff also encloses a print out of the
account for defendant's scrutiny. The printout is set out in annexure
"F" which is part of these proceedings. According to
annexure "F" defendant is shown to have paid the following
the 1st April 1993 she paid El 000-00; On the 16th June 1993 she paid
E2 000-00; On the 25th November 1994 she paid E400-00; On the 7th
April 1995 she paid El 480-00; On the 13th May 1995 she paid E370-00;
the above amounts were credited to the principal amount which by then
had accumulated to an astronocal amount of E120 515-13.
the issue of the summons the amount owing by the defendant is given
as E122 801-98 and interest chargeable is given as 13% per annum
calculated from the 1st July 1995 to date of payment.
the commencement of these proceedings, Mr. Flynn on behalf of the
plaintiff indicated that he would, instead of the amount of E122
801-98 being sued on he was going to proceed against the defendant on
the original debt of E68 334-60. Mr. Flynn said this is the amount
that the defendant owed plaintiff when she resigned. This is the
that defendant was called upon to pay in full at her resignation. Mr.
Flynn also said plaintiff was now claiming a commercial rate interest
of 9% per annum and forgoes further interest which was chargeable in
terms of the agreement. Mr. Flynn mentioned the application of the in
duplum rule without going into any details.
have consulted extensively relating to the application of the in
duplum. rule. This, I did because I was of the view that counsel for
the defendant has either not fully understood the application of the
en duplum rule or did not read this application. Mr. Simelane in his
opening remarks stated that defendant did not deny that she owes
plaintiff the amount of E68 334.60 as per calculation by plaintiff's
(tape defective) Mr. Simelane said because plaintiff was accepting
what defendant did not deny therefore plaintiff had no case against
the defendant because plaintiff was conceding to the sum of the
figure admitted by defendant as being owed. Plaintiff ought to have
withdrawn his cause of action, so states Mr. Simelane. Whether Mr.
Simelane was seriously meaning what he addressed the court, it is
very doubtful because on the one hand he states that his client
admits that she is indebted to this amount and she further admits
that she had not paid this amount.
her evidence before this court, defendant admitted that she was being
sued for E122 801-98 and interest chargeable was 17% per annum. She
stated that her defence was based on annexure "A". Annexure
"A" is the document she signed where the original loan was
advanced and paid through her. Sight should not be lost of the fact
that annexure "A" was of application as long as she
remained in the employ of the plaintiff. Annexure "A" in
turn refers to annexure "B". Defendant admits part of
annexure "B" contents and argued that the latter part of
annexure "B" was added subsequent to her resignation
plaintiff's employment. Defendant was however unable to produce any
document to substantiate her arguments.
Mrs. Masina stated on oath that there never were any amendments to
is my view that defendant is a witness who is very economic with
telling the truth. For example, in her affidavit, opposing an
application for summary judgment (see page 21 book of pleadings). She
stated on oath that she had paid on each occasion amounts amounting
to E2 000-00 while she continued to pay the other instalments in
terms of the letter of the 27th August 1991. This was obviously not
true as it has now turned out from the documentary in evidence.
my judgment, I therefore have no hesitation in rejecting her evidence
that annexure "B" was ever amended as she claims.
now turn to the application of the in duplum rule. I have consulted
Appeal Case No.50/99 SHISELWENI INVESTMENTS (PTY) LTD VS SWAZILAND
DEVELOPMENT 8b SAVINGS BANK a judgment of a full bench consisting of
Leon JP, Tebbutt JA and Schreiner JA. The judgment handed down by
Tebbutt JA at page 7 of the judgment. The learned judge of the Court
of Appeal refers to the (inaudible) to the STANDARD BANK OF SOUTH
AFRICA (LTD) VS ONET INVESTMENTS (PTY) LTD 1988(1) SA 811 SCA where
it was held in dealing with the in duplum rule.
rule which provides that interest stops running when unpaid interest
equals the outstanding capital is a rule based on a public policy
designed to protect borrowers from exploitation by lenders. As such
borrowers cannot wave it and banking practice cannot alter it. The
practice by bankers of capitalising on unpaid interest does not
result in interest losing its character as interest and certainly not
for the purpose of in duplum rule."
page 5.7.2 of the STANDARD BANK OF SWAZILAND VS ON SET
The learned judge states the following and I quote:
order to apply the in duplutn rule the unpaid amount of the capital
advanced has to be established and the establishment of that amount
depends in turn upon how credits to the account have been
appropriated. See STANDARD BANK OF SOUTH AFRICA supra at page 572
(e). As soon as and for as long as the in duplum rule suspends
further running of the interest, all credits to the account should be
appropriated to pay the interest before they apply to pay the
difficulty with the present case however, is that the defendant as
shown above tendered her resignation from the employment of the
plaintiff soon after the application for a house loan, in terms of
annexure "A" was concluded and notwithstanding the
provisions of paragraph 1 of annexure "A" which states that
the loan of E68 250-00 advanced by the plaintiff was subject to the
bank's usual rules and conditions pertaining to the staff loan
scheme. Staff loan scheme is contained in exhibit "B"
defendant failed to pay the outstanding loans and advances. Defendant
also failed to honour the subsequent arrangement she and plaintiff
agreed to. As a result of her failure the amount had accumulated to
E122 801-98 as at June 1995 when summons was issued. This amount
clearly violated the in duplum rule whereas in the STANDARD BANK
supra it was held.
as long as the in duplum rule suspends further running of the
interest of all credits to account to be appropriated to pay interest
before being applied to the capital a creditor may therefore not
recover in legal proceedings against the debtor more than unpaid
capital together with interest equal to the unpaid capital."
order to apply the in duplum rule, the unpaid amount of the capital
advanced has to be established and the establishment of that amount
depends in turn upon how credits to the amount has been appropriated.
According to exhibit "F" as at 11th December 1992 the
unpaid amount of the capital stood at E75 901-46 and defendant did
pay any amount until the 2nd April 1993 when she paid a El 000-00.
The unpaid amount of the capital together with the interest had
reached the total of E86 184-69 inclusive of interest less the El
000-00 credit, this equals to E85 184-69. Defendant again paid per
cheque on the 6th June 1992 an amount credited of E2 000-00. When he
paid this amount, the capital together with the interest had risen to
E87 659-11 and the payment of E2 000-00 brought the balance to E85
659-11. Defendant did not pay any amount until the 25th November 1994
when she paid in cash a sum of E400-00. As at this date the payment
of this amount, the capital interest included has arisen to El10
268-22 and the credit of E400-00 brought the balance to E109 869-22.
Defendant again failed to pay until the 7th April 1995 when she paid
E1 480-00 as at this day the balance owing was E l08 469-72 and the
payment brought the balance to El 16 989-72. The last payment
defendant made was on the 13th May 1995 when she said she paid an
amount of E370-00. This payment brought the balance to El20 515-13.
There no documentary document of any payment by defendant and summons
was issued when the amount owing together with the interest stood at
E l22 801-98. This amount violated the in duplum rule.
the mode of payment by defendant, it would hardly be said to be
unfair to infer that she had made up her mind not to honour any of
her obligation to pay either in terms of exhibit "A" or
exhibit "E". No wonder her account was labelled "irregular
have had a careful consideration of all the Acts, facts and law in
this matter. It is my considered view that the plaintiff has
discharged its onus on a balance of probabilities considering the
application of the in duplum rule, the court grants the following
The court grants judgment in the original amount advanced to the
to run from the 1st July 1995 to date of payment. The interest
should be the commercial interest.
of suit - This will include the costs of counsel in terms of Rule 68
of the High Court Rules.