- The court ordered the state to pay interest on the full R20 million from the date of the consent order, not only in the event of default.
- Both the MEC and the child’s mother failed to secure leave to appeal after the judge found no reasonable prospect of success.
- The health department was also ordered to pay wasted costs after causing a postponement on the eve of the hearing.
The High Court in Kimberley has ordered the Northern Cape Health Department to pay interest on a R20 million birth injury settlement from the day the agreement was made, dismissed both parties’ bids to appeal and confirmed that the legal costs fight is over.
Deputy Judge President MV Phatshoane rejected the MEC for Health’s attempt to avoid interest on the damages and refused Davidene Chanelle Arends’ effort to reopen costs using a Calderbank offer. The court found there was no reasonable prospect that another court would reach a different conclusion and declined to let the dispute continue.
For the family, the ruling means the compensation increases with interest dating back to March 2023. For the department, it means a higher financial burden and additional legal costs.
Interest starts when the amount is agreed
The claim stems from serious injuries a minor suffered during birth at a public hospital. The parties later agreed to settle the damages for R20 million, payable in instalments, but disagreed about when interest should begin.
The department argued that interest should apply only if it failed to pay on time. The court disagreed and applied the Prescribed Rate of Interest Act 55 of 1975. Judge Phatshoane held that once the amount of damages was fixed by agreement, the debt was effectively a judgment debt under the Act.
He wrote that “interest shall not commence to run until the date upon which the quantum is determined by judgment, arbitration, or agreement,” and that such determination “would, for the purposes of the PRIA, be deemed to be a judgment debt.”
On that basis, he ordered that the defendant pay interest on the capital amount from 15 March 2023, the date the consent order was issued, to the date of final payment at the rate of 10.75% per annum.
Dismissing the MEC’s application for leave to appeal, he said the grounds of appeal are unsustainable on the facts and the law and that there was no reasonable prospect of a successful appeal.
Calderbank offer cannot reopen settled costs
Arends tried to revisit costs by relying on a confidential settlement proposal made earlier in the case. A Calderbank offer is a formal settlement proposal made in legal disputes, marked as without prejudice save as to costs. It is designed to encourage settlement and may later be shown to a court when deciding who should pay legal costs.
She argued that because the department did not accept her earlier offer, it should face attorney and client costs from that date.
The court said that the argument came too late.
The consent order expressly recorded that costs would be paid on a party and party scale. According to the judge, once both sides agreed to that term and made it an order of the court, the issue was finished.
It is patently incorrect to suggest the parties had not agreed on costs, he wrote. Obviously, they did.
He explained that a compromise embodied in a consent order has the effect of res judicata, meaning the dispute is finally settled. The order brings finality to the lis between the parties and replaces all earlier positions, including any reliance on a Calderbank offer.
Nothing prevented the plaintiff from asking the court to reserve the issue of costs at the time, as she did with the question of interest. Instead, she accepted a full settlement.
Her application for condonation for filing late was also rejected. The delay was described as inordinate and the explanation wholly unpersuasive, with the court finding no sufficient cause to excuse it.
State pays for last-minute delay
The department was, however, ordered to pay wasted costs for a separate reason. It introduced new allegations in its heads of argument on the eve of the hearing, which forced a postponement so the plaintiff could respond.
The judge found that the department occasioned the postponement and must bear the costs of that day.
Get your news on the go. Click here to follow the Conviction WhatsApp channel.
