The Basics of Mora Interest

‘A tempore morae’ is a Latin phrase denoting the date on which an obligation to pay becomes due and when interest may be charged when payment is not made timeously. It is also commonly known as mora interest.

Written By of Cowan-Harper-Madikizela Attorneys

Mora interest is charged when a payment is not made timeously, and an interest rate has not been agreed upon between the parties, determined by trader custom or prescribed by law. Parties can avoid the application of mora interest by agreeing to a different interest rate, subject to other applicable laws such as the National Credit Act, which may limit the amount of interest that can be charged.

The basis for the provision of mora interest is the common law right to claim interest. This reasoning is based on the notion that creditors suffer damages because of tardy payments by debtors. In Land Agricultural Development Bank of South Africa v Ryton Estates (Pty) Ltd and Others 2013 (4) SA 385 (SCA) the Supreme Court of Appeal held that interest is the “life-blood of finance” and that late payments by debtors cause deprivation to the creditors as they are unable to use those funds in a productive manner.  Due to mora interest’s position as a representative of damages, the rate at which it is charged cannot be determined by agreement.

The Prescribed Rate of Interest Act, 55 of 1975 (the “Act”) determines the rate at which mora interest is calculated.

Section 1(1) of the Act provides that:

“If a debt bears interest and the rate at which interest is to be calculated is not governed by any other law or by an agreement or trade custom or in any other manner, such interest shall be calculated by the rate contemplated in subsection (2) (a) as at the time when such interest begins to run, unless a court of law, on the ground of special circumstances relating to that debt, orders otherwise.”

Section 2(a) of the Act determines that the rate of mora interest is the repurchase rate as determined from time to time by the South African Reserve Bank, (“the Repo Rate”) plus 3,5 percent per annum, which rate must be published by the Department of Justice and Correctional Services, from time to time, by notice in the Government Gazette. The rate will become effective from the first day of the second month following the month in which the Repo Rate is determined by the South African Reserve Bank. 

The High Court in Da Cruz v Bernardo 2022 (1) All SA 414 (GJ) found that while the provisions of the Act are to be interpreted in light of the existing common law, the common law will yield where there is a conflict between the statutory provision and the common law position, the former being taken to amend the latter. 

In Davehill (Pty) Ltd vs Community Development 1988 (1) SA 290 (A) the Appellate Division ruled that the prescribed rate at the time when mora interest begins to run is fixed at that time and remains constant, notwithstanding that the Minister may from time to time prescribe different rates. This was confirmed by the Supreme Court of Appeal in Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga and others 2013 (2) SA 1 (SCA) where the SCA found that the rate of mora interest is fixed at the time when the debtor is placed in mora. In other words, for a creditor to become entitled to such interest, there must be a due date for payment, or a demand made for payment by the creditor. The creditor is then entitled to charge mora interest from such date at the prevailing rate.

Here follows a table of the changes in the prescribed rate since 1993:

Date Range

Rate of Interest

1 October 1993 – 31 July 2014

15.50% pa

1 August 2014 – 29 February 2016

9.00% pa

1 March 2016 – 30 April 2016

10.25% pa

1 May 2016 – 31 August 2017

10.50% pa

1 September 2017 – 30 April 2018

10.25% pa

1 May 2018 – 31 December 2018

10.00% pa

1 January 2019 – 31 August 2019

10.25% pa

1 September 2019 – 29 February 2020

10.00% pa

1 March 2020 – 30 April 2020

9.75% pa

1 May 2020 – 31 May 2020

8.75% pa

1 June 2020 –30 June 2020

7.75% pa

1 July 2020 – 31 August 2020

7.25% pa

1 September 2020 – 31 December 2021

7.00% pa

1 January 2022 – 28 February 2022

7.25% pa

1 March 2022 – 30 April 2022

7.50% pa

1 May 2022 – 30 June 2022

7.75% pa

1 July 2022 – 31 August 2022

8.25% pa

1 September 2022 – 31 October 2022

9.00% pa

1 November 2022 – 31 December 2022

9.75% pa

1 January 2023 – 30 April 2023

10.5% pa

1 May 2023 – 30 June 2023

11.25%

 1 July 2023 - onwards

11.75%


Mora interest is a principle that remains ever-present, not only in commerce but also in the lives of many South Africans. As the South African debt crisis worsens, everyone should have a clear understanding of how and when interest is charged on debt.

As a number of applicable principles and legal instruments must be considered, specialist legal advice should be taken by both creditors and debtors before incurring debts or concluding agreements which incorporate interest provisions.

Henry Korsten

Henry Korsten
Head of Property, Conveyancing and Litigation

Anthony Andrews

Anthony Andrews
Candidate Legal Practitioner of Corporate Law and Commercial Litigation

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