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[2017] ZAWCHC 68
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Audi Financial Services v Safter (9990/13) [2017] ZAWCHC 68; [2017] 3 All SA 778 (WCC) (28 June 2017)
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IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
Number: 9990/13
In
the matter between:
AUDI
FINANCIAL SERVICES a division of WESBANK
a
division of FIRSTRAND BANK
LIMITED
Plaintiff
and
EBRAHIMA
SAFTER
Defendant
Delivered:
28 June 2017
JUDGMENT
BOQWANA,
J
Introduction
[1]
The
plaintiff instituted action against the defendant for payment of
damages arising from an instalment sale agreement, concluded
between
the parties after the vehicle which was the subject matter of the
agreement had been repossessed by the plaintiff and sold
by way of
auction. It is common cause that the parties entered into a
written agreement on or about 30 November 2006 at Cape
Town,
Barloworld Motor (Pty) Ltd t/a Audi Centre (‘Audi Centre’),
in terms of which the defendant purchased from Audi
Centre a
2006
Audi Q7
motor vehicle (‘the motor vehicle’ / the
vehicle’) for a total purchase price of R965 269. 80 which
included
finance charges of R265 241. 18 and a processing fee of
R3500. 00.
[2]
In
terms of the agreement the defendant would pay the purchase price in
monthly instalments of R12 640. 33, commencing
on 10
January 2007, with the final instalment of R 219 490. 33 due on
29 November 2011.
[3]
It
was agreed that ownership of the vehicle would remain vested in Audi
Centre until the full amount owed under the agreement was
paid by the
defendant.
[4]
It
was further agreed that in the event of the defendant breaching any
term of the agreement, the plaintiff would be entitled to
cancel the
agreement, obtain possession of the motor vehicle, sell the vehicle,
keep all payments made by the defendant and claim
the balance, if
any, from the defendant as damages. Finally, the defendant’s
chosen
domicilium
citandi et executandi
was
[...]
F. Street,
Cape
Town.
[5]
Audi
Centre ceded its right, title and interest in the agreement to the
plaintiff, which accepted the cession of same.
[6]
It
is common cause that the defendant breached the agreement by falling
into arrears with his payment obligations. As a result
thereof
the plaintiff elected to cancel the agreement and on 27 July 2011 the
plaintiff issued summons against the defendant, in
this Court under
case number 15177/11, in which the plaintiff claimed, inter alia,
cancellation of the contract as well as return
of its motor vehicle.
[7]
The
defendant defended the action and the plaintiff applied for summary
judgment, which was granted by Acting Judge Eloff on 14
October 2011.
Eloff AJ confirmed the cancellation of the agreement and
ordered the defendant to deliver the vehicle to the
plaintiff. Leave
to appeal was refused. The defendant approached the Supreme Court of
Appeal (‘SCA’) on petition, which
granted leave to appeal
to the full bench of this division. An order was granted by the
full court, dated 21 January 2013,
which dismissed the appeal with
costs, including costs relating to the application for leave to
appeal and the petition to the
SCA.
[8]
In
the intervening period prior to the finalisation of the appeal and on
or about 7 January 2013, the plaintiff obtained possession
of the
motor vehicle when the defendant signed a notice of termination.
[9]
The
plaintiff alleges that the defendant had surrendered the vehicle
voluntarily. It further contends that it sent to the defendant
a
notice in accordance with the provisions of s 127(2) of the National
Credit Act 34 of 2005 (‘the NCA’), informing
the
defendant of the value attributed to the motor vehicle. The defendant
failed to respond to such notice and the vehicle was,
according to
the plaintiff, sold at auction at the best possible price,
taking into account the state of
the economy at that time
.
The contract balance as at the date of repossession was the sum of
R434 809.56. The motor vehicle was duly appraised
and
valued in the sum of R 60 000.00 plus VAT and sold for
R140 000.00.
[10]
The
plaintiff also contends that it complied with ss 127(5)(a) and (b) of
the NCA, by crediting the defendant’s account with
the proceeds
of the sale less any expenses reasonably incurred by the plaintiff in
connection with the sale of the goods. As
the settlement value
exceeded the value obtained after the sale of goods, the plaintiff
contends that written notice was sent affording
the defendant 10 days
in which to settle the outstanding balance, and the
defendant
failed to do so.
The plaintiff further alleges that it sent a notice in terms of the
provisions of s 129(1)(a) of the NCA, via registered mail.
[11]
The
amount claimed in the summons was originally R261 797.98. The
plaintiff however reduced its claim to an amount of
R211 984.33
in light of the fact that the legal fees were not taxed or agreed,
following the decision of
Nkata
v FirstRand Bank Limited
2016
(4) SA 257
(CC). The amount claimed, including its reduction,
was not contested by the defendant.
[12]
The plaintiff
called three witnesses in support of its claim, being, Johannes
Petrus van Niekerk (‘Van Niekerk’), Hasina
Sonday
(‘Sonday’) and Alistair Samuels (‘Samuels’).
The defendant closed his case without calling
any witnesses.
Issues
to be determined
[13]
The
defendant had initially challenged the cancellation of the contract,
as one of the issues contested, on the basis that
there
was a debt review in place
.
Mr Khan for the defendant advised the court during oral argument that
the defendant no longer placed the issue of cancellation
in dispute;
he submitted that the defendant agreed that the agreement had been
cancelled. He further agreed that the appeal
court dismissed
the appeal on 21 January 2013. Mr Khan also submitted that the
defendant no longer persisted with the contention
that he did not
receive the s 127(5) notice. This issue was in any event not pleaded,
although it featured in cross examination
of the witnesses and in the
defendant’s heads of argument. Finally, he submitted that the
defendant was also abandoning his
challenge that s 129 (1) was not
complied with.
[14]
The
remaining issues in dispute are therefore:
(a)
Firstly,
whether the defendant voluntarily surrendered the vehicle to the
plaintiff. This question is significant because,
according to
the defendant, if the surrender was not voluntary, the plaintiff
would not have been entitled to repossess the vehicle,
as the appeal
was still pending. In those circumstances the court order would have
been suspended pending the finalisation of the
appeal.
(b)
Secondly,
whether there was compliance with s 127(2) of the NCA. The
defendant alleges that he did not receive the notice.
According
to him, had he received the notice, he would have had the opportunity
to take the vehicle back instead of losing it and
having to pay any
further money to the plaintiff.
(c)
Thirdly,
whether the plaintiff complied with the Consumer Protection Act 68 of
2008 (‘the
Consumer Protection Act&rsquo
;) when advertising the
vehicle for the auction.
Plaintiff’s
case
[15]
Van
Niekerk testified that he works at WesBank Asset Remarketing as a
sales manager. He leads a group of employees
that
receives vehicles that have been repossessed
and brought to the store. He has been in this position for the
last eight years. His department ensures that those
vehicles
are inspected when they come in. They are then valued and the
necessary
s 127(2)
and (5) notices are sent to the respective
clients. These vehicles are then authorised for sale, after
which they are repaired
and prepared for auction. The day before an
auction Van Niekerk and his team would go and establish estimate sale
prices, which
they would use as a reserve. On the day of the
auction they would ensure that the vehicles are sold for the highest
possible
bid. Van Niekerk did not know the defendant
personally, but knew that he had an account with the plaintiff on
which he had
defaulted and that the plaintiff had repossessed his
vehicle by means of a court order and eventually disposed of the
vehicle on
auction. According to Van Niekerk, the plaintiff
utilised tracers from Kitshoff & Associates (‘Kitshoff’/
‘the agents’) to repossess the vehicle after it obtained
the summary judgment. The defendant wanted to appeal and his
appeal
[sic] was dismissed but he later on got permission to take it to the
full bench and the appeal was again [sic] dismissed
with costs.
[16]
The
field agents from Kitshoff would go and meet with a defendant who
would hand over the vehicle. When the defendant hands
over the
vehicle to the agents, they would inspect it together and fill out an
inspection form and the defendant would also sign
a notice of
termination with the agent. The same process happened in this
case and the defendant signed a voluntary termination
notice.
[17]
The
inspection report noted that there were problems with the motor and
electronics of the vehicle. The vehicle had packed
up and the
battery was flat. The vehicle was a non-runner at the time,
meaning it was not in a working condition. It
also had
scratches, cracks and dents. The defendant signed the
inspection report to confirm what was noted therein. Because
the
vehicle was not in a working condition, it was towed to Auction
Operations for it to be turned into a runner.
[18]
Once
the vehicle was towed to Auction Operations, Van Niekerk went there
to inspect it in order to provide a
prima
facie
valuation of the vehicle. The impression of the real value at
that stage, unless disputed, was 25% of the trade price because
it
was a non-runner. The ‘for sale’ market value was
R60 000.00. The plaintiff would normally expect
it to be
sold at a higher price at the auction. The vehicle was turned
into a runner, the battery was replaced and it was
fixed cosmetically
and sent to the valet for cleaning. The estimated price for the
vehicle, established by Van Niekerk the
day before the auction was R
120 000.00. It was eventually sold for R140 000.00
excluding VAT. Compared to
the estimation it was sold at a good
price.
[19]
The
auction was advertised in numerous newspapers, namely, The Citizen,
Die Burger, Cape Times, Die Beeld, The Argus, Die Rapport
and The
Sunday Times. Van Niekerk attended the auction on 11 April 2013
and there were 152 people present.
[20]
In
cross examination, he testified that the plaintiff sent the agents to
collect the vehicle as it was not delivered to it as per
the court
order, but it was totally voluntary. When asked what the field agents
would have said when asking the defendant to sign
for the vehicle, he
testified that he was not present when the document was signed. It
was put to him that a court order
could not be enforced because there
was an appeal pending and therefore the defendant had given the
vehicle voluntarily. His
answer was that that was correct.
[21]
When
asked about how would the public and the defendant know that the
defendant’s vehicle was to be sold at an auction, he
responded
by saying that they would, because the newspaper advertisement
contained a telephone number and website where enquiries
could be
made. Therefore, if a member of the public went to the website
they would see the items on sale on that specific
day. There
were also auction lists with the description given. According
to him,
it is not
stated anywhere in the legislation
that details of a specific vehicle belonging to the defendant must be
mentioned (in the newspaper advertisement). At the
time of
repossession the defendant was informed where his vehicle was going
as indicated in the inspection report which he signed.
It indicated
that the vehicle was stored at Auctions Operations in Drill Road with
name and contact details of a contact person.
Whilst a copy of the
inspection report was not given to the defendant at the time, he
could be given a copy upon request. The plaintiff
would have informed
him, before it sold his vehicle on auction, as to which auction house
the vehicle would be auctioned.
The
defendant would have received an SMS notification. He did not
personally inform the client of the date and venue of the
auction.
He recalled seeing an entry that an SMS was sent to the
defendant informing him of the auction of his motor vehicle.
The
s
127(2)
and (5) letters are sent by the plaintiff’s legal
department.
[22]
Sonday
testified that she is a specialised controller working in Specialised
Collections at WesBank. When a vehicle is repossessed
an
agreement is cancelled. If the vehicle is to be sold, her
department sends out the
s 127(2)
letters. If the time has
expired and the client is able to pay his or her arrears plus costs
or negotiates a repayment arrangement,
the plaintiff would reinstate
the agreement. If the client, however, fails to pay or
negotiate a repayment arrangement, the
plaintiff would then proceed
to sell the vehicle on auction. Sonday has been working in this
position for 11 years.
[23]
The
defendant’s account was allocated to her in February 2013
.
The agreement (with the defendant) was cancelled. It came
in with a court order. The plaintiff sent a
s 127(2)
notice to
the defendant. It was the second time the vehicle had been
repossessed and sold. The first time around the
s 127(2)
was system
generated and sent to the defendant. He then paid the arrears
plus costs and the agreement was reinstated. Because
it was the
second time the
s 127(2)
notice was sent, it was manually generated.
The first time the letter is sent it goes to the client
automatically, the second
time it is sent off to the client manually.
She manually generated the letter on the system and it was
posted. The mailroom
has a dropdown box in their system. She
generated the letter, printed it, put it in the envelope and sent it
to the mailing
room. The mailing room sent it off to client.
[24]
A client is also
sent SMS messages to contact the plaintiff regarding the valuation
amount. These SMS messages are also system generated.
They go
automatically (to the client’s cell phone number). The
reason for the SMS is for the customer to see that the
vehicle has
been valued, to contact the plaintiff and to pay. The system sends
the SMS when the valuation amount is loaded.
[25]
She referred to
the plaintiff’s computer system which contains entries of what
SMS messages were sent to the defendant. According
to these
records, on 8 January 2013 a valuation amount was sent to the
defendant’s cell number by Frank van Staden.
An entry was
also made on 13 February 2013 that a
s 127(2)(b)
valuation letter was
sent to ‘customer – customer’s residential’.
The system however stated that the letter
was not sent. She saw
this and realised it was because this was a second repossession and
that is when and why she generated
the
s 127
(2)(b) letter manually.
Another entry was made on the same date stating that saleable date
was sent via SMS to client’s
cell number. On 13 February
2013 it was recorded that an SMS had been sent that
‘
YOUR
VEHICLE HAS NOW BEEN FORWADED TO BE SOLD ON AUCTION – CONTACT
HASINA SONDAY AT WESBANK TEL: 021 4433413’
.
Another system entry recorded a saleable date SMS to client’s
cell number on 13 March 2013 by Sadika Mohamed.
[26]
Sonday stated that
a
s 127(2)
letter is sent (to a client) if a vehicle is taken in
because of a court order or a voluntary termination. If the
agreement
is cancelled with a court order the full settlement value
must be paid. The plaintiff does not reinstate that agreement.
The agreement in the current matter was cancelled. The arrears
of R 413 480.22 had equalled the outstanding balance,
because
the agreement had also expired on 29 November 2011. The
s
127(2)
letter was sent on 13 February 2013, after the agreement had
expired. The defendant never contacted the plaintiff or
tendered
payment of the arrear amount. The letter was sent to
the address given by the defendant to the plaintiff. A
s 127(5)
automated letter was sent to the defendant on 20 April 2013 as per
the electronic records. A further entry was made on that
day by
Sadika Mohamed that ‘PROCEEDS SMS’ was sent to the
defendant’s cell number.
[27]
In
cross examination, Sonday conceded that she did not personally post
the
s 127(2)
letter. She gave it to the mailing room personnel
to post. She testified that the mailing room personnel sent all
the
letters and there would be no reason why they would not send the
letter to the defendant. Their job is to send letters and
all
the letters go. She conceded that she did not see them posting
the letter. The
s 127
letters, unlike the
s 129
letters, are
not sent by registered mail. Even though summons had been
served and the agreement cancelled, they still gave
a client an
opportunity to pay the settlement. She conceded that whether
repossession of goods was voluntary or done by a court
order, a
s
127(2)
letter would be sent. They do not keep proof of postage
of these letters. She was not aware that the defendant had
signed a voluntary surrender of his vehicle; she was aware of a court
order and that once summons was served on the defendant, the
agreement was cancelled. She was not aware of the appeal and
that the order had not yet been confirmed; she did not deal
with this
area (of work) at all. The SMS was system generated and was
sent to the number they had on the system. The
system shows the
SMS was sent. When the vehicle was sold, the account went to Sadika
Mohamed.
[28]
In
re-examination she testified that because the agreement had expired,
despite the
s 127(2)
letter being sent, the defendant still had to
pay the full settlement amount.
[29]
Samuels
testified that he works for the plaintiff as a team leader in the
Specialised Collections department. He leads a team
of people
that attend to defaulting customers when their accounts have been
referred for legal action. He ensures that the
plaintiff
complies with legislation, gives instructions to attorneys to proceed
with legal action and monitors the process. He
has been a team
leader for three years, but has been in that Specialised Collections
department for nine years. Sonday is
a member of his team. He
knew the defendant had an account with the plaintiff which went into
arrears. The account
was cancelled and the vehicle was sold on
auction.
[30]
The
plaintiff complied with the NCA by sending the
s 129
notice, dated 2
June 2011,
via
registered mail. The defendant responded to the
s 129
notice by
forwarding an email and,
according
to his recollection
,
the defendant also applied for debt review. They were notified
that the defendant applied for debt review on 12 August 2011.
Summons had been issued on 27 July 2011, which was before the
defendant had applied for debt review. The defendant made several
sporadic payments from August (2011) when he had applied for debt
review, the last payment being on 5 April 2012. The plaintiff
accepted these payments because the defendant had a balance
outstanding on his account. The plaintiff would always accept
the payment to reduce the losses against defendant’s account.
The plaintiff did not include the defendant’s account
in
the debt review application because it had already sent a
s 129
notice via registered mail and had already instituted litigation
prior to the debt review application. The plaintiff was
not
served with any debt restructuring application and Samuels was not
aware of any such application pending before the magistrate
court.
[31]
He
testified that prior to the current litigation, the plaintiff sent
ss
127(2)
and
127
(5) notices. The defendant was thereafter sent
another
s 129
notice
regarding
the
shortfall
on his account and the amount that the plaintiff was now claiming in
the summons. The
s 127(3)
letter was sent to the defendant on
13 February 2013. The
s 127(5)
letter was dated 20 April 2013.
These letters are sent
via
normal
mail which is why an additional
s 129
letter was sent
via
registered mail informing the defendant that he needed to pay the
shortfall. The defendant responded to this notice by sending
an
email
via
his Professional Assistant (“PA”). This email was
received by the plaintiff’s attorney of record on 12
June 2013.
The email reads as follows:
“Dear Sirs/Madam
RE: REF JRG/nb 3701 – MR E SAFTER –
NATIONAL CREDIT REGISTRATION NUMBER – NCRCP20
I have been out of town for a few days due to
work commitments and only returned on Sunday 9th June 2013. I have
collected your
registered letter on Tuesday 11th June 2013. I will
seek legal assistance regarding this matter, with reference to
(paragraph 5)
of your letter, Notice in terms of
section 129
(1) of
the
National Credit Act 35 of 2005
.
I trust my response to this matter is in order
and please note that your (sic) have my full cooperation in this
regard.
Kind Regards
Celeste Camphor
P.A. to Mr Ebrahim Safter
Jet Set VIP Protocol’
[32]
No
other information or notification was received from the defendant
after this email, hence the plaintiff initiated the current
action
against the defendant. Before the vehicle was sold the balance
was R 434 809.56. The reason being that
the contract had
expired over a period of time. The vehicle was then sold at an
auction for an
amount
of R159 600.00 including VAT. The plaintiff paid over an
amount of R19 600.00 to SARS in respect of VAT.
The plaintiff
claimed an amount of R33 158. 00 back from SARS due to the fact
that it had paid VAT at the commencement of
the agreement. After
taking all the transactions into account, the loss suffered by the
plaintiff was R261 797. 98 which
is what was claimed from the
defendant. Legal fees totalled an amount of
R49 813.65.
These legal fees were not taxed or agreed to between the
parties and in light of recent case authority the
plaintiff decided
to reduce its claim by deducting the amount of R49 813.65 from
the R261 797.98 claim to get to the
amount of R211 984.33.
At this point the plaintiff moved for an amendment to its
particulars of claim that the amount
claimed by the plaintiff against
the defendant was now R211 984.33, which I granted.
[33]
According
to Samuels, the agreement was no longer extant at the time the
s
127(2)
was sent, because the plaintiff had cancelled the agreement in
the summons of the first action. The summons was served on
the
defendant on 4 August 2011 at 13h35. The agreement was due to
expire on 29 November 2011. Therefore, on 13 February 2013,
which was
the date on which the
s 127
(2) letter had been sent, the agreement
was not in existence.
[34]
In
cross-examination, it was put to him that the cell number appearing
in the application for debt review in 2011 is different from
the one
that the SMS was sent to in August 2013 regarding the valuation
amount. To this he testified that the bank did not
receive any
notification from the defendant to update his contact details. They
did not receive notification that the number
they had in their
records was invalid and that the one that was in the debt review
application was the correct one. The address
that the plaintiff
had, had been provided by the defendant. The
ss 127(2)
and
127
(5) letters were sent by ordinary mail. He indicated that he would
not dispute it if the defendant were to say that he had not received
the letters. They had not received an instruction that the
ss
127(2)
and (5) letters must be sent via registered mail, but he was
aware of a recent constitutional court ruling that required these
letters to be sent via registered mail. He conceded that the
amount that the defendant would be liable for after the sale
of the
vehicle, if it was sold at R60 000 (as valued), would have been a
substantial amount and therefore the
s 127(2)
letter was an important
letter that the defendant had to receive, which was the reason why it
ought to be sent by registered mail.
He testified that whilst
the defendant paid a substantial sum in instalments to the plaintiff
and suffered loss of money,
he made use of the vehicle. Samuels
was not aware that the defendant had appealed the court order but he
had (recently) read
about it. He could not say why the vehicle
was handed over when the appeal was still pending, but he could see
from the trial
bundle that the defendant signed a notice of
termination. His department was not responsible for giving an
instruction to
collect the vehicle; that would come from one of the
representative managers of the plaintiff. He agreed that the
tracers
could not take the vehicle against the defendant’s
will. He did not know whether the defendant had been forced or
threatened
to hand over the vehicle.
[35]
He
testified that the plaintiff did send
s 127(2)
letters even after a
court order
(had
been granted),
but
due to a recent amendment in the NCA, they could no longer reinstate
the agreements after cancellation. The
s 127(2)
letter was sent
prior to the amendment and the plaintiff would have released the
vehicle if the defendant had paid the arrears.
In
re-examination, however, he testified that it was not possible to
reinstate something that had already expired through
effluxion of
time. According to him, in this case, reinstatement would not
have been possible because the agreement had expired
and there was no
contract to reinstate.
[36]
He
testified further that it was incorrect that the amount
outstanding
had
escalated by approximately R100 000, as was put to him by Mr Khan,
since the initial summons was issued. This is because
an amount
pertaining to legal fees was taken off. He confirmed that the
interest rate charged was in terms of the contract
and that the
plaintiff was also entitled to charge interest on instalments which
had not been paid timeously.
Discussion
Lawfulness
of the repossession of the vehicle of the defendant
[37]
In this case we
have a situation where there was a court order granted by Eloff AJ on
14 October 2011. Leave to appeal this
order was granted by the
SCA, to the full court of this division. That appeal was
dismissed on 21 January 2013. Before
the appeal was decided,
the defendant signed a notice of termination dated 7 January 2013.
There is a dispute as to the lawfulness
of this termination
notice and the repossession of the vehicle. It is submitted on
behalf of the defendant that he was forced
to sign the notice of
termination and return the vehicle, by the agents who went to his
home.
[38]
Whilst some of the
plaintiff’s witnesses seemed to suggest that the motor vehicle
was repossessed from the defendant pursuant
to a court order, it is
not disputed that it would have been impermissible for the plaintiff
to claim possession of the vehicle
whilst the appeal was pending.
[39]
It is not clear
what circumstances led to the defendant signing the notice of
termination of agreement, as none of the persons involved
in this
regard were called. What is on record, however, is a document
signed by the defendant which reads as follows:
“NOTICE OF TERMINATION
1. I
EBRAHIM SAFTER,
the Consumer, in terms of Section 127 of
the National Credit Act, No 34 of 2005 (“the NCA”) hereby
give written notice
to
(FNB) WESBANK
(“the Credit
Provider”) of the termination of the “instalment/lease/secured
loan agreement (“the Agreement”)
under account number
[...] in respect of the following goods:
(Full description of goods/secured loan)
2006 AUDI Q7
FS1V8
Reg no:
CA [...]
Chassis no
W[...]
(“the goods”)
2.
I agree to hand back the Goods to the Credit Provider and
require the Credit Provider to sell the goods
.
3.
I am aware that the Credit Provider will give me a written
notice of the estimated value of the goods and after receiving such
valuation
notice, I may unconditionally withdraw this termination
notice within 10 (ten) days of receipt of the valuation notice and
resume
possession of the goods, provided that I am not in default of
Agreement
.
4.
If I do not withdraw my termination, the credit provider may
sell goods as soon as practicable for the best price reasonably
obtainable
.
5. Thereafter, my account will be credited with the sale proceeds
less any expenses reasonably incurred in respect of the sale
of the
goods.
6.
I will be liable for any shortfall on my account and will be
called upon to pay same or make a suitable payment arrangement,
within
10 (ten) business days of receiving a demand notice, failing
which the Credit Provider may commence legal proceedings in terms of
the Magistrate’s Court Act 32 of 1944
.
7. Interest at the rate specified in the Agreement will be payable by
me from the date of the demand notice until the outstanding
amount is
paid.
8. Upon payment of the amount demanded, your liability in terms of
this account will be complete.
Signed at
ZONNEBLOEM
on the 07 date of
JAN
2013
__________
Consumer” (
Own emphasis)
[40]
The defendant does
not dispute that he signed the document; what he placed in issue, by
way of the questions Mr Khan put to the
plaintiff’s witnesses,
was that he was forced to surrender his vehicle by people who went to
his home to fetch it. The
plaintiff’s witnesses could not
comment on whether or not that was correct, as they were not there
when the vehicle was repossessed
from the defendant. The
defendant decided not to testify. The version put by Mr Khan to
the witnesses does not amount
to evidence. It ought to have
been repeated under oath. The court must therefore accept that
the notice of termination
containing the signature of the defendant,
with its content that I have quoted above, is a reflection of what
transpired on the
date of signature.
[41]
At the end of oral
argument while the defendant was about to complete his argument, as
Mr Khan was being quizzed by the Court about
the defendant’s
case, he reacted by stating that he wished to amend the defendant’s
plea to allege that the surrender
of the vehicle was not voluntary.
Apart from this being a knee-jack reaction at the late stage of the
proceedings, an amendment
of the plea, in my view, was not going to
assist the defendant because the issue of whether or not the vehicle
was surrendered
voluntarily was an evidential issue and no such
evidence was led and that could not be cured by means of an amendment
to the plea.
I indicated that to Mr Khan at which point he asked that
the matter be postponed so he could call the defendant to give
evidence.
I declined that request on the basis that argument had
almost been completed and the defendant had been observing the
proceedings
as they were unfolding. I was of the view that the
postponement as well as allowing the defendant to testify at that
stage of the
trial would prejudice the plaintiff and would not be in
the interests of justice. Furthermore, it did not seem to have been
the
intention of the defendant to apply for the re-opening of his
case in the first place. This is indicated by the manner in
which Mr Khan raised this request. It seemed to have been a
quick reaction to what transpired during argument and appeared
to
have been a realisation that the defendant had made a mistake by not
testifying. This occurred with the defendant having
listened to
the argument the entire time. Allowing this would, in my view, have
been akin to permitting the defendant to conduct
‘
trial
by ambush
’.
[42]
Seeking to correct
a tactical blunder late in the proceedings may in some cases cause an
injustice to the other party who would
not have had an opportunity to
investigate and properly respond to the issues raised. See
Erasmus,
Superior Court Practise
,
Second Edition at D1-333 footnote 7 where reference is made to
Clarapede & Co v
Commercial Union Association
(1883) 32 WR 262
at 263.
[43]
In my view, this
was not one of those cases where the Court should have exercised its
discretion in favour of the defendant by allowing
him to re-open his
case and testify. If allowed this would mean parties could,
after having listened to the entire case and
having made an election
on how they would conduct their case, decide that they want to change
course and restart the entire case.
This approach would, in my
view, be equivalent to one ‘
having
his/her cake and eating it
’.
[44]
Having been
presented with the evidence of the notice, signed by the defendant,
with nothing to gainsay it, I find that the termination
of the
agreement followed by the surrender of the vehicle was voluntary.
Applicability
of s 127(2)
[45]
As regards the s
127(2) point, according to the plaintiff, the notice of termination
of agreement was signed after the plaintiff
had cancelled the
agreement and therefore s 127 (2) did not apply. Section 127 of
the NCA provides that:
“
Surrender of goods
127. (1) A consumer under an instalment agreement, secured loan or
lease –
(a) may give written notice to the credit provider to terminate the
agreement; and
(b) if –
(i) the goods are in the credit provider’s possession, require
the credit provider to sell the goods; or
(ii) otherwise, return the goods that are the subject of that
agreement to the credit provider’s place of business during
ordinary business hours within five business days after the date of
the notice or within such other period or at such other time
or place
as may be agreed with the credit provider.
(2) Within 10 business days after the later of –
(a) receiving a notice in terms of subsection (1)(b)(i); or
(b) receiving goods tendered in terms of subsection (1)(b)(ii),
a credit provider must give the consumer written notice setting out
the estimated value of the goods and any other prescribed
information.
(3) Within 10 business days after receiving a notice under
subsection (2), the consumer may unconditionally withdraw the
notice
to terminate the agreement in terms of subsection (1)(a), and resume
possession of any goods that are in the credit provider’s
possession,
unless the consumer is in default under the credit
agreement
.
(4) If the consumer –
(a) responds to a notice as contemplated in subsection (3), the
credit provider must return the goods to the consumer unless the
consumer is in default under the credit agreement; or
(b) does not respond to a notice as contemplated in subsection
(3), the credit provider must sell the goods as soon as practicable
for the best price reasonably obtainable.
(5) After selling any goods in terms of this section, a credit
provider must –
(a) credit or debit the consumer with a payment or charge equivalent
to the proceeds of the sale less any expenses reasonably incurred
by
the credit provider in connection with the sale of goods; and
(b) give the consumer a written notice stating the following-
(i) The settlement value of the agreement immediately before the
sale;
(ii) the gross amount realised on the sale;
(iii) the net proceeds of the sale after deducting the credit
provider’s permitted default charges, if applicable, and
reasonable
costs allowed under paragraph (a); and
(iv) the amount credited or debited to the consumer’s account.
…
(7) If an amount is credited to the consumer’s account
and it is less than the settlement value immediately before
the sale,
or an amount is debited to the consumer’s account, the credit
provider may demand payment from the consumer of
the remaining
settlement value, when issuing the notice required by subsection
(5)(b).
…” (
Own emphasis
)
[46]
Section 127 deals
with a situation where the consumer wishes to terminate a credit
agreement, by giving notice to the credit provider
and surrendering
the goods to same. Section 127(2)(b) then requires the credit
provider to give the consumer written notice
of the estimated value
of the goods so that the consumer may, under s 127(3), consider
whether or not to withdraw the written notice
of termination of
agreement and resume possession of the goods, if such consumer is not
in default under the agreement. If
the consumer does not
respond to the notice sent in terms of s 127(2)(b) within the
stipulated time period, then the credit provider
must sell the goods
for the best price reasonably obtainable as soon as possible.
[47]
After selling the
goods, s 127(5) provides that the credit provider must credit or
debit the consumer with a payment or charge equivalent
to the
proceeds of the sale and deduct its expenses in connection with the
sale of the goods. Thereafter, it must give written
notice to
the consumer in terms of s 127(5)(b) of the settlement value before
the sale and other relevant information resulting
from the sale.
These provisions are applicable when the consumer surrenders the
goods to the credit provider voluntarily.
[48]
The plaintiff’s
argument started from the premise that the contract between the
parties had been cancelled and therefore s
127(2) did not apply. Ms
Nel-Wade argued that paragraph 9 of the particulars of claim in the
first action before Eloff AJ,
stated that the plaintiff elected to
cancel the agreement and recover possession of the vehicle following
the breach of the agreement
by the defendant. The cancellation
became effective upon service of the summons on the defendant on 4
August 2011 at the
defendant’s chosen
domicilium
.
Such cancellation was confirmed by Eloff AJ in his order. The appeal
against Eloff JA’s order was dismissed. As already
stated,
cancellation of the contract is no longer in issue.
[49]
Ms Nel-Wade
referred to the decision of
Edwards
v Firstrand Bank Ltd t/a Wesbank
2017 (1) SA 316
(SCA), involving the same plaintiff, which she
submitted was on all fours with this matter. In that case
Shongwe JA held
the following at para 16:
“[16] Whilst
generally I am inclined to agree with the proposition that ss 127(2)
– 127(9) of the Act are applicable,
I however consider that
they are not applicable in the present case because the agreement had
already been cancelled
. Section 131 of the Act squarely answers
the question whether s 127(2) is applicable at all in the positive.
The purposes of the
NCA are set out in s 3 of the Act and are, inter
alia, to promote and advance the socio-economic welfare of South
Africans, to
promote and advance the socioeconomic welfare of South
Africans, to protect the consumer’s rights most of all, and to
harmonise
the system of debt enforcement.”
(Own
emphasis)
[50]
In a separate
concurring judgment, Cachalia JA at paragraphs 41- 43 took the point
further by holding that:
“[41] The first thing to be observed is that s 129(3), as it
read at the time of these proceedings, permitted a consumer,
before
the credit provider has cancelled agreement, to reinstate it by
paying the overdue amount and resume possession of the property.
In
its judgment refusing leave to appeal against the summary judgment
ruling, the court held that Wesbank had cancelled the agreement.
This
means that Mr Edwards was not entitled to reinstate the agreement and
resume possession of the car, which is what the s 127(2)
notice sent
to him on 12 June 2012 invited him to consider doing
.
Mr
Edwards was of course also in default under the agreement before the
cancellation, which meant that he could not take repossession
of the
goods after having received the estimated value of the goods in terms
of ss 127(3) and 127(4) eithe
r. Counsel for Mr Edwards was
constrained to concede this during the hearing. Counsel for Wesbank
argued that the section does not
apply in these circumstances,
precisely because Mr Edwards was not entitled to reinstate the
agreement and resume possession of
the goods.
[42] However, counsel for Mr Edwards maintained that s 127(2)(b)
nevertheless applied in the present circumstances. He argued that
before the attached car was sold, Mr Edwards should still have been
given notice so that he had the opportunity to consider whether
or
not he wished to object to the estimated valuation of the car. The
contention does not withstand scrutiny.
[43] Section 127(4) imposes an obligation on the credit provider to
sell the goods at the best price reasonably obtainable if the
consumer has not responded to the s 127(2) notice. The credit
provider’s estimated value of the goods plays no part in
determining
whether or not the best price was obtained, as is evident
from this matter, where the estimated value of the car in the s
127(2)
notice was R500 000 but it was sold for considerably more, ie
R763 800.
The clear purpose of a s 127(2) notice, as I have
mentioned, is to place the consumer in a position to consider whether
to withdraw
the termination notice and resume possession of the
goods, which is what the s 127(2) notice invited Mr Edwards to do.
But this
option was simply not available to Mr Edwards once the
agreement had been cancelled
and the court had ordered the
attachment of the car. So, in this case, no purpose was served by
sending the notice to him. Section
127(2) simply did not apply.”
(Own emphasis)
[51]
It was accepted by
Mr Khan for the defendant that the agreement in the present case had
been cancelled and that issue is no longer
in contention. I do
not see how one can get around the findings of the SCA in the
Edwards
matter. Because
of the fact that the agreement in the present case was cancelled, the
defendant was not entitled to reinstate
the agreement and resume
possession of the vehicle, which is what is envisaged in s 127(2) of
the NCA. There appears to be
neither ambiguity to the finding
of the SCA on this matter nor any factor distinguishing the present
case from
Edwards
on this aspect. I am therefore bound to find that s 127(2) was
not applicable in this matter.
[52]
Section 131
provides:
“If a court makes an attachment order with respect to property
that is the subject of a credit agreement, section 127(2)
to (9) and
section 128, read with the changes required by the context, apply
with respect to any goods attached in terms of that
order.”
(Own Emphasis)
[53]
According to the
Court in
Edwards
supra at para 40, s 131 requires the application of ss 127(2) –
127 (9) and 128, read with the changes that the context requires.
The context in the present matter is analogous to
Edwards
in that the agreement had been cancelled and therefore the defendant
was not entitled to reinstate the agreement and resume possession
of
the vehicle.
[54]
Both Shongwe JA
and Cachalia JA nevertheless considered the issue of whether there
was any merit in the contention that the defendant
in that case did
not receive the s 127(2) notice. In the first instance Shongwe
JA, at para 11, confirmed “…
[a]
registered mail is not what the legislature had in mind when it used
the words ‘give the consumer written notice’
.
It may be advisable to
send the notice in terms of s 127(2) by registered mail but that is
not what the law requires.”
Cachalia JA found at para 44 that the contention that the
defendant did not receive the s 127(2) notice, had no merit. He
remarked that “
Once
it was proved that the notice was sent to Mr Edwards, he had to
explain why it was not reasonable to have expected the notice
to
reach his attention
.”
[55]
I do not need to
decide this issue, but to the extent required, the defendant in the
present matter also alleged in his plea that
he did not receive the s
127(2) notice. The notice was addressed to the defendant’s
chosen
domicilium
.
Mr Khan contended on behalf of the defendant that the plaintiff
has not been able to show that the notice was actually sent.
Its
case on this issue stops where Sonday left the letter in the mailing
room. She did not see it being posted and
no one was called to
confirm that it was. Other than to say that Sonday had no
reason to believe that the letter was not
sent by those responsible
for posting the mail, there was no evidence to show that it was
posted. Whilst considerate of Ms
Nel-Wade’s point that it
would be very difficult for the plaintiff to ordinarily show the
actual posting when a letter is
sent by ordinary mail or even to call
those responsible for posting, as they may not recall a particular
document sent, taking
into account that they deal with volumes of
correspondence on a daily basis, the plaintiff still needs to prove
that the letter
was sent. No record was produced that this letter was
posted. Each case must obviously be dealt with on its merits.
The
evidence placed on record by the plaintiff in this case
left a vacuum.
[56]
It cannot be
assumed that the letter was actually sent nor can it be inferred
without more, from what Sonday said. One cannot
come to a
conclusion that it was sent without some kind of confirmation that
the letter was posted. It would have gone a
long way, in my
view, in this case to, for example, call personnel responsible for
posting of letters on the day or the period
that Sonday alleged to
have left the letter in the mail room for posting, to confirm at the
very minimum that letters that they
received that day were posted, as
they would normally do in the course of their duties or as Mr Khan
suggested, to present some
record or entry indicating letters sent on
that day, even if by ordinary mail. Whilst it is not a requirement to
send the 127 (2)
letters by registered mail, the plaintiff still has
to prove that the letter was sent, as gleaned from Cachalia JA’s
words
in
Edwards
supra at para 44 that: “
Once
it was proved that the notice was sent to Mr Edwards
,
he had to explain why it was not reasonable to have expected the
notice to reach his attention
.”
[57]
I take note of the
fact that the defendant did not testify, the issue was simply raised
in his plea. Even before one gets to the
question of him having to
explain why it was not reasonable to have expected the letter to
reach his attention, the plaintiff must
first demonstrate that the
letter was sent. I have to agree with Mr Khan that the plaintiff has
not been able to show that the
letter left the mailing room and was
actually posted.
[58]
The issue,
however, does not end there. The defendant was sent an SMS containing
the valuation amount. Could it be said that
the SMS amounted to
a written notice sufficient to satisfy the requirements of s
127(2)(b)? In this regard, Mr Khan firstly
submitted that the
SMS notification could not be classified as ‘written notice’
required in terms of s 127(2)(b) of
the NCA. In his view, what
is envisaged in that section is a written letter. Whilst I
agree that ordinarily ‘written
notice’ would be in the
form of a printed document, understandably because it is easier to
demonstrate that it was served
on the chosen
domicilium
of a party, there does not seem to be a prescription in the section
as to what form ‘written notice’ should take. One
could argue that an email or SMS (if such were chosen by the party
concerned beforehand) may constitute written notice, as long
as it
conforms to the relevant provision and contains information
stipulated in that section. It is not clear in this case
whether the SMS was also chosen as one of the mechanisms to convey
information as contemplated in s 127(2). At the end of
the day
though, notification was sent to the defendant containing the
valuation amount. He could have reacted to this, taking
into
account that paragraph 3 of the notice of termination he signed on 07
January 2013 stated that after receiving such valuation
notice, he
may unconditionally withdraw this termination notice within 10 (ten)
days of receipt of the valuation notice and resume
possession of the
goods, provided that he was not in default of the agreement.
Considering the implications that followed if there
was no reaction
as stated in the notice of termination, the defendant should have
contacted the plaintiff, after having received
the SMS message. It is
worth noting that another SMS was sent to the defendant that his
vehicle had been sent for auction and that
he must contact Sonday at
the telephone number provided. There is no suggestion that he did
that.
[59]
Mr Khan sought to
suggest that the cell phone number of the defendant had changed,
pointing out a cell phone number that appeared
on the application for
debt review. This argument cannot stand because according to the
plaintiff’s witnesses the defendant
had not given them any
notification that his cell phone number had changed and there was no
way for the plaintiff to know that
the defendant had not received the
SMS notification.
[60]
Ms Nel-Wade also
submitted that by the time the s 127(2) was sent, the agreement
between the plaintiff and the defendant had expired
through the
effluxion of time on 29 November 2011. Therefore, in order for
the defendant to have resumed possession of the
vehicle in terms of s
127, he would have had to pay the full amount outstanding as all the
instalments would have been due. There
was no evidence that the
defendant tendered payment towards the outstanding instalment or any
other amount. According to
her, it is doubtful that he would
have been able to pay in any event as papers show that he was under
debt review.
Has
there been compliance with the
Consumer Protection Act?
[61
]
As to the
Consumer
Protection Act, it
is alleged that the plaintiff did not properly
advertise as required by the Regulations of the relevant statute and
in particular
Regulations 19
and
20
.
Regulation 19
of the
Consumer Protection Act stipulates
that:
“
Mandatory advertising of auctions
19 (1)
Subject to
regulation 33
, no goods may under any
circumstance whatsoever be sold by auction unless the inclusion of
such a particular item or lot or service
in that auction has been
advertised in compliance with these regulations in such a manner that
the general public has had a reasonable
opportunity to become aware
of the auction, the goods on offer and of the rules governing the
auction.
(2) The onus to prove that an auction was advertised as contemplated
in subregulation (1) rests on the auctioneer.
(3) An auctioneer must for purposes of subregulation (1)
advertised the auction of a particular item or lot at least 24 hours
prior to the commencement of the auction, but –
(a)
any goods may be withdrawn at any time prior to the commencement of
the auction;
(b)
in the event of an auction where goods offered for sale include
immovable property, this period must exceed five business days.
(4)
If an auction or part thereof relates to goods sold in
execution or by order of court, the advertisement must clearly state
that
fact
.
General rules on advertising of auctions
20 (1) Despite the rules and rulings of any advertising
standards body, all advertising of auctions must –
(a)
be accurate; and
(b)
provide sufficient information for a reasonable consumer to –
(i) understand that it relates to an auction; and
(ii) be able to find the place where the auction is to be held.
(2) Advertising relating to an auction must subject to subregulation
(3) –
(a)
be in a legible format and size;
(b)
contain a reference to these regulations, together with the URL of an
operational internet site where a copy of these regulations
can be
obtained;
(c)
state the date, place and time of the auction;
(d)
state the name of the auctioneer and the auction house, if any, and
if registration or licensing of auctioneers or auction houses
after
the commencement of these regulations becomes mandatory, such
registration or licensing number;
(e)
state where the rules of auction can be obtained;
(f)
state the particulars of the goods offered on auction;
...
(3) The requirements of subregulation (2) do not apply to roadside
advertising or classified advertising in printed newspapers,
but such
advertising must –
(a)
at the top of the advertising prominently display the word “auction”.
(b)
indicate where a full advertisement as contemplated in subregulation
(2)(b) can be obtained; and
(c)
state the date, place and time of the auction.
…”
[62]
Mr Khan’s
submission under this topic is that
Regulations 19(1)
and
20
(2) are
peremptory in requiring that there should be inclusion of a
particular item in the advertisement. He argues that in this
case
that was not done by the plaintiff - members of the public and the
defendant would not have known that his vehicle was being
sold on
auction on the date advertised.
[63]
Van Niekerk
testified that the plaintiff advertised the auction in newspapers.
In this regard and as correctly stated by Ms
Nel-Wade,
Regulation 20(2) is subject to Regulation 20(3). Regulation
20(3) clearly stipulates that the requirements in subregulation
2 do
not apply to classified advertising in printed newspapers. I agree
with that contention. What remains to look at is whether
subregulation 3 was complied with.
[64]
In so far as
subregulation 3(a) is concerned the first requirement is that at the
top of the advertising the word ‘auction’
must be
displayed. Mr Khan submits that the word ‘auction’
does not appear on the newspaper adverts. What
appears is the
name of an entity called ‘Auction Operations’. If
regard is to be had to the object of the requirement,
which is to
make sure that the general public has the reasonable opportunity to
become aware of the auction as stipulated in Regulation
19, the
appearance of the word ‘auction’ in the advertisement,
although it is made with reference to an entity, sufficiently
draws
attention to the fact that an auction is being advertised, in my
view.
[65]
The second
requirement contained in subregulation (3)(b) is that the advertising
must indicate where a full advertisement as contemplated
in sub
regulation (2)(b) can be found. That requirement has also been
fulfilled in my view. It will be recalled that
subregulation
(2)(b) requires that the advertising contains reference to the
regulations, together with the URL of an operational
Internet site
where a copy of these regulations can be obtained. Subregulation
(3)(b) does not require the newspaper advert
itself to contain the
information in subregulation (2)(b), it must just state where the
full advertisement containing the information
required in
subregulation (2)(b) may be obtained. In this case, the
advertising in the newspaper contained the telephone
number as well
as the website on which enquiries could be made. Mr Khan
submits that there is no evidence to suggest that
there was a full
advertisement done, where members of the public and the defendant
could have access and find this information.
Van Niekerk
testified that details of each motor vehicle on auction were
displayed on the plaintiff’s website and the
website of
Auctions Operations as required by Regulations 19(1) and 20(f).
Furthermore, the list of details of the auction
was emailed to
the plaintiff’s mailing list of 350 motor vehicle dealers.
According to Van Niekerk, the defendant was informed
of where the
vehicle was stored and about the auction of his vehicle. A system
entry indicates that the defendant was sent an SMS
that his vehicle
had been forwarded to be sold on auction, he was also advised to
contact Sonday and a telephone number was provided.
Another entry
shows that a saleable date was SMSed to the defendant.
[66]
As regards the
third requirement in subregulation (3)(c), on perusal of the
advertisements it is evident that the date, place and
time of the
auction is stipulated as Thursday 11 April at 11:00 am, 3 Bofors
Circle, Epping 2, Cape Town. In my view, the
plaintiff was able
to discharge its onus that it complied with the
Consumer Protection
Act.
Costs
[67]
As to costs, Ms
Nel-Wade argued that costs should be awarded on attorney and client
scale and in relation to costs for the postponements
of 10 October
2016 and 27 March 2017, awarding costs
de
bonis propiis
would
be appropriate. The matter was postponed on these two dates after the
court received sick notes regarding Mr Khan’s
ill-health.
Whilst I was not entirely satisfied with the manner in which the
postponements were sought on these two occasions on
behalf of the
defendant, having considered the record and listened to the parties,
I find no basis to award costs
de
bonis propiis
.
[68]
I invited the
parties to file supplementary notes on whether costs on the High
Court scale were justified, the basis of the collection
charges and
interest claimed. Only the plaintiff filed a supplementary note. Ms
Nel-Wade pointed out that clause 14.1 of the instalment
agreement
makes provision for costs on attorney and client scale. I, however,
noted that the plaintiff did not ask for costs under
this scale in
its particulars of claim, I will therefore not grant costs on this
basis.
[69]
She also pointed
to clause 15 of the instalment agreement which provides that the
Magistrate Court shall have jurisdiction over
any proceedings unless
the plaintiff chooses the High Court. In this regard, she submitted
that the plaintiff’s election
was justified, taking into
account the history of the matter and the complexity of the defences
raised.
[70]
The fact that the
plaintiff may elect to bring the action to the High Court in terms of
the agreement does not, in my view, entitle
it to costs on the High
Court tariff. The discretion still lies with the Court in this
regard. I doubt that the plaintiff would
have known what kind of
defences would be raised by the defendant when instituting action.
Even if that was not the case, I am
persuaded that despite reasons
given by Ms Nel-Wade in the supplementary note, costs should be
awarded on the Regional Court scale.
[71]
I am satisfied
that collection charges and interest claimed are permitted in the
instalment agreement.
[72]
For those reasons,
I make an order in the following terms:
1.
The defendant is to make
payment to the plaintiff as follows:
1.1
Damages in the amount of
R 211 984. 33;
1.2
Interest at the rate of
prime less .884% per annum with effect from 9 April 2013;
1.3
Costs of suit including
the wasted costs of 10 October 2016 and 27 March 2017 on the Regional
Court scale;
1.4
Collection charges.
____________________
N
P BOQWANA
Judge
of the High Court
APPEARANCES
For
the Plaintiff: Adv E Nel-Wade
Instructed
by: Jeff Gowar & Associates, Cape Town
For
the Defendant: Mr M R Khan of M R Khan & Associates,
Claremont