THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

REPORTABLE
Case No:  434/2013

In the matter between:

ANDRÉ FRANCOIS PAULSEN

First Appellant
MARGARETHA ELIZABETH PAULSEN
Second Appellant
and
SLIP KNOT INVESTMENTS 777 (PTY) LIMITED      Respondent
Neutral citation: Paulsen v Slip Knot Investments (434/13) [2014]
ZASCA 16 (25 March 2014)
Coram:
MPATI P, SHONGWE, WALLIS and WILLIS JJA and
MATHOPO AJA
Heard:

4 March 2014
Delivered:

25 March 2014
SUMMARY:
Credit agreement to which the National Credit Act 34
of 2005 does not apply – not invalid because credit provider not
registered in terms of s 40 (1) of Act – mezzanine financing – application
of in duplum rule.

ORDER

On appeal from: Western Cape High Court, Cape Town (Louw, Ndita JJ
and Dolamo AJ sitting as court of appeal):
1 The appeal is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
2 The cross-appeal succeeds with costs, such costs to include those
consequent upon the employment of two counsel.
3 Paragraph 2 of the order of the court below is amended to read as
follows:
The orders made by the court a quo are set aside and the
following substituted orders are made:
‘1 The Eighth and Ninth Respondents are ordered to pay, jointly
and severally, the following amounts:
(a) The sum of R 12 million.
(b) Interest on the sum of R 12 million up until 10 February
2010 in the amount of R 12 million.
(c) Further interest on the capital sum of R 12 million at a rate
of 3% per month from 10 February 2010 to 24 February
2012.
(d) Interest on the total of the amounts set out in paras (a), (b)
and (c) above at a rate of 3% per month from 25 February
2012 to date of payment thereof, such interest to be limited
to the total of the said amounts.
(e) Costs of suit on the party and party scale, such costs to
include the costs of two counsel.’

JUDGMENT

Wallis JA (Mpati P, Shongwe JA and Mathopo AJA concurring)
[1] In 2006, a company, optimistically named Winskor 139 (Pty) Ltd
(Winskor), had the opportunity to purchase a portfolio of properties in
Pretoria and resell them at what it anticipated would be a substantial
profit. It had obtained a loan for the bulk of the purchase price, but there
was a shortfall of R12 million. In order to obtain this amount it
approached Slip Knot Investments 777 (Pty) Ltd (Slip Knot), which
conducts business as a provider of what is termed mezzanine finance, an
expression meaning nothing more than short term bridging finance. Such
finance is high risk and those who provide it demand commensurately
high returns. How high, will be seen when I come to examine the
provisions of the agreement in relation to the return that Slip Knot
required on this loan. Needless to say, Winskor’s dreams of a speedy and
substantial profit dissipated during the course of the world economic
downturn that commenced in 2007 and the result is the present litigation.
In it Slip Knot seeks to recover what it lent, together with interest, from
Mr and Mrs Paulsen (the Paulsens), who bound themselves as sureties for
and co-principal debtors with Winskor for the repayment of the loan.

[2] The litigation commenced in the Western Cape High Court before
Blignault J. He upheld all of Slip Knot’s claims. The Paulsens sought and
obtained leave to appeal to the full court of that division. There they
enjoyed substantial success in that their liability for the payment of

interest was held to be limited by virtue of the operation of the in duplum
rule. In addition Slip Knot’s claims for the payment of interest over and
above a fixed amount were dismissed. The judgment was delivered by
Louw J, and concurred in by Ndita J and Dolamo AJ. However, that did
not entirely satisfy the Paulsens, who believed that they had grounds, in
terms of the provisions of s 40(4)(a), read with s 89(2)(d), of the National
Credit Act 34 of 2005 (the NCA), for defeating the claim in its entirety.
They accordingly sought and obtained the special leave of this Court to
appeal against the full court’s judgment. Slip Knot likewise was
dissatisfied and sought and obtained special leave to appeal in regard to
the dismissal of its claims for interest. It is that appeal and the cross-
appeal that are before us.

[3] My colleague Willis JA has prepared a judgment that I have had
the opportunity of reading. I agree with it in part and disagree with it in
part. On the parts where we agree on the result my reasoning is different
from his. I accordingly express my views separately. For convenience I
have adopted his nomenclature to refer to the parties.

[4] The Paulsens bound themselves as sureties for and co-principal
debtors with Winskor for the latter’s liabilities arising from the loan
agreement concluded with Slip Knot. The latter agreement was a large
agreement as described in s 9(4) of the NCA and Winskor was a juristic
person the asset value or annual turnover of which exceeded the
prescribed threshold. Accordingly, in terms of s 4(1)(b) of the NCA it
was one of the credit agreements to which the Act does not apply and to
which I will refer as ‘excluded agreements’. In their appeal the Paulsens
contend that it was nonetheless invalid in terms of the provisions of

s 89(2)(d) of the NCA, because Slip Knot was not registered as a credit
provider in terms of s 40 (1) of the NCA.

[5] The argument and my colleague’s analysis focus on the obligation
to register in terms of s 40 (1) of the NCA. With respect I believe that is
the wrong starting place. If the loan agreement between Slip Kot and
Winskor is invalid that is because of the provisions of s 89(2)(d) of the
NCA. That much is apparent from s 40(4) of the NCA, which provides
that a credit agreement entered into by a credit provider who is obliged to
register in terms of the NCA is ‘an unlawful agreement and void to the
extent provided for in section 89’. Accordingly it is to s 89 that we must
turn to ascertain whether this agreement is void and, if so, to what extent.

[6] Section 89 is the opening section in Chapter 5 of the NCA dealing
with ‘Consumer Credit Agreements’. That heading immediately alerts the
reader to the question whether the chapter applies generally to all credit
agreements, or only to those to which the NCA applies. In my view it is
clear that it applies only to those credit agreements in respect of which it
is elsewhere provided that the NCA shall apply. For that reason s 89(2)(d)
does not apply to the loan agreement between Slip Knot and Winskor and
does not serve to invalidate it. My reasons for reaching that conclusion
are the following.

[7] The starting point is s 4 of the NCA, which deals with the scope of
application of the NCA and provides that, subject to the limitations
spelled out in ss 5 and 6, the NCA ‘applies to every credit agreement
between parties dealing at arm’s length and made within, or having an
effect within, the Republic’. That broad statement is then qualified by the
word ‘except’ and there follows a list of exceptions, of which a large

agreement entered into by a juristic person whose turnover or assets
exceed stipulated limits is one. These exceptions are the excluded
agreements. They are all credit agreements, but they are excluded from
the application of the NCA. The plain meaning of that exclusion is that
the provisions of the NCA that would otherwise apply to them because
they are credit agreements do not apply to them.

[8] The next step is to determine the scope of this exclusion and to
identify the provisions of the NCA to which it relates. Counsel correctly
pointed out that the NCA deals with many matters. Chapter 1 defines the
different types of credit agreements and delimits the scope of application
of the NCA in relation to those agreements. Chapter 2 deals with
consumer credit organisations and Chapter 3 with regulation of the
industry. It is here that the provisions governing registration of credit
providers are to be found. Chapter 4 deals with policy in regard to
consumer credit. If one pauses at this point it is not immediately clear
why the fact that certain agreements are excluded from the application of
the NCA should necessarily mean that persons who seek credit in relation
to such agreements should not be protected against discrimination under
s 61, or disentitled to reasons for the refusal of credit in terms of s 62,
both of which fall in Chapter 4. Nor is it clear that the regulation of the
consumer credit industry should not encompass all credit providers and
not merely some.

[9] In order for the exclusion in s 4 to have operative effect the
portions of the NCA that are not intended to apply to excluded
agreements must be identified. That brings me to Chapter 5, which is the
chapter that deals expressly with consumer credit agreements. Its
provisions, and those of Chapter 6 dealing with collection, repayment,

surrender and debt enforcement, are the provisions of the NCA that apply
generally to credit agreements. Accordingly when s 4 says that the
provisions of the NCA do not apply to excluded agreements, it is to these
provisions that we must look. These chapters are the obvious place in
which to find the provisions that do not apply in respect of excluded
agreements. And s 89(2)(d), on which the Paulsens depend for their
contentions, falls squarely within the opening section of Chapter 5.

[10] Does Chapter 5 or any of its provisions apply to credit agreements
in respect of which the application of the NCA has been specifically
excluded? The answer lies in a closer consideration of the provisions of
the chapter. It consists of ss 89 to 123 of the NCA.  It is manifest from
reading most of these provisions that they cannot apply to agreements
that are otherwise excluded from the application of the NCA. To apply
them to such agreements would render their exclusion from the
application of the NCA pointless. Thus Part F of Chapter 5 (ss 121 to
123) affords consumers rights to terminate agreements that would
otherwise be legally binding upon them. Conversely it constrains the
ability of the credit provider to terminate the agreement where the
consumer is in default of their obligations. Part E (ss 116 to 120) permits
consumers unilaterally to alter the terms of the credit agreements to
which they are party; precludes alterations to agreements unless they
reduce the consumer’s liabilities under the agreement and limits the
alterations that the credit provider can effect. Part D (ss 107 to 115) deals
with the content and form of statements. Significantly it is careful to
exclude (in s 107) certain types of credit agreement that are clearly
subject to the provisions of the NCA. That shows that those responsible
for drafting the NCA were alive to the need to exclude certain agreements
from its area of operation.

[11] Part C of Chapter 5 (ss 100 to 106) deals with prohibited charges,
the cost of credit, fees and charges and interest and makes provision for
these to be capped by way of regulations. It also governs the basis upon
which interest, fees and charges may be adjusted. If these provisions
apply to excluded agreements they would render their exclusion from the
application of the NCA pointless. Part B (ss 92 to 99) deals with pre-
agreement disclosure, the form of agreements, notices and other related
matters. Although it distinguishes between small agreements on the one
hand, and intermediate and large agreements on the other, with special
provision for pawn brokers in s 99, there is no indication that it is
intended to apply to excluded agreements.

[12] That brings me to Part A, in which we find s 89(2)(d). Part A
identifies in s 89 those credit agreements that are unlawful and in s 90 the
provisions of credit agreements that are unlawful. These latter include
provisions that are commonplace and would be expected to appear in
agreements covering most large commercial transactions such as ‘no
misrepresentation’ or ‘whole agreement’ clauses; waivers of common law
rights such as, in the case of a surety, the right to demand that the
principal debtor be excussed before resort is had to the surety; limitation
of liability or exemption clauses; and provisions requiring the conclusion
of supplementary agreements, such as deeds of suretyship or contracts of
insurance. The notion that the NCA intended such provisions to be
invalidated in all commercial transactions falling within the broad notion
of a credit agreement (see s 8 of the NCA read with various definitions in
s 1) is obviously incorrect. That would fly in the face of the entire
purpose of the NCA, which is to regulate the provision of credit to natural

persons and small businesses and even then only at the lower end of the
credit market.

[13]   Against that background I am unable to see on what basis
s 89(2)(d), of all the provisions in Chapter 5, should apply to excluded
agreements, when none of the other provisions in the chapter do so. That
being so, it is unnecessary for me to consider whether Slip Knot was
required to register as a credit provider under the regulatory provisions of
the NCA. Conceivably those provisions may serve some purpose in
relation to a credit provider that only enters into excluded agreements. I
appreciate that in the definition of ‘credit provider’ in s 1 the term is only
defined in relation to ‘a credit agreement to which this Act applies’ and
that is a strong indication that the credit providers that are obliged to
register do not include those that confine their activities to the conclusion
of excluded agreements,1 but prefer not to express a final view on this
when it is unnecessary to do so.

[14] For those reasons I agree with my colleague that the Paulsens’
appeal falls to be dismissed with costs, such costs to include those
consequent upon the employment of two counsel. I turn then to deal with
Slip Knot’s cross-appeal.

[15] The cross appeal relates to Slip Knot’s claims in terms of clause 6
of the loan agreement. The clause reads as follows:
‘6. Interest
SLIP KNOT shall be entitled to payment from the Borrower of interest accrued on the
loan amount, such interest which shall be calculated at 25% (twenty five percent) of

1 This is the view expressed in JW Scholtz, JM Otto, E van Zyl, CM van Heerden and N Campbell
Guide to the National Credit Act (looseleaf) Vol 2, at 5-3 (Issue 5), fn 12, where they describe it as
‘logical’.

the nett profit in the development, the Borrower having however guaranteed a
minimum interest repayment of R17 000 000.00 (Seventeen million rand). For
example, should 25% of the nett profit in the development be R16 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17 000 000.00 (seventeen million
rand). Should 25% of the nett profit in the development be R18 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
The full court held that this clause embodied arrangements for the
payment of interest and that it fell foul of the provisions of the in duplum
rule that restricts the amount of interest that a creditor may recover on a
debt to the capital amount of that debt. It accordingly held that Slip
Knot’s recovery was to be limited to the capital sum of R12 million and
interest on that sum of R12 million.

[16] Slip Knot contended that this was a profit sharing arrangement and,
notwithstanding the terminology of the clause, that it did not provide for
the payment of interest at all. Accordingly it said that the in duplum rule
found no application. Like my colleague, I disagree, and believe that the
contention that this is a profit sharing arrangement is easily disposed of.
A claim to rectify the agreement to remove the description of this amount
as interest and to describe it instead as a profit share was not pursued. The
matter is therefore one of interpretation. Apart from the fact that the R17
million is described repeatedly as interest, it is payable even if no profit
accrues from the venture in which Winskor was engaged and for which
the loan was advanced. That excludes the notion that this was a profit
share. In its ordinary connotation ‘interest’ describes the reward or return
that a lender expects the borrower to pay in return for the loan. That is
what the R17 million is. The fact that further interest was payable in

terms of clause 7 of the agreement if the capital was not repaid within six
months merely reinforces that conclusion.

[17]  Once interest is payable on a debt the in duplum rule potentially
comes into play. The effect of that rule is clear. Where a debt is owed and
bears interest, the amount of such interest may not exceed the capital
amount.2 It was argued that this restriction only applied to arrear interest,3
but as the cases show that expression merely means accumulated interest
on the amount in arrears.4 It excludes amounts already paid by way of
interest and relates only to interest that has accrued but is unpaid.5 Then it
was argued that this court in African Dawn Property Finance 2 (Pty) Ltd
v Dreams Travel and Tours CC and Others,6 sanctioned the charging of
interest exceeding the amount of the capital. That is a misreading of that
judgment, which dealt with usury and not the operation of the in duplum
rule. All that it held was that there is no rate of interest that is
automatically usurious and therefore contrary to public policy. It did not
sanction breaches of the in duplum rule.

[18] It follows that the stipulation for the payment of interest in clause 6
contravened the in duplum rule. That is readily illustrated by the
following example. Had Slip Knot stipulated that it be paid interest at a

2 Union Government v Jordaan’s Executors 1916 TPD 411 at 413 per, de Villiers JP: ‘No interest runs
after the amount is equivalent to the amount of the capital.’ Wessels and Curlewis JJ concurred in the
decisions which was accordingly rendered by a court of which all three members went on to become
Chief Justice. The rule in this form was held by this court still to be the law in LTA Construction Bpk v
Administrateur, Transvaal 1992 (1) SA 473 (A) at 482B-H.
3 Sanlam Life Insurance Ltd v South African Breweries Ltd 2000 (2) SA 647 (W) at 655D-E. Neither
that judgment, which dealt with the determination of the price payable for immovable property by way
of the application of an interest factor, nor Ethekwini Municipality v Verulam MediCentre [2006] 3 All
SA 325 (SCA), which dealt with the calculation of restitution in respect of a failed property transaction
making use of an interest factor, has any bearing on the facts of this case, which involves a
straightforward money loan.
4 That is clear from the Afrikaans expression ‘opgehoopte rente’.
5 Van Coppenhagen v Van Coppenhagen 1947 (1) SA 576 (T) at 581-582.
6 African Dawn Property Finance 2 (Pty) Ltd v Dreams Travel and Tours CC and Others 2011 (3) SA
511 (SCA) para 19.

rate of 23.5 per cent per month on the capital it lent to Winskor, on
condition that the interest was repayable with the capital after six months,
the effect would have been that Winskor was obliged to repay the
R12 million in capital together with an amount only fractionally less than
R17 million by way of interest. It could not be disputed that after the end
of the fourth month the in duplum rule would have operated to prevent
the accumulation of further interest. The position cannot be any different
where the interest is payable in a lump sum.

[19] I accordingly agree with my colleague that clause 6 stipulated for
the payment of interest and that the interest for which it stipulated
exceeded the duplum. The full court was accordingly correct to hold that
up until the date of commencement of the proceedings at first instance,
which was the 10 January 2010, the interest recoverable was limited to
R12 million.  It is at this point and in regard to the recovery of further
interest that I diverge from my colleague in regard to the fate of the cross-
appeal.

[20] The operation of the in duplum rule after the commencement of
legal proceedings was the subject of the decision in this court in
Oneanate. 7   At the end of a discussion of the relevant authorities
Zulman JA rejected the views of Huber that, where the duplum had been
reached prior to the institution of action, interest did not run during the
pendency of the litigation, but only began to run after judgment, and
concluded8 that the true position is that:
‘(i) the in duplum rule is suspended pendente lite, where the lis is said to begin upon
service of the initiating process, and (ii) once judgment has been granted, interest may

7 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (In Liquidation) 1998 (1) SA
811 (SCA).
8 At 834H-I.

run until it reaches the double of the capital amount outstanding in terms of the
judgment.’

[21] Some confusion may arise from Zulman JA’s use of the expression
pendente lite in this passage, as its ordinary meaning is ‘pending the
suit’,9 and he was dealing with the situation during the pendency of the
suit, that is, after the litigation was underway. In this passage it means
during the litigation and not before the litigation. Once that is understood
its effect is clear. If the duplum has been reached prior to litigation
commencing, interest will accumulate afresh on the capital debt from the
date of service of the summons or application papers. Once judgment is
pronounced, in this case on 24 February 2012, the capital and interest
accumulated up to that date are consolidated and interest begins to run
again on the consolidated debt until it reaches the duplum. The in duplum
rule will accordingly operate to limit the interest recoverable on a debt at
two points in time. Prior to litigation it will prevent interest accumulating
beyond the full amount of the debt. If that point has been reached prior to
litigation interest will start to run again and will accumulate until
judgment is pronounced. At the stage of judgment the whole judgment
debt, that is, capital plus all accumulated interest to date of judgment, will
bear interest until it again reaches the duplum.

[22] The full court held that these principles do not apply in this case
because Slip Knot did not sue Winskor. The reasoning on which this was
based is the following. Before the commencement of litigation Slip Knot
could only recover the capital of R12 million plus interest of a further
R12 million from Winskor. As it did not sue Winskor that is at present
the limit of Winskor’s liability to it. The Paulsens are sued as sureties and

9 V G Hiemstra and H L Gonin Trilingual Legal Dictionary 2 ed, 253 sv ‘pendente lite’

their liability is accessory to that of Winskor. They cannot therefore be
held liable to pay further interest on the amount of their existing liability
because Slip Knot would then recover more from them than it could
recover from Winskor.

[23]  I do not agree. This approach conflates what are different matters,
namely the accessory liability of the surety and the obligation on a debtor
to pay interest on the debt. The liability of Winskor as at the date of
commencement of these proceedings was limited to the total amount of
R24 million by virtue of the operation of the in duplum rule, and so was
that of the Paulsens. However, once they were sued, there is no reason
why interest on what they owed Slip Knot as co-principal debtors, should
not run again. That is not to impose upon them a liability different from
that of Winskor, because Winskor would similarly have been liable had it
been sued. The surety is generally entitled to raise any defence that the
principal debtor could raise. Accordingly the Paulsens were entitled to
raise the operation of the in duplum rule in order to limit their liability
before the institution of proceedings to a total of R24 million. However,
Winskor had no defence to a claim for the payment of further interest if
litigation was commenced against it. There is accordingly no reason why
the Paulsens should have one.

[24] By permitting a claim for further interest after the commencement
of proceedings a liability to pay interest is imposed on the Paulsens in
respect of a debt that they owed to Slip Knot. They were the only ones
who could limit that liability by paying what they owed. If they did not
do so there is no reason why they should be able to shelter behind the fact
that proceedings were not taken against an entity in respect of which
liquidation proceedings were pending.

[25] The contention that interest does not run against the sureties unless
the principal debtor is sued, where prior to litigation the duplum has been
reached, has extraordinary consequences. It could compel a claimant to
sue a manifestly insolvent principal debtor in order to ensure that interest
ran against the sureties. That would be pointless and would result in costs
being incurred for which the sureties would very likely be liable on the
ordinary form of commercial suretyship. What is to happen if the
principal debtor has already gone into liquidation and the liquidator is
prepared to recognise the claim by the creditor in the winding up? Does
that mean that interest will not run against the sureties when they do not
do what they have undertaken to do and pay the debt? Can the sureties
defeat any further claims against them for payment of interest on the debt
beyond the duplum by causing the principal debtor to be liquidated and
rendering it worthless as a target for the creditor? If the principal debtor
was excussed and, only after that process was complete, it transpired that
it could not pay the judgment debt, the sureties would be entitled to say
that interest above the duplum would only be recoverable from them once
they were sued. Why should they be able to avoid paying interest when
they are sued but the principal debtor is not? If the benefit of excussion
has not been waived the claim against the surety will arise at a later date
than the claim against the principal debtor, so that they cannot be sued
simultaneously. What happens if both are sued, but in different
proceedings that proceed at a different pace, for example, because the
proceedings take place in different divisions of the high court for
jurisdictional reasons? If the approach of the full court were correct, there
is no answer to these and other problems, the existence of which can
easily be imagined.

[26] Where I think the problem lies with the full court’s reasoning is in
its failure to recognise that the accessory nature of the surety’s
obligations in relation to the principal debtor relates only to the existence
and extent of the principal debt itself.10 That is why our courts have held
that an interruption in the running of prescription against the principal
debtor also interrupts the running of prescription against the surety. 11
Whilst the surety’s liability may be less than the amount of the principal
debt it cannot be more.12 That does not, however, mean that, once the
surety is sued for the debt and accumulated interest, the principles
governing the recovery of interest laid down in Oneanate and set out in
para 20 above cease to be applicable. It is clear that the inability to pursue
a claim against the principal debtor, for example because it is a company
and has been deregistered, does not bar a claim against the surety.13 There
is no reason why it should bar the continued running of interest on the
claim and no authority was cited for this proposition, nor have I been able
to find any. The fact that the interest reached the duplum before the surety
was sued is no reason for not permitting it to commence running again
once litigation commences in accordance with the ordinary application of
the rule. Nor is the fact that, if it transpired that the liquidated company
had hitherto undisclosed assets, the claim against those assets would be
limited to the capital and interest up to the duplum.  Once the creditor
turns to the surety for payment of that debt, the surety’s obligation is to
discharge that debt and if they fail to do so the surety is in breach of their
own obligations and therefore liable to pay interest on the outstanding
indebtedness.

10 Kilroe-Daley v Barclays National Bank Ltd 1984 (4) SA 609 (A) at 622H-623H.
11 Jans v Nedcor Bank Ltd 2003 (6) SA 646 (SCA).
12 Pfeiffer v First National Bank of SA Ltd 1998 (3) SA 1018 (SCA)
13 Traub v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd 1983 (3) SA 619 (A) at
634A and Norex Industrial Properties (Pty) Ltd v Monarch SA Insurance Co Ltd 1987 (1) SA 827 (A)
at 840F-H.

[27] My colleague accepts this, but nonetheless upholds the conclusion
of the full court. He does so in paras 53 and 54 of his judgment on the
basis that the in duplum rule is founded on the public interest and that to
apply it in the present case in the manner set out in Oneanate would
enfeeble the rule in its entirety. He concludes (para 54) that ‘a residual
discretion must remain for a court, in appropriate circumstances, to apply
the in duplum rule in the traditional manner’. In reaching this conclusion
he is much concerned at the effect of applying the judgment in Oneanate
in accordance with its terms and expresses the view that mezzanine
finance lenders must be incentivised to commence proceedings quickly in
order to recover debts owed to them so as to avoid prejudice to their
debtors.

[28] I respectfully disagree. My colleague points to no authority that
supports what is in effect an equitable approach that invokes the in
duplum rule in some circumstances, such as mezzanine financing, and not
in others. He suggests that the approach in Oneanate is not to be used to
enfeeble the in duplum rule. But that is precisely what it does not do. It
explains how the rule operates and is to be applied once litigation is
commenced. He contends for a residual discretion to apply the rule in
what he describes as ‘the traditional way’. But that is what Oneanate
does. None of this is supported by any authoritative statement of the
scope of the rule and it is an entirely novel approach to the in duplum
rule. In the absence of argument that we should depart from existing
authority or adapt the rule in some way I am not persuaded that it is either
permissible or desirable to follow the route he suggests.

[29] The concern appears to be the large sums of interest that the
Paulsens may be called upon to pay. I agree that they are large,14 but that
is because the loan was large and the Paulsens were engaged on a
transaction that they confidently thought would generate a profit of
R68 million within the short space of six months. The accumulation of
interest beyond the sum of R12 million to which it was initially limited is
not, as my colleague appears to believe, due to any dilatoriness on the
part of Slip Knot. Their entitlement was capped at R24 million from the
outset. What has caused additional interest to accrue has been the
Paulsens’ dogged resistance to Slip Knot’s claims before three courts.
Had they tendered to pay R24 million at the outset they would not have
been liable for any further amount. Instead they offered to pay
R12 million and the present litigation ensued.

[30] The amounts involved are to any ordinary person substantial, but
that flows from the size of the loan. A loan of R1 000 bearing interest at
the maximum permissible rate for unsecured credit transactions of a little
over 32 per cent per annum15 would pass the duplum after a little more
than 2 years and would double again to R4 000 two years after judgment
was obtained if that was sought and obtained immediately the two years
had passed. At the maximum rate of five per cent per month applicable to
short term credit transactions the duplum is reached within 15 months. A
person needing a loan in that amount is probably more deserving of
concern than those borrowing large sums in the hope of making even
larger profits. Yet my colleague’s approach does not suggest that the rule

14 The maximum they may be called upon to pay is about R72 million. That is calculated as R24
million prior to the commencement of litigation, plus approximately R12 million of interest between
that date and judgment and further interest on the judgment debt, which would total approximately
R36 million, up to the duplum. That gives R72 million.
15 The maximum prescribed rate for unsecure credit transactions is (Repo Rate x 2.2) + 20% per year,
which at the current SA Reserve Bank Repurchase Rate (the Repo Rate) of 5.5% is a little over 32%.
Regulation 42 in GN 713 of 1 June 2006.

as expounded in Oneanate should not apply to such transactions or
should be subject to a residual discretion vested in the court to relax its
effect.

[31]  In the circumstances I would uphold the cross-appeal to the extent
of permitting Slip Knot to recover interest from 10 January 2010 to 24
February 2012 on the sum of R12 million at the agreed default rate of
three per cent per month capitalised monthly in arrears. I would also
permit them to recover further interest on the judgment debt of R24
million, plus the interest accumulated between 10 January 2010 and 24
February 2012, at the same rate from 24 February 2012 to date of
payment, subject to the amount of that interest not exceeding the amount
of the judgment debt. That success on the cross-appeal should carry with
it an order for costs of the appeal including the costs of two counsel. In
the court below, however, the Paulsens enjoyed substantial success on the
in duplum rule and in having some of the claims for interest deleted from
the judgment. The order for costs in their favour should accordingly not
be disturbed.

[32] I accordingly grant the following order:
1 The appeal is dismissed with costs, such costs to include
those consequent upon the employment of two counsel.
2 The cross-appeal succeeds with costs, such costs to include
those consequent upon the employment of two counsel.
3 Paragraph 2 of the order of the court below is amended to
read as follows:
The orders made by the court a quo are set aside and the
following substituted orders are made:

‘1 The Eighth and Ninth Respondents are ordered to pay,
jointly and severally, the following amounts:
(a) The sum of R 12 million.
(b) Interest on the sum of R 12 million up until 10 February
2010 in the amount of R 12 million.
(c) Further interest on the capital sum of R 12 million at a
rate of 3% per month from 10 February 2010 to 24
February 2012.
(d) Interest on the total of the amounts set out in paras (a),
(b) and (c) above at a rate of 3% per month from 25
February 2012 to date of payment thereof, such interest
to be limited to the total of the said amounts.
(e) Costs of suit on the party and party scale, such costs to
include the costs of two counsel.’

M J D WALLIS
JUDGE OF APPEAL
Willis JA (concurring in part and dissenting in part)
[33] The appellants were sureties, binding themselves jointly and
severally, in solidum, for a loan agreement concluded between a company
known as Winskor 139 (Pty) Limited (‘Winskor’) and the respondent,
Slip Knot Investments (Pty) Limited (‘Slip Knot’) in terms of which the
respondent lent Winskor R12 million for a twelve month period from 10
July 2006 to 9 July 2007. Slip Knot had lent Winskor the money to assist
with the funding of a property development in Brooklyn. Winskor

defaulted on its obligation to repay the loan together with interest. An
application by Slip Knot for the liquidation of Winskor is still pending.

[34] Slip Knot brought an application in the Western Cape High Court
for an order that the two appellants (the sureties), together with two trusts
which had also been sureties for the debt, the Paulsen Family Trust and
the Keurbos Beleggingstrust, be ordered to be jointly and severally liable
to pay the sum of R12 million, being the capital sum lent to Winskor,
together with R17 million as interest and costs of suit.

[35] Clause six of the loan agreement entered into between Winskor and
Slip Knot reads as follows:
‘6. Interest
SLIP KNOT shall be entitled to payment from the Borrower of interest accrued on the
loan amount, such interest which shall be calculated at 25% (twenty five percent) of
the nett profit in the development, the Borrower having however guaranteed a
minimum interest repayment of R17 000 000.00 (Seventeen million rand). For
example, should 25% of the nett profit in the development be R16 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R17 000 000.00 (seventeen million
rand). Should 25% of the nett profit in the development be R18 000 000.00, the
Borrower will be liable to pay SLIP KNOT the loan amount of R12 000 000.00
(Twelve million rand) plus interest in the sum of R18 000 000.00 (Eighteen million
rand).’
Slip Knot contended in its founding affidavit that the relevant portion of
clause six should read as follows:
‘Slip Knot shall be entitled to payment from the Borrower of a profit share, such
profit share which shall be calculated at 25% (twenty five percent) of the net profit in
the development, the Borrower having however guaranteed a minimum profit share of
R17 000 000.00 (Seventeen million rand)’.

Slip Knot provided the emphasis given to the underlined words and
applied for the rectification of the agreement in order to replace the word
‘interest’ with ‘profit share’. The application for rectification was
opposed by the sureties in their answering affidavit.

[36] After some preliminary skirmishes between the parties, the
application came before Blignault J. He refrained from deciding whether
the underlined words in the preceding paragraph should read as ‘profit
share’, as contended for by Slip Knot, or interest contended for by the
sureties. On 24 February 2012 Blignault J granted judgment against the
sureties but dismissed the application against both the Paulsen Family
Trust and the Keurbos Beleggingstrust. The court of first instance
exonerated the trusts by relying on Thorpe v Trittenwein, 16  which
confirmed the common law principle that unless the trust deed requires
otherwise, all trustees of a trust are required to act jointly in order to incur
liability for the trust. The court of first instance failed to apply the in
duplum rule, in terms of which arrear interest ceases to run once it
reaches the equivalent of the amount of the capital lent.17 The order of the
court of first instance was that the sureties were jointly and severally
liable to pay Slip Knot:
‘A.
(1)
The sum of R12 million;
(2)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from 21 July 2007 to 10 January 2010, such interest to be limited to a maximum
amount of R12 million;
(3)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from 10 January 2010 to the date of judgment;

16 Thorpe & Others v Trittenwein & Another 2007 (2) SA 172 (SCA) at 176H.
17 See, Union Government v Jordan’s Executors 1916 TPD 411 at 413; LTA Construction Beperk v
Administrateur, Transvaal 1992 (1) SA 473 (A) at 482B-H.

(4)
Interest on the sum of R12 million at the rate of 3% per month, calculated
from the date of judgment to the date of final payment, such interest to be limited to a
maximum amount of R12 million;
(5)
The sum of R17 million;
(6)
Interest on the sum of R17 million at the rate of 15,5% per annum, calculated
from the date of judgment to the date of final payment;
(7)
Subject to the provisions of B below, the costs of the application under case
No 26398/09 on an attorney and client scale, such costs to include the costs of two
counsel.
B.
The claims of Slip Knot Investments 777 (Pty) Ltd for payment of the above
amounts by the trustees for the time being of the Paulsen Family Trust and the
trustees, for the time being, of the Keurbos Beleggingtrust, are dismissed with costs,
including the costs of two counsel.’

[37] Sitting as a court of first instance, the high court granted leave to
appeal to the full court. On 12 February 2013 the full court (Louw and
Ndita JJ and Dolamo AJ) upheld the appeal in part but dismissed the
remainder. The full court, applying the in duplum rule, ordered the
sureties to pay the sum of R12 million, being the capital sum lent to
Winskor but limited interest thereon to R12 million (ie a further
R12 million, over and above the R12 million that was to be repaid in
terms of the capital lent to Winskor). The full court held that a surety is
not obliged to pay more interest than the principal debtor.18 As at the time
of delivering judgment no action had been brought by Slip Knot against
the principal debtor, the full court reasoned that, at the time of judgment,
the principal debtor would be obliged to pay no more than R12 million
plus interest in the same amount under the in duplum rule. For this reason
the full court granted the order which it did. The full court, allowing the

18 It relied on Neon and Cold Cathode Illuminations (Pty) Limited v Ephron 1978 (1) SA 463 (A) at
471C-H and Jans v Nedcor Bank Limited 2003 (6) SA 646 (SCA) para 10.

costs of two counsel, ordered the sureties to pay the costs of suit on a
party-and-party scale.

[38] The sureties sought the special leave of this court to appeal hereto,
contending that their appeal should have been upheld in its entirety, to the
extent that Slip Knot’s application should have been dismissed with costs.
Slip Knot then sought special leave to cross-appeal against that part of the
judgment and order of the full court which upheld the appellant’s appeal.
Slip Knot essentially sought the reinstatement of the order of the court of
first instance. This court granted special leave both to appeal and to cross-
appeal further. Accordingly, this court now has before it both the appeal
and the cross-appeal against the decision of the full court (sitting as a
court of appeal). I have profited from reading the judgment prepared by
my brother Wallis

The appeal
[39] The relevant facts are not in issue. This is, in large measure,
illustrated by the sureties having disclosed a tender to pay Slip Knot R12
million together with interest a tempore morae thereon up to the sum of
R12 million. In the appeal the issues are (a) whether, on a correct
interpretation of s 40, read with s 4, of the National Credit Act 34 of 2005
(‘the NCA’), Slip Knot should have been a registered credit provider in
terms of the NCA and (b) if Slip Knot was not so registered, the suite of
agreements in question, including the deeds of suretyship signed by the
sureties, were void. The cross-appeal is concerned with the interpretation
of clause six in the loan agreement concluded between Slip Knot and
Winskor, more particularly the application of the in duplum rule to the
calculation of interest.

[40] In the founding affidavit Slip Knot asserted that the provisions of
the NCA are not applicable either to the loan or the deeds of suretyship
by reason of the fact that Winskor was, in terms of s 1 of the NCA, a
juristic person the asset value of which or annual turnover of which,
together with the combined asset value and annual turnover of all related
juristic persons, at all relevant times exceeded R1 million. In the
answering affidavit the sureties were content that the matter be one for
argument but contended, in addition to interest exceeding the maximum
that is allowed under the in duplum rule in our common law, that the rates
of interest which Slip Knot sought to claim were usurious and contrary to
public policy.

[41] Both the court of first instance and the full court hearing the appeal
accepted that the transaction was one known as ‘mezzanine funding’.
‘Mezzanine funding’ has come to the fore increasingly in recent years.19
It features not infrequently in transactions related to property
development. 20 It involves high risk. 21  Typically, the lender borrows
money from the banks to provide bridging finance to the property
developer at very high rates of interest for a period that is envisaged to be
short term.22

[42] The relevant portions of ss 4(1)(a) and (b) of the NCA read as
follows:
‘4. Application of Act

19 See, for example, Slip Knot Investments 777 (Pty) Limited v Project Law Prop (Pty) Limited &
Others (36018/2009) [2011] ZAGPJHC 21 (1 April 2011) paras 2 and 4.
20 Ibid.
21 Ibid.
22 Ibid.

(1)
Subject to sections 5 and 6, this Act applies to every credit agreement between
parties dealing at arm’s length and made within, or having effect within, the Republic,
except –
(a)
A credit agreement in terms of which the consumer is –
(i)
A juristic person whose asset value or annual turnover, together with
the combined asset value or annual turnover of all related juristic persons, at the
time the agreement is made, equals or exceeds the threshold value determined
by the Minister in terms of section 7(1);
(ii)
the state; or
(iii)
an organ of the state;
(b)
A large agreement, as described in section 9(4), in terms of which the
consumer is a juristic person whose asset value or annual turnover is, at the time the
agreement is made, below the threshold value as determined by the Minister in terms
of section 7(1).’
It is common cause that the agreement is a ‘large agreement’. It has not
been disputed that, at the time when the agreements in question were
concluded, the asset value and annual turnover of Winskor exceeded the
threshold values determined in terms of ss 4(1)(a) and 4(1)(b) of the
NCA.

[43] The relevant portions of ss 40(1) and (4) of the NCA provide as
follows:
‘(1) A person must apply to be registered as a credit provider if –
(a) that person, alone or in conjunction with any associated person, is the credit
provider under at least 100 credit agreements, other than incidental credit agreements;
or
(b) the total principal debt owed to that credit provider under all outstanding credit
agreements, other than incidental credit agreements, exceeds the threshold prescribed
in terms of section 42(1).23
…

23 The parties were ad idem that this threshold currently stands at R500 000. See Reg 5 in terms of the
National Credit Act, GN 713, GG 28893, 1 June 2006.

(4) A credit agreement entered into by a credit provider who is required to be
registered in terms of subsection (1) but who is not so registered is an unlawful
agreement and void to the extent provided for in section 89.’
It is immediately apparent that s 40 (1), which requires registration, is not
unqualified. Section 89(2)(d) of the NCA is also not unqualified: it
renders unlawful an agreement if, ‘at the time that it was made, the credit
provider was unregistered and this Act requires that credit provider to be
registered’ (the emphasis is my own). In other words, the NCA envisages
situations where credit may be provided by a credit provider which is not
registered in terms of the NCA. Moreover, s 89 has to apply to credit
agreements to which the NCA applies and not to credit agreements to
which the NCA does not apply. Not only does this follow as a matter of
logic but it is reinforced by the fact that chapter five, under which 89
falls, nowhere refers to agreements to which the NCA does not apply.

[44] Section 1 of the NCA sets out the definitions that are applicable to
the NCA. The section qualifies all definitions with the words, ‘In this Act
unless the context indicates otherwise’. A ‘credit agreement’ is defined in
s 1 of the NCA as ‘an agreement that meets all the criteria set out in
section 8’. Section 8 enumerates a lengthy list of transactions. There is no
dispute that the loan agreement in question falls within the criteria set out
in s 8. It is neither in dispute that Slip Knot was not registered as a credit
provider in terms of s 40(1) of the NCA nor that the challenged
transaction exceeded the threshold amount prescribed in terms of
s 40(1)(b) of the NCA.

[45] Ex facie the NCA, Slip Knot was not required to be registered in
terms of s 4 but may be required to apply for registration as a credit
provider in terms of s 40. Both the court of first instance and the full

court reconciled that apparent conflict by reference to the words ‘In this
Act unless the context indicates otherwise’ with which s 1 begins. This is
the correct approach. See Amalgamated Packaging Industries Limited v
Hutt. 24 The fact that s 89(2)(d) of the NCA stipulates both (i) non-
registration as a credit provider and (ii) the qualification that the NCA
requires that particular credit provider to be registered, in order for a
credit agreement to be void, gives further impetus to the construction that
non-registration is not necessarily fatal to the provision of credit. The
reference to ‘credit agreements’ in s 40(1) necessarily must be restricted
to include only those agreements which are subject to the NCA or to
which the NCA otherwise extends application.

[46] Mr Burger, who appeared for the sureties, conceded that not every
person who lends money in excess of R500 000 has to be registered as a
credit provider. The example, during argument, of the benevolent uncle
lending money to his nieces and nephews to buy houses for themselves in
different parts of the country, put paid to any notion that good sense
required willy-nilly an interpretation in favour of obligatory registration
for all who lend money in excess of R500 000, no matter what the
circumstances may be.

[47]  The appeal on the ground that Slip Knot was not a registered
credit provider in terms of the NCA must fail. The agreements in question
were not void ab initio.

The cross-appeal
[48] As the full court correctly observed, clause six refers, in terms, to
the payment of R17 million, as ‘interest’ no less than five times (even

24 Amalgamated Packaging Industries Limited v Hutt & Another 1975 (4) SA 943 (A) at 949H.

though it also refers to it as a payment for net profit in the development).
The word ‘interest’ is also used in clause 1.1.5 when referring to this sum
as ‘the total amount accrued in interest in terms of clause six. Clause six
provides that the payment is due, even if, as so happened, there was no
profit arising from the venture. The full court correctly found that, upon a
proper reading of clause six, it referred, without rectification, to interest
claimed by Slip Knot and not to profit share.

[49] I agree with Wallis JA that the full court was incorrect in placing
reliance upon the accessory nature of a suretyship agreement as the
reason for limiting the amount of interest that could be recovered to R12
million, being the amount of the capital sum which had been lent to the
borrower. In Millman v Masterbond Participation Bond Trust 25 ,
Friedman JP and Farlam J , after a comprehensive review of the common
law authorities, held that where, as in this case, sureties had renounced
the benefit of excussion, a creditor has an unqualified election whether to
sue the principal debtor or the surety and may do so directly.26 The fact
that a surety’s obligation is accessory does not have the consequence that
it is contingent.27 What is relevant is not whether or, if so, when the
creditor sued the principal debtor but whether, as matter of law, it could
at any time material to the litigation, have done so.

[50] Slip Knot invoked Standard Bank of SA Limited v Oneanate
Investments (Pty) Ltd (in liquidation) 28  in support of its arguments.
Zulman JA, who delivered the judgment of the court in Oneanate,

25  Millman and another NNO v Masterbond Trust Managers (Pty) Limited (under Curatorship) and
others 1997 (1) SA 113 (C)
26 Ibid at 116B-123C.
27 Ibid at 122C.
28 Standard Bank of SA Limited v Oneanate Investments (Pty) Ltd (in liquidation) 1998 (1) SA 811
(SCA) at 828C-E and 834B-D.

observed that the in duplum rule is concerned with public interest. 29
Having accepted that interest is ‘the life-blood of finance’, he decided
that the application of the rule should be relaxed to the extent that it was
suspended pendente lite. 30  In Oneanate this court held that ‘once
judgment has been granted, interest may run until it reaches double the
capital amount outstanding in terms of the judgment’ (The emphasis is
my own).31  The mischief against which Oneanate was directed was a
debtor’s dilatoriness, which may include taking advantage of the courts’
civil procedures and the law’s delays to avoid the prompt payment of a
debt that was obviously due.32

[51]  Oneanate was concerned with an ordinary unpaid banker’s
overdraft.33 The case was decided before the repeal of the Usury Act 73
of 1968 in terms of s 172(4)(a) of the NCA. Section 2(1)(a) of the Usury
Act provided for the regulation of ‘the annual finance charge rate’
(largely coextensive with interest) by a ‘money lender’ under the
direction of the Minister by notice in the Gazette.  The definition of a
‘money lender’ in terms of s 1 of the Usury Act was widely cast to
include any person granting a loan for a ‘money lending transaction’
which was, in turn, broadly defined as meaning ‘any transaction which,
whatever its form may be, and whether or not it forms part of another
transaction, is substantially one of money lending.’ It is reasonable to
suppose that, until the coming into operation of the NCA, the collective
consciousness of the general public was that interest rates were controlled
across-the-board in South Africa. At the time when Oneanate was

29 At 834B.
30 At 834D..
31 At 834H.
32 See at 834B-E.
33 See at 816J.

decided, the kind of issues with which the courts have been grappling
since the coming into operation of the NCA were not on the horizon.

[52] Slip Knot put its confidence in African Dawn Property Finance
(Pty) Limited v Dreams Travel and Tours CC34 to submit that the courts
must be careful not to let their subjective views interfere with a bargain
deliberately entered into between parties dealing at arm’s length with one
another, even though the rate of interest may be high. The African Dawn
case dealt with the rate of interest, not the capping thereof in terms of the
in duplum rule. In this case there has been no interference with the rate.
That point has not even been argued. It has been accepted throughout that
‘mezzanine funding’ involves high risk and therefore attracts high rates
of interest.

[53] Having had the benefit of reading Wallis JA’s judgment in this
matter, I remain of the view that it cannot have been the intention of the
court in Oneanate Investments to enfeeble the in duplum rule almost
entirely. As Lord Steyn said in R v Secretary for the Home Department,
ex parte Daly,35 ‘In law, context is everything’. This was approved by
this court in Aktiebolaget Hässle and Another v Triomed (Pty) Ltd. 36
Similar views were expressed by Harms DP in KPMG Chartered
Accountants (SA) v Securefin Limited and another. 37 The context of
Oneanate was an ordinary commercial overdraft.38 ‘Mezzanine funding’
is, in the words of Slip Knot itself, a niche market: useful though it may
be, it performs a different role from that of the banks. The money which

34 African Dawn Property Finance (Pty) Limited v Dreams Travel and Tours CC & Others 2011 (3)
SA 511 (SCA).
35 [2001] 3 All ER 433 (HL) at 447 a.
36 2003 (1) SA 155 (SCA) at para [1]
37 KPMG Chartered Accountants (SA) v Securefin Limited and another 2009 (4) SA 399 (SCA) para39.
38 See at 834E.

the banks lend is derived from the deposits therewith of the general
public; the funding for ‘mezzanine’ loans arises from speculative
investments.

[54] LTA Construction Beperk v Administrateur Transvaal 39 remains
unaltered with regard to the retention in our law of the in duplum rule.40
The in duplum rule remains the standard, the benchmark, the yardstick,
the mainstay by which to test the capping of interest.41 As this court said
in LTA Construction, the in duplum rule fulfills a valuable role and a vital
economic function.42 The court quoted Ulrich Hüber as saying, inter alia;
‘ne homines augusta et inclinata re destruantur’,43 the law is not there to
destroy people with a grim and sanctimonious self-righteousness. It is not
creditors alone who deserve the law’s saving hand: debtors may also
qualify. The in duplum rule operates to mitigate a ‘domino effect’
whereby one debtor’s insolvency triggers another, creating a spiral of
economic misfortune with deleterious consequences for society including
the loss of jobs. A relevant factor, when it comes to ‘mezzanine funding’,
is that by its very nature – the lending being short term – a debtor’s
default will very quickly become apparent. In consequence thereof a
creditor should quickly be able to obtain judgment either before or soon
after the in duplum rule caps the interest.

[55] As Zulman JA remarked in Oneanate: ‘A creditor can control the
institution of litigation and can, by timeously instituting action, prevent

39 LTA Construction at 482B-83B.
40 LTA Construction at 482H; Nedbank Limited v National Credit Regulator 2011 (3) SA 581 (SCA)
para 36.
41 Ibid.
42 LTA Construction at 482H.
43 LTA Construction at 482H; Ulrich Hüber Praelectionum Juris, Romani et Hodierni, Pars III (1725)
22.1.28.

prejudice to the debtor and the application of the rule.’44 When it comes
to ‘mezzanine funding’, prompt action by a creditor to recover the debt,
together with interest, has to be incentivised: the public interest in
proceeding speedily with litigation for the recovery of debt due is not
merely to discourage debtors from ensuring that a litis is pendens for as
long as possible; potential prejudice to the debtor is a relevant factor too.
A residual discretion must remain for a court, in appropriate
circumstances, to apply the in duplum rule in the traditional manner.
When it comes to ‘mezzanine funding’ in cases where a debtor has been
‘playing for time’, the suspension of the in duplum rule, as envisaged in
Oneanate, may come into operation.

[56] The sureties for a loan of R12 million, if they were to pay today,
would have to pay an amount of the order of R72 million, if the order of
the court of first instance were to stand. That cannot be correct, especially
in the light of the appellant’s tender. The order which Wallis JA
envisages, although less crippling than that sought by Slip Knot, would
remain inordinately onerous. I come to this conclusion notwithstanding
the fact that the prohibition in Roman and Roman-Dutch law against
‘interest on interest’ has become obsolete.45

[57] It is appropriate in this case for a court to exercise a discretion
which will have the consequence that the in duplum rule is applied in the
traditional way. I arrive at the same conclusion as the full court, albeit by
a different route.

44 At 834D-E.
45 See Davehill (Pty) Limited and others v Community Development Board 1988 (1) SA 290 (A) at
298G-H.

[58] The complexity of the issues and the magnitude of the quantum
have justified the costs of two counsel. I should have dismissed both the
appeal and the cross-appeal with costs.

_______________________
N P WILLIS
JUDGE OF APPEAL

APPEARANCES:

For the Appellant:
W G Burger SC (with him J C Swanepoel)
Instructed by:
Joubert Attorneys, Strand
c/o McIntyre & Van der Post, Bloemfontein

For the Respondent:
R Stockwell SC (with him, J F Pretorius)
Instructed by:
Sim & Botsi Attorneys, Johannesburg
c/o Lovius Block, Bloemfontein

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
24 March 2014

Status:
Immediate

Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.

Paulsen v Slip Knot Investments

The SCA today dismissed an appeal by Mr and Mrs Paulsen
against a judgment of the Western Cape High Court in which they had
been ordered as sureties to pay Slip Knot Investments the sum of R12
million, together with interest and costs. The Paulsens had argued that
although the loan agreement under which the claim was made was not
one to which the National Credit Act (NCA) applied, it was nonetheless
invalid because Slip Knot Investments was not registered as a credit
provider in terms of the NCA. However, the court held that the provisions
of s 89(2)(d) of the NCA on which the sureties relied did not apply to this
credit agreement and it was therefore not invalid because of Slip Knot’s
non-registration as a credit provider.

Slip Knot lodged a cross-appeal in relation to the quantification of
the interest to which it was entitled. Before proceedings commenced the
accrued interest on the outstanding amount of the loan equalled the
amount of the loan. The court held that as a result the interest it could
recover up to the date of institution of proceedings was limited to the

capital sum. However, once proceedings commenced interest would
again commence to run and after judgment it would run on the
cumulative judgment debt until it again reached the amount of the
judgment debt.