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The South African Constitutional Court, in Minister of Police v Khedama, considered when interest begins to run on an award of general damages.
Background
The case arose from the unlawful arrest and detention of Ms Khedama by members of the South African Police Service at the King Shaka International Airport in December 2011. Ms Khedama was detained at the Tongaat Police Station for twelve days in appalling conditions before being released on bail and the charges against her were withdrawn.
The trial court awarded her ZAR 1 million in general damages with interest running from the date of service of the summons. On appeal, the Full Court reduced the quantum to ZAR 350 000 and held that interest on the ZAR 350 000 was to run from the date of judgment. The Supreme Court of Appeal increased the award to ZAR 580 000 and ruled that interest was to run from the date of service of the summons.
Issues in dispute
The central question before the Constitutional Court was whether interest on general damages for unlawful arrest and detention should run from the date of service of the summons or from the date of the trial court's judgment, in terms of sections 2A(2)(a) and 2A(5) of the Prescribed Rate of Interest Act, 1975 (“the Act”).
Court’s findings
The Constitutional Court held that general damages classify as unliquidated debts and therefore fall within the scope of section 2A of the Act. However, the court drew a critical distinction between unliquidated claims for pecuniary loss and claims for general damages. Since general damages are invariably assessed in monetary values prevailing at the date of judgment, not at the date of the delict or service of the summons, awarding interest from the earlier date would result in overcompensation and unjustified enrichment.
The court explained that section 2A(5) of the Act empowered courts to depart from the default rule in section 2A(2)(a), which is that interest runs from the date of service of the summons, and to make an order as appears just in respect of the interest on an unliquidated debt. Where general damages are assessed at the date of judgment, it is fair and reasonable to order that interest runs only from the date of that judgment.
Conclusion
The Constitutional Court has now conclusively found that interest on general damages runs from the date of judgment and not from the date of service of summons or demand in respect of claims for unlawful arrest and detention.
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