CCT61/14

[2015] ZACC 5

2015 (3) SA 479 (CC)

2015 (5) BCLR 509 (CC)

Madlanga Main judgment

Moseneke DCJ separate judgment

Cameron J separate judgment

16 September 2014

24 March 2015

http://hdl.handle.net/20.500.12144/3763

Application for leave to appeal against a judgment and order of the SCA: Paulsen v Slip Knot Investments (434/2013) [2014] ZASCA 16; [2014] 2 All SA 527 (SCA); 2014 (4) SA 253 (SCA) (25 March 2014).

arguable point of law — general public importance — ought to be considered — National Credit Act 34 of 2005 — obligation to register as credit provider — excluded credit agreements — in duplum rule — development of common law — public policy. Application for leave to appeal against an order of the Supreme Court of Appeal. The Constitutional Court dealt with three main issues: (i) the Court’s extended jurisdiction under the Seventeenth Amendment to the Constitution; (ii) whether the failure of a credit provider to register under the National Credit Act 34 of 2005 (NCA) invalidates an agreement exempt from the operation of the NCA; and (iii) whether interest on a debt greater than the capital amount may resume accruing once litigation is pending – that is whether there is an exception to the common law in duplum rule, which forbids further accumulation of interest once the capital amount owed is exceeded, once a creditor initiates litigation. The first two issues were dealt with unanimously in the main judgment by Madlanga J. Regarding the Court’s extended jurisdiction – that it may decide a case that does not raise a constitutional issue, but nevertheless raises “an arguable point of law of general public importance that the court ought to consider” – the Court held that a case must: raise a point of law and not of fact; must be of sufficient public importance so as not to merely transcend the narrow interests of the litigants, but also to affect a large section of the public; and the interests of justice must require a hearing. As to the second issue Madlanga J held that where a credit agreement is exempt from the operation of the NCA, the credit provider need not be registered. There were three judgments on the third issue (interest). Madlanga J plus the majority judgment held that there should be no exemption from the common law in duplum rule after the creditor institutes litigation. The majority reasoned that the Supreme Court of Appeal’s development of the common law in Oneanate to create the exception that allowed interest to accumulate once more above the double limit after litigation commenced, was misdirected as it failed to take into account debtors’ rights of access to courts. Madlanga J concluded that the rule should never have been developed by a court in the first place. Because of the competing policy factors, the task of changing the rule should have been left to the legislature. A separate majority concurring judgment by Moseneke DCJ agreed with the main judgment that there should be no exception to the in duplum rule once litigation commences, but differed from Madlanga J on the role of the judiciary in developing the common law. It held that this is the role of the judiciary, especially given section 39(2) of the Constitution, which compels the courts to develop the common law in light of constitutional imperatives. The majority held on this point that the exception to the in duplum rule was indeed the product of the Supreme Court of Appeal’s development of the common law in Oneanate – but that, in this case, the Court’s present ruling was not merely making the rule revert to before the Supreme Court of Appeal’s development (as held Madlanga J), but was itself developing the common law further, and rightly so. Cameron J dissented on changing the in duplum rule. He endorsed the exception to the in duplum rule created by the SCA in Oneanate. He held that the principles of contractual autonomy and contractual observance (that people should live up to their promises), the impact on creditors’ rights of access to courts, and the effect of inflation on creditors’ claims all meant that the common law was justifiably interpreted to mean interest a debtor agrees to pay should again accumulate once litigation starts. Main Judgment: Madlanga J (Jafta J and Nkabinde J concurring). Separate Concurrence: Moseneke DCJ (Mogoeng CJ, Leeuw AJ, Khampepe J and van der Westhuizen J concurring). Dissent: Cameron J.