IN THE MALAWI SUPREME COURT OF APPEAL
AT BLANTYRE
MSCA CIVIL APPEAL NO. 17 OF 1997
(Being High Court Civil Cause No. 439 of 1988)
BETWEEN:
KARONGA
MANUFACTURERS
ASSOCIATION
(KAMA)..........................................................APPELLANTS
- and -
DEVELOPMENT
OF MALAWIAN
TRADERS
TRUST
(DEMATT)..........................................RESPONDENTS
BEFORE: THE
HONOURABLE THE CHIEF JUSTICE
THE HONOURABLE MR JUSTICE
KALAILE, JA
THE HONOURABLE JUSTICE MRS
MSOSA, JA
Bazuka Mhango, Counsel for the
Appellants
Nkowani, Counsel for the
Respondents
Chirambo (Mrs), Official
Interpreter/Recorder
J U D G M E N T
Kalaile, JA
The appellants, Karonga
Manufacturing Association, claimed against the respondents the sum of K4,012.82
interest, damages for conversion and costs of the action in the High Court.
The proceedings then came
before the Registrar for assessment of interest. The issue before the Registrar was the meaning of “interest at
current rate from August 1985" to the judgment date. It was the opinion of the Registrar that the
Judge’s intention was to reinstate the appellants to the position in which they
would have gained from the loan had they had the opportunity to use or invest
the funds in issue.
Accordingly, the Registrar
held that the interest rate applicable is the rate at the time of assessment of
45% less 5% on capital, to wit 40%. He,
therefore, awarded the appellants K117,617.57 less 10% which would have accrued
as tax on interest. The total interest
awarded came to K105,855.82. This
ruling was delivered on 20th February, 1996.
On 1st April, 1996, the first
respondent took out an application to set aside the Registrar’s ruling on the
award of interest. This application
also came before the Registrar. After
listening to Counsel’s arguments, the Registrar set aside his own ruling of
20th February, 1996 and made a fresh assessment of interest in which he awarded
the sum of K13,952.30. Now, the learned
Judge held that the Registrar had no jurisdiction to set aside his earlier
award of assessment. He also held that
when the trial Judge awarded interest at current interest rate from 1985, he
meant various interest rates applicable from 1985 to 1995. Applying this principle to the application
under consideration, the learned Judge found the interest to be K13,950.30, and
he awarded this amount to the appellants.
This appeal is against the
findings and Orders made by the learned Judge from the appeal against the
findings and Orders of the Registrar.
Mr Mhango, Counsel for the
appellants, argued principally that the proper interest rate which the learned
Judge should have applied is the “commercial interest rates” and not the “bank
savings rates”. He cited a number of
authorities in support of this proposition.
Counsel for the respondents,
Mr Nkowani argued, on the other hand, that the proper rate to apply is the bank
savings rate, because this is the rate which
the appellants would have
had in mind if they
had invested the
amount they were entitled to. Again, Counsel cited some authorities in
support of this proposition.
We do not consider it
necessary to examine the authorities cited by either Counsel, for reasons which
we shall shortly give. It seems to us
relevant and important to examine the way the appellants framed their pleadings
in this particular case. For purposes
of this appeal, we shall consider and confine our attention to paragraph 6 of
the appellants’ pleadings. It reads -
“6. CONSEQUENTLY the plaintiff pleads
that the first defendant is vicariously liable to pay the said sum of K4,012.82
from 1st June, 1985 at the going bank rate up to the date of payment.”
Evidently, the appellants did
not indicate in their pleadings whether they were calling for the “commercial
rate” or the “investment rate”, both being “bank rates”. According to The Supreme Court Practice 1995
Edition, Vol. I, at page 39, the commercial and investment rates are described
as follows -
(a) The commercial rate - or rates
which the plaintiff would have had to pay to borrow the money. It is uncertain to what extent the personal
circumstances of the plaintiff are relevant;
there is a discussion in the judgment of Forbes, J. in Tate and Lyle
Food and Distribution v. G.L.C. [1982] 1 W.L.R. 149; [1981] 3 All E.R. 716, which suggests that a
plaintiff of high standing should receive somewhat less than the ordinary run
of plaintiff and vice versa, but that the abatement or increase should
be moderate.
The commercial rate
is commonly used in commercial cases, including claims on bills of
exchange. The practice of the
Commercial Court is to award interest at base rate plus one per cent. This, however, is no more than a presumption
which can be displaced by evidence showing that such a rate will be unfair to
one party or the other (Shearson Lehman Hutton Inc. v. Maclaine Watson &
Co. Ltd. (No. 2) [(1990) 3 All E.R. 723).
(b) The investment rate - at
which the plaintiff could have invested the money. This is the basis of the practice in personal injury cases (see
para. 6/2/16). Until recently this has
been taken to be the Short Term Investment Account rate; since April 1, 1983 this investment has not
been generally available and it is becoming more usual to take the
rate payable on judgment debts (see para. 42/1/12). These rates have in the past been markedly
lower than commercial rates, but at other times the difference may be small.” [Emphasis supplied]
Order 6, r.2, rr.10 states
that all claims for interest must be pleaded.
(O.18, r.8, rr.4 further states that a party must plead specifically any
claim for interest under section 35A of the Act or otherwise”.)
In the case at hand, the
appellants did not specifically plead for interest at the commercial rate nor
at the investment rate. They pleaded
for interest at the bank rate which is not specific enough.
On the same pages 39-40 of The
Supreme Court Practice 1995 Edn, Vol. I, under the heading Rates of Interest
is paragraph (f), which provides that -
“Ordinary interest
- It has been said that there is no such thing as “ordinary” or “correct”
interest. In practice the Court will
sometimes assess interest by reference to the rates of interest available on
monies invested in Court on special account during the relevant period, or by
reference to Judgment Act rates. This
is the rate awarded on default judgments and in most cases by the Masters in
the Q.B.D. Such rates will be relied
on, however, only where no better guide as is appropriate or available. There are other methods of assessment which
may be used, e.g. one or more per cent over base rate from time to time
in force, which are more sophisticated and accurate than the slow moving
special account rate, or the even slower moving Judgment Act rate (United
Bank of Kuwait v. Hammond [1988] 1 W.L.R. 1051, C.A., at p.1064). The usual practice in the Commercial Court
is to award interest at one per cent above base rate, unless such rate would be
unfair to one or other of the parties (Shearson Lehman Hutton Inc. V.
Maclaine Watson & Co. Ltd. (No. 2) [1990] 3 All E.R. 723). In assessing damages in an action against
solicitors for negligence in the conduct of a personal injuries claim, the
question may arise whether the correct rate of interest to be included in the
award is that appropriate to a personal injuries claim (special account) or
whether it is the higher rate appropriate to a judgment; in such a case it is within the
discretion of the court to award interest at the Judgment Act rate,
and there is nothing exceptional about using such rate as an exercise of
discretion. When a court is considering
the appropriate rate of interest for a period from the date of the cause
of action to the date of the judgment, the rate payable on judgment
debts is a convenient starting point (Pinnock v. Wilkins & Sons, The
Times, January 29, 1990; The
Independent, March 13, 1990, C.A.).” [Emphasis supplied]
The Judge in the Court below
appears to have applied the principles as stated in the Rules of the Supreme
Court under paragraph (f), at page 39 cited above. In Malawi, the Judgment Act rate would appear to be prescribed
under the provisions of section 65 of the Courts Act (Cap. 3:02), which states
that every judgment in civil proceedings shall carry interest at the rate of
five per centum per annum or such other rate as may be prescribed. In our opinion, this is the rate which
should be applied in the circumstances of the case under consideration. The Registrar is, therefore, directed to
make the award based on this interest rate.
Costs to the respondents.
DELIVERED in Open Court this
24th day of November,1999, at Blantyre.
Sgd ...........................................
R A BANDA, CJ
Sgd ...........................................
J B KALAILE, JA
Sgd ...........................................
A S E MSOSA, JA