The application of the common-law in duplum rule during litigation, constitutional proportionality and the separation of powers

Abstract

In Paulsen v Slip Knot Investments 777 (Pty) Ltd 2015 5 BCLR 509 (CC) the constitutional court held that the common-law in duplum rule that arrears interest stops accruing when the sum of unpaid interest equals the amount of the outstanding capital, applies during litigation between creditors and debtors. The court overruled the decision in Standard Bank of SA Ltd v Oneanate Investments (Pty) Ltd (in liquidation) 1998 1 SA 811 (SCA) that the in duplum rule does not apply during litigation. In the Paulsen case both the majority and minority judgments contended that their respective conclusions were “in accordance with constitutional values”. The right affected by the suspension of the rule during litigation was the right of debtors to raise defences freely. The majority held that there are alternative ways in which delaying tactics of creditors who raise fictitious defences could be dealt with. The court should also have considered the alternative proposed by Willis JA in Paulsen v Slip Knot Investments 2014 4 SA 253 (SCA) parr. 50‒7, namely that a court must retain a discretion either to apply or not to apply the in duplum ruleduring litigation. The contention of Madlanga J that the court was merely rectifying a mistaken reading of the common law in the Oneanate case and was not changing the common law was justly rejected by a majority in a separate concurring judgment of Moseneke J. However, the idea of Madlanga J that proponents either of developing the common law or of sustaining the Oneanate position are expressing “personal” opinions, can possibly be linked to the fact that strong opinions expressed in the judgments of what the practical effect of the application or non-application of the in duplum rule would be in practice, were not substantiated by arguments based on facts.

Keywords: bill of rights; constitutional values; law of contract; in duplum rule; limitation of rights; polycentric issues; proportionality; right to access to courts and fair and public hearings; right to freedom of contract; separation of powers

Lees die artikel in Afrikaans: Vonnisbespreking: Die toepassing van die gemeenregtelike in duplum-reël tydens gedingvoering, grondwetlike proporsionaliteit en die skeiding van magte

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