In terms of the so-called in duplum rule, arrear interest on a loan ceases to accumulate once the accrued and unpaid interest equals the amount of the outstanding capital debt. Put differently, a lender may only levy interest on a loan up to the capital loan amount and no further interest may, while it remains unpaid, accumulate in excess of that ceiling. The in duplum rule is a public interest rule that protects borrowers from exploitation by lenders. Its contours continue to evolve. On 21 April 2026, and in Valoworx 33 CC and Others v Merchant Commercial Finance 1 (Pty) Ltd t/a Merchant Factors (A142/2025; 16399/2023) [2026] ZAWCHC 182 (21 April 2026), the Full Bench (three Judges) of the High Court of South Africa, Western Cape Division (“High Court“) had to answer the following question:
“[W]hether the in duplum rule’s application is circumvented when the parties, after interest has accumulated, conclude a written settlement agreement that amalgamates the outstanding capital and interest into a new single consolidated amount, expressed and admitted as a new capital amount.” (at paragraph [45])