Sarah damaged her car when she drove into a pillar in the parking lot of a shopping mall. XYZ

Panel Beaters quoted her R10 000 to repair the car. She accepted the quotation and paid a R5000
deposit. The car was repaired and returned to Sarah, and she, despite demand for payment from
attorneys for XYZ Panel Beaters, remains in default for payment of the outstanding amount. Since
the outstanding amount is a liquidated amount, interest has started to accrue from the date of
the letter of demand. Sarah’s failure to pay the outstanding amount has led to the attorneys
instituting a claim and obtaining a default judgment against her in the district court of the
Magistrate’s Court. According to the attorney’s last letter to Sarah, she now owes R11 500, which
includes the judgment debt, interest on the amount as well as costs. Sarah consults with you
regarding this latest letter she has received. She wants to know whether it is possible for them
to claim this amount of money from her when the initial debt was only R5000.
Instruction: Advise Sarah with reference to the common law rule and legislative guidelines that
regulate mora interest.

1 answer

According to the common law, mora interest begins to accrue from the date of the letter of demand. In this case, since Sarah received a letter of demand from XYZ Panel Beaters' attorneys, interest would have started accruing from that date. Additionally, the attorneys have obtained a default judgment against Sarah in the magistrate's court, which includes the judgment debt, interest on the amount, and costs.

Legislative guidelines also govern mora interest, specifically the Prescribed Rate of Interest Act. This Act prescribes the maximum rate of interest that may be charged as mora interest. Currently, the prescribed rate is 10.25% per annum.

Therefore, based on the common law rule and legislative guidelines, it is possible for XYZ Panel Beaters' attorneys to claim the total amount of R11 500 from Sarah, which includes the initial debt of R10 000, interest accrued from the date of the letter of demand, and costs associated with obtaining the default judgment. Sarah should seek legal advice if she wishes to dispute the claim.