When is interest a tempore morae payable?
15/08/2011

This question was dealt with in a recent decision of the Supreme Court of Appeal (SCA) in the matter of Scoin Trading (Pty) Ltd vs Bernstein. Briefly, an application was made by Scoin, a company dealing in gold coins and similar items, for payment of the balance of the purchase price of a rare coin purchased by the deceased, (a Mr Till) prior to his death, together with interest at the rate of 15.5% per annum against delivery of the coin.

The executor of the deceased’s estate acknowledged liability for payment of the balance of the purchase price but disputed the estate’s liability for interest.

The SCA held that if a debtor’s obligation is to pay a sum of money on a stipulated date, he will be in mora if he fails to perform on/before such date. The damages that flow naturally from such failure is interest a tempore morae or mora interest. The purpose of mora interest is to place the creditor (in this case, Scoin) in the position it would have been if the debtor had performed in terms of the undertaking to pay the balance of the purchase price.

Because mora interest constitutes contractual damages, it does not require fault. All that is required is proof that the debtor is in mora, in that he failed to perform, (i.e. pay the balance purchase price on or before the time agreed upon).

The mere fact that the debtor passed away does not render payment of the debt impossible.

In this case, the appeal of Scoin was upheld with costs and the executor as administrator of the estate was accordingly obliged to pay the debt owed by the deceased to Scoin, including mora interest.

Clients are reminded of their rights to claim mora interest on outstanding debts in certain circumstances. Such interest is presently 15.5% per annum, which is substantially higher than the prime interest rate charged out by the major banks. Where an amount of money is due to a client and it is agreed that payment is due on or before a specific date e.g. the 31st of August 2011, mora interest can be claimed at the rate of 15.5% per annum from the following day i.e. the 1st of September 2011 until date of payment of the sum owing or balance in terms of the Prescribed Rate of Interest Act. Clients are requested to contact the Commercial, Property and Litigation Department of Adams & Adams and speak to Leander Opperman or Tracey Moss should they require any further advice on the correct procedure in claiming of outstanding debts.
Leander Opperman
Partner
leander-o@adamsadams.co.za