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[2016] ZASCA 144
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Edwards v Firstrand Bank Limited t/a Wesbank (20734/14) [2016] ZASCA 144; [2016] 4 All SA 692 (SCA); 2017 (1) SA 316 (SCA) (30 September 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 20734/14
In
the matter between:
JOHN
BLACK
EDWARDS
APPELLANT
and
FIRSTRAND
BANK LIMITED
T/A
WESBANK
RESPONDENT
Neutral
citation:
Edwards v FirstRand Bank Limited t/a Wesbank
(20734/14)
[2016] ZASCA 144
(30 September 2016)
Coram:
Cachalia, Shongwe, Tshiqi and Seriti JJA and Makgoka AJA
Heard:
1 September 2016
Delivered:
30 September 2016
Summary:
Credit agreement –
National Credit Act 34 of 2005
–
whether or not the credit provider complied with
s 127(2)
and (5) of
the Act – court must satisfy itself that the credit provider
has placed before it facts which show that the notice,
on a balance
of probabilities, has been sent to the consumer.
ORDER
On appeal from:
Gauteng Local Division of the
High Court, Johannesburg (Monama J) sitting as court of first
instance.
1 The appeal is dismissed with costs.
2 The order of the court a quo in para 25.2 specifying 1
August 2012 is replaced with the following:
‘
13 December 2012’
JUDGMENT
Shongwe
JA (Tshiqi, Seriti JJA and Makgoka AJA concurring)
[1]
It is well-known that the draughtsmanship of the National Credit Act
34 of 2005 (the NCA or the Act) is far from being a model
of
elegance. This appeal mainly concerns the interpretation and
applicability of s 127 (2) and (5) of the Act. The Gauteng Local
Division, Johannesburg (Monama J) ordered the appellant (consumer) to
pay the respondent (credit provider) a sum of R668 461.69
plus
interest and costs, being damages suffered by the respondent. The
appeal is with the leave of the court a quo.
[2]
The factual background is briefly that on 24 July 2009, the appellant
and the respondent concluded an instalment sale agreement
as defined
in terms of s 8 (4)
(c)
of the NCA. The appellant purchased a
motor vehicle, namely an Aston Martin Vantage Coupe for a contract
price of R1 457 958.00.
The appellant paid a deposit of
R145 000.00 and was due to pay fifty nine monthly instalments of
R23 100.00. During April
2011, the appellant fell into arrears,
as a result the respondent issued summons against the appellant
cancelling the agreement
and claimed the return of the vehicle, plus
the shortfall as it was entitled to in terms of the credit agreement.
[3]
The appellant entered an appearance to defend. The respondent
immediately filed an application for summary judgment which the
appellant unsuccessfully resisted. The court (Farber AJ) granted
summary judgment on 12 August 2011 and ordered the appellant to
return the vehicle to the respondent.
[4]
In his plea the appellant raised a multiple number of defences,
including, that the granting of the credit to him by the respondent
was reckless because he was over indebted at the time the credit was
granted. The appellant prayed that the credit agreement be
declared a
reckless agreement in terms of s 80 (1) read with s 81 (2), (3) and s
83(1) of the NCA. The appellant further denied
that the respondent
had complied with the provisions of sections 127 and 129 of the Act
and denied that the vehicle was sold lawfully.
He also averred that
the respondent forced him to sign the agreement and that the
agreement falls to be rectified by the reduction
of the sum of
R46 000, which deduction will result in him not being in
arrears. The court, as indicated earlier, rejected
all the defences
raised and found that he had no bona fide defence. The court even
remarked that it was strange that he sought
‘to retain and use
the vehicle despite his disavowal of the validity of the instrument
which found his entitlement to retain
and used it. A result of this
kind, can simply not be countenanced’.
[5]
It is significant to mention that the appellant unsuccessfully
applied for leave to appeal against the summary judgment order.
Even
his application for leave to appeal to this Court suffered the same
fate. The vehicle was eventually repossessed on 6 July
2012. A notice
in terms of s 127(2) of the Act was dispatched by ordinary post to
the appellant on 13 June 2012, using the address
furnished in the
credit agreement by the appellant as his domicilium citandi ex
executandi being […] T. Road, Fourways 2055.
In terms of
clause 17(2) of the credit agreement, the appellant agreed that the
physical address that he provided was the address
he has selected as
the address where legal notices must be sent.
[6]
The respondent amended the summons accordingly in preparation of the
second leg of the proceedings, being to recover the shortfall.
The
vehicle was sold at an auction. This is after the respondent had sent
a notice in terms of s 127(5) of the Act. It is important
to note
that the respondent also attached to the amended summons the previous
notices in terms of s 129(1) and s 127(2) of the
Act. Ever since the
vehicle was repossessed the appellant did absolutely nothing towards
following up the attachment until the
matter went on trial in March
2014 before Monama J.
[7] The court a quo indicated clearly that what was
before it was the consideration of the quantum of damages, that is,
the shortfall
and the question whether there was compliance with the
provisions of s 127 of the Act. Monama J also concluded that the only
defence
to be considered, was whether the respondent had complied
with the provisions of s 127(2) and (5) of the Act.
His conclusion was:
‘
[18] The critical issue is
whether the defendant was given notice of the valuation amount in the
letter dated 13 June 2012 as required
by section 127(2) as well as
the information referred to in section 127(5) by virtue of the letter
dated 1 August 2012.
[19] It is common cause in this
matter that both the section[s] s 127(2) and 127(5) letters
highlighted the information dictated
by the respective sections. Both
letters dealt with all the categories of information required to be
disclosed. The letters were
addressed to the defendant’s chosen
domicilium and were sent by ordinary mail.’
[8]
Before this Court, the issues had been crystallised to whether or not
the respondent complied with s 127(2) and (5) notices
of the Act
before disposing of the vehicle. The appellant contended that he did
not receive the s 127(2) and (5) notices of the
Act. And also that
the vehicle was not sold for the best price reasonably obtainable as
contemplated in s 127(4)(
b
) of the Act. The appellant relied
on
ABSA Bank Ltd v De Villiers & another
[2009] ZASCA 140
;
2010 (2) All SA 99
(SCA);
2009 (5) SA 40
(C) in respect of the s 127
process. The procedure to be followed in respect of the s 127 process
is clearly stated in the case
quoted above, and I agree with it, but
it does not assist the present appellant. In
ABSA
the initial
application was brought in terms of s 130(1) of the Act for a final
order authorising the attachment of the subject
vehicle without
cancelling the credit agreement first, which was found to be
incorrect. It is, in my view, distinguishable from
the facts of the
case before us.
[9] On the other hand the respondent contended that, if
the appellant did not receive the s 127(2) and (5) notices of the
Act, it
was a direct result of the appellant providing a physical
address at which, knowingly, there was no street delivery of the
post.
This contention was affirmed by the court a quo when it
concluded that ‘The conduct of the defendant (appellant) in
designating
an address in which no street delivery occurs, is
unreasonable’. The Constitutional Court in
Kubyana v
Standard Bank of South Africa Ltd
[2014] ZACC 1
;
2014 (3) SA 56
(CC) para 46 observed that:
‘
The Act
does not imply, and cannot be interpreted to mean, that a consumer
may unreasonably ignore the consequences of her election
to receive
notices by registered mail, when the notifications in question have
been sent to the address which she duly nominated.
While it is so
that consumers should receive the full benefit of the protections
afforded by the Act, the noble pursuits of that
statute should not be
open to abuse by individuals who seek to exercise those protections
unreasonably or in bad faith.’
[10] Section 127(2) of the Act reads as follows:
‘
(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.’ (My emphasis.)
Section 127(1) is not applicable in this case because,
the appellant did not voluntarily terminate the agreement, but the
respondent
secured, by the court process, the termination of the
agreement, and subsequently the attachment and sale of the vehicle in
question.
Therefore, the appellant is wrong when submitting that s
127 of the Act expressly provides that the appellant must actually
receive
the s 127(2) and (5) notices. The argument went further to
say that the respondent must prove delivery of the notice and receipt
thereof in order to comply with s 127 of the Act. The Constitutional
Court in
Baliso v Firstrand Bank Limited t/a Wesbank
[2016]
ZACC 23
Froneman J, writing for the majority judgment referred with
approval to what Jafta J said in
Kubyana
at para 98:
‘
The
determination of the facts that would constitute adequate proof of
delivery of a notice in a particular case must be left to
the court
before which the proceedings are launched. It is that court which
must be satisfied that section 129 has been followed.
Therefore, it
is not prudent to lay down a general principle save to state that a
credit provider must place before the court facts
which show that the
notice, on a balance of probabilities, has reached a consumer. This
is what
Sebola
must be understood to state’.
In
Sebola & another v Standard Bank of SA Ltd & another
[2012] ZACC 11
;
2012 (5) SA 142
(CC) s 129 of the Act was an issue
and not s 127 of the Act.
[11] The majority in
Baliso
above concluded
obiter
in my view, that there is much force in the argument
that it was illogical to make a distinction between the manner of
giving notice
under s 127(2) of the Act, and that required under s
129(1) of the Act. Although Froneman J, writing for the majority, was
of the
view that there is merit in the submission that there exists
no good reason to differentiate materially between the method of
complying
with the s 127(2) notice requirement and that under s
129(1). He went on without deciding whether the distinction between s
129(1)
and 127(2) was justified or not. In para 30 of
Baliso
,
he remarked that:
‘
Is this clarification of what
is required by way of proof of compliance in relation to the notice
requirement under sections 127(2)
and 129(1)
(a)(i)
respectively, sufficient reason to entertain the appeal? I think
not’.
My understanding is that the distinction was not
relevant to the facts of that case. That is why it was not
definitively decided.
On the other hand Zondo J, writing for the
minority judgment, was of the view that:
‘
[30] The question raised by
this matter is whether or not the sending of a section 127(2) notice
by a credit provider to a consumer
by ordinary mail constitutes
compliance with section 127(2).’
Failure
to comply with s 127(2) by the credit provider is detrimental even to
the credit provider because the recovery of damages
by way of the
shortfall cannot be pursued. Therefore the importance of complying
with s 127(2) is beneficial to both the consumer
and the credit
provider. It is settled law that the ordinary grammatical meaning of
the words used in s 127(2) of the Act must
be interpreted to mean
just that. 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.
[12]
Counsel for the respondent was at pains to explain why s 128(1) of
the Act was not invoked by the appellant, as it was open
to him to do
so. He conceded that no evidence indicates why this section was not
invoked. It is significant to note that the appellant
did not quarrel
with the evidence provided by the respondent during the trial. This
concession also takes care of the evidence
of quantum save for the
storage costs which were cured by the amendment, effected by the
respondent towards the close of its case
during the trial.
[13] I now turn to deal with the provisions of s 127(5)
of the Act in particular. It provides that:
‘
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 the 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.
From
the evidence adduced during the trial, it is clear that the
respondent did send a notice in terms of s 127(5) of the Act to
the
address furnished by the appellant. The appellant does not dispute
that the notice was sent, but denies that he received it.
We know why
he did not receive it, his failure to receive it must be squarely
placed on the appellant’s shoulder. Counsel
for the appellant
conceded that in terms of s 129(4) of the Act a consumer may not
re-instate a credit agreement after the sale
of the vehicle pursuant
to an attachment. As in this case s 127(3) of the Act is not
applicable because the appellant was clearly
in default.
[14]
I turn to deal with the deliberations during the hearing of this
matter. A question was raised
mero motu
by this Court whether
s 127 of the Act applies at all in the circumstances of this matter.
In other words where the merx forming
the subject of a credit
agreement is repossessed by order of the court. The question
presupposes that after the attachment of the
merx and the subsequent
sale thereof, the provisions of s 127(2) to (9) of the Act are not
applicable. The matter changes from
being governed by s 127(2) to (9)
of the Act and transforms to become a common law guided damages
claim, so the proposition went.
[15] Counsel for the appellant contended that the
provisions of s 127(2) to (9) are always applicable whether there was
a voluntary
surrender of the goods or a forced repossession. He went
further to suggest that the answer lies in s 131 which reads thus:
‘
Repossession of goods
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’.
Although
this question has not yet come before this Court for adjudication,
Fourie J in
ABSA
(see para 8 above) seems to agree that s
127(2) to (9) is applicable even after a forced repossession of the
merx. In para 29 of
ABSA
he deals with the interpretation of s
131 of the Act, although in a different set of facts from this case.
He observed that s 131
imposes restrictions being that s 127(2) to
(9) should be ‘read with the changes required by the context’.
He goes
further to set out in detail the procedure to be followed
regarding the execution and realisation of goods attached by virtue
of
a court order in terms of s 131 of the Act. Counsel for the
respondent on the other hand seemed to agree that s 127 of the Act is
not applicable at all after an attachment and sale of the goods. He
suggested further that s 127(2) read with ss (3) of the Act
fortifies
his belief that s 127 of the Act does not apply where an attachment
and sale have taken place. He acknowledged that if
one is in default
one cannot re-instate the credit agreement, alternatively that
re-instatement would be impermissible.
[16]
Whilst generally I am inclined to agree with the proposition that s
127(2) to (9) of the Act is applicable, I, however, consider
that it
is 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
inter alia
,
to promote and advance the socio-economic welfare of South Africans,
to protect the consumer’s rights most of all to harmonise
the
system of debt enforcement.
[17]
Considering the above discussions and reasons, I am satisfied that
the respondent succeeded to show that the notices in terms
of s
127(2) and (5) of the Act were duly given and/or sent to the
appellant. The appellant has himself to blame by providing an
address, which he knew, that no street deliveries could take place in
the area. The appellant is a quantity surveyor. He is not
the
ordinary man in the street. He knew and/or should have known what
service of legal notices meant.
[18] In the result the following order is made:
1 The appeal is dismissed with costs.
2 The order of the court a quo in para 25.2 specifying 1
August 2012 is replaced with the following:
‘
13 December 2012’
_____________________
J
B Z Shongwe
Judge
of Appeal
Cachalia
JA (Tshiqi JA concurring)
[19]
I have read the judgment by Shongwe JA and agree with the order he
proposes. But I think the disputed issues require fuller
treatment.
And I propose to do so.
[20]
This appeal, with leave of the court a quo (Monama J), concerns a
festering dispute between a recalcitrant debtor and a finance
house
regarding the enforcement of an instalment credit agreement concluded
in 2009. The dispute goes back to November 2010 when
the debtor first
fell into arrears with his payments. The finance house is Firstrand
Bank Limited t/a as Wesbank, which was the
plaintiff in the court a
quo. The debtor is Mr John Black Edwards, who is a quantity surveyor,
and was the defendant.
[21]
Mr Edwards bought a 2007 model of an Aston Martin Vantage Coupe
sports car from Wesbank for the princely sum of approximately
R2
million, which included interest charges amounting to R548 101.
The cash price of the car was R1 457 958. The
monthly
instalment payment was about R23 088, payable over 59 months
with a final instalment of R500 000.
[22]
A car magazine describes driving this car as the best way to live out
one’s spy-fantasy. But Mr Edwards, it seems, is
not a man with
deep pockets, and soon found himself in difficulty meeting the
monthly payments. On 11 June 2014, following
a trial, the court
a quo ordered him to pay Wesbank an amount of R668 461.69 plus
interest, which he owed as at 1 August 2012.
(The parties agreed that
in the event of Wesbank succeeding in the appeal, the correct date
from which interest had to run was
13 December 2012.)
[23]
In this court Mr Edwards abandoned his contention that Wesbank had
not established the amount he owed. Instead he sought to
take refuge
in the procedural protections afforded to debtors by the National
Credit Act 34 of 2005 (The Act). His complaint in
this appeal is that
Wesbank did not comply with ss 127(2) and 127(5) of the Act because
it did not despatch the relevant notices
to him by registered mail.
As a consequence, he did not receive them, and Wesbank’s
failure in this regard, he contends,
nullifies the order of the court
a quo.
[24]
Before I consider whether there is merit in the complaint some
background is necessary. Mr Edwards first fell into arrears
with his
monthly payments in November 2010. A notice in terms of s 129 was
sent to him by registered mail on 19 November in which
Wesbank
proposed, amongst other things, that Mr Edwards referred the
agreement to a debt counsellor. He did not respond to the
letter and
was thus in default as envisaged in s 130(1) of the Act. Wesbank
elected to cancel the agreement and on 11 April 2011
instituted debt
enforcement proceedings against him in the South Gauteng High Court,
Johannesburg (the high court). At that stage
he was in arrears to the
tune of R167 231 and the balance owing was R1 567 668.
Mr Edwards entered an appearance
to defend the matter on 16 May 2011.
On 26 May 2011 Wesbank applied for summary judgment.
[25]
Mr Edwards advanced several defences to resist the application:
first, that he was improperly induced or compelled to enter
into the
agreement; second, that the agreement was unenforceable in as much as
it was ‘reckless’ within the meaning
of s 80; third, that
the agreement fell to be set aside because he was ‘over-indebted’
as envisaged in s 86 and that
he was not in arrears with his
instalment payments. In a carefully considered judgment, the high
court (Farber AJ) rejected each
of these defences. On 12 August
2011, summary judgment was granted against Mr Edwards, and he was
ordered to return the car.
However, on the very same day he delivered
an application for leave to appeal against the order.
[26]
The application was heard on 3 February 2012. On this occasion
Mr Edwards advanced two further grounds of appeal, which
was
that the agreement had not been lawfully cancelled, and that the s
129 notice was defective because it did not clearly indicate
Wesbank’s intention to cancel the agreement in the event of his
not remedying the breach. He also contended that the summons
was not
properly served on him because it had been delivered to his attorney,
and not to him personally. On 29 February 2012 the
court gave
judgment in which these further defences were also dismissed.
[27]
Still not satisfied, Mr Edwards applied for leave to appeal to this
court. His application suffered the same fate on 1 June
2012. On 6
June 2012 the car was restored to Wesbank in accordance with the
summary judgment order of 12 August 2011. During
this period of
ten months Mr Edwards had the use of the car and took no steps to
reduce his indebtedness to Wesbank.
[28]
A week later, on 13 June 2012, Wesbank despatched a letter
purportedly in terms of s 127(2), by ordinary mail to his
address at […] T. Road, Fourways. The letter said that the car
had been valued at R500 000, excluding VAT. And, repeating
the
language of s 127(3) of the Act, that if he wished to reinstate the
agreement and resume possession of the car he may do so
on condition
that he settled all arrear payments and further costs for which he
was liable. Mr Edwards says that he did not
receive this letter.
[29]
On 26 July 2012 the car was sold at an auction conducted by a third
party for R763 800, inclusive of VAT. The deficit
at that stage
was R780 499. On 1 August 2012, Wesbank sent another
letter, in terms of s 127(5), also by ordinary mail,
to Mr Edwards.
This letter indicated that the settlement value, after expenses, was
R780 449, which if not paid within
ten days would result in
further enforcement proceedings against him. This letter too,
Mr Edwards says, he did not receive.
[30]
On 13 December 2012, Wesbank filed a notice amending its particulars
of claim to reflect the adjusted amount now owed. Importantly,
it
annexed both the ss 127(2) and 127(5) notices to it. On 26
February 2013, Mr Edwards delivered his plea and counterclaim.
He
once again pleaded his earlier defences relating to over-indebtedness
and reckless credit, and also that s 129 had not been
complied with.
In addition he pleaded that, assuming s 127 applied, it was not
complied with either. For present purposes it is
not necessary to
discuss the content of the counterclaim as it was not persisted with
at the trial.
[31]
The trial began on 14 March 2012. At the outset the court was asked
to rule on whether or not Mr Edwards could persist with
the defences
pertaining to over-indebtedness, reckless credit and compliance with
s 129 that had been dismissed in the summary
judgment proceedings.
The court held that these issues had been finally determined and
could not be re-opened. In other words it
upheld Wesbank’s
contention that these issues were res judicata. Mr Edwards does not
appeal this ruling for good reason.
What remained was the dispute
pertaining to compliance with the s 127 notices, the extent of Mr
Edward’s indebtedness to
Wesbank, and whether or not the car
was sold at the best price reasonably obtainable in terms of s
127(4)
(b)
.
[32]
During the trial Wesbank applied for and was granted an amendment to
its summons to reflect a reduction in the amount Mr Edwards
owed from
R780 449 to R668 461. The trial lasted several days. In
regard to the evidence regarding the delivery of the
notices Wesbank
adduced the evidence of three witnesses, who proved that the letters
were sent to the address that Mr Edwards
had given Wesbank for
the delivery of legal notices in the agreement.
[33]
Regarding the dispute over the amount that Mr Edwards owed, two
witnesses were called: Mr Frank van Staden’s evidence
demonstrated conclusively how the final amounts has been calculated.
Mr Roelof Johannes Strydom’s evidence that the best
price for
the car was obtained at the public auction was compelling, stemming
from his 21 years’ experience in this area.
Mr Edwards, through
his legal representative, was not able to discredit their evidence
despite having subjected them to lengthy
cross-examination.
Mr Edward’s own evidence was less than satisfactory. He
testified that he had not received the notices
in terms of s 127
because there is no street delivery at his home address and in his
area. In regard to the price obtained for
the car at the auction, he
persisted with his claim that he could have received a better price
had he been given the opportunity
to do so. The learned judge found
him to be a ‘poor witness and highly arrogant,’ and
rejected his evidence.
[34]
Although the appeal was directed at all the court a quo’s
findings, the issue pertaining to the amount that was owed
as at 13
December 2012, ie R668 461, was abandoned in argument before us,
as was his contention that Wesbank had not obtained
the best price
for the car at the auction. There was, in my view, no merit in either
of these contentions.
[35]
What remained is the dispute regarding compliance with the s 127
notices. Mr Edwards contends that Wesbank’s failure
to
despatch these notices by registered mail means that they did not
comply with the Act. Mr Edwards contends that he did
not receive
the notice in terms of s 127(2) before the car was sold. Neither did
he receive the s 127(5) notice after the sale
of the vehicle. Before
I deal with whether or not there was sufficient proof that the
notices were delivered to Mr Edwards it is
necessary to consider
whether, and to what extent, these provisions apply at all in the
circumstances of this case, an issue the
court debated fully with
counsel for both parties during the hearing.
The
relevant provisions
[36]
I turn to consider the relevant provisions at the time of these
proceedings.
‘
127 Surrender of goods
. . .
(2) Within 10 business days after the later of-
. . .
(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 the 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.
. . .
128 Compensation for consumer
(1) A consumer who has unsuccessfully attempted to
resolve a disputed sale of goods in terms of section 127 directly
with the credit
provider, or through alternative dispute resolution
under Part A of Chapter 7, may apply to the Tribunal to review the
sale.
(2) If the Tribunal considering an application in terms
of this section is not satisfied that the credit provider sold the
goods
as soon as reasonably practicable, or for the best price
reasonably obtainable, the Tribunal may order the credit provider to
credit
and pay to the consumer an additional amount exceeding the net
proceeds of sale.
(3) A decision by the Tribunal in terms of this section
is subject to appeal to, or review by, the High Court to the extent
permitted
by section 148.
. . .
129 Required procedures before debt enforcement
. . .
(3) Subject to subsection (4), a consumer may-
(a)
at any time before the credit provider has
cancelled the agreement re-instate a credit agreement that is in
default by paying to
the credit provider all amounts that are
overdue, together with the credit provider’s permitted default
charges and reasonable
costs of enforcing the agreement up to the
time of re-instatement; and-
(b)
after complying with paragraph
(a)
,
may resume possession of any property that had been repossessed by
the credit provider pursuant to an attachment order.
(4) A credit provider may not re-instate or revive a
credit agreement after-
(a)
the sale of any property pursuant to-
(i) an attachment order; or
(ii) surrender of property in terms of section 127;
(b)
the execution of any other court order
enforcing that agreement; or
(c)
the termination thereof in accordance with
section 123.
. . .
131 Repossession of goods
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.’
[37]
Section 127 deals with a situation where the consumer wishes to
terminate a credit agreement, gives notice to the credit provider
thereof and surrenders the goods to the credit provider. Section
127(2)
(b)
then says that the credit provider must give the
consumer written notice of the value of the goods so that the
consumer may consider,
under s127(3), whether or not to withdraw the
notice of intended termination and resume possession of the goods.
But this does
not apply if the consumer is in default under the
agreement. If the consumer does not respond to the notice within the
requisite
time the credit provider must sell the goods for the best
price reasonably obtainable as soon as possible.
[38]
Once the credit provider has taken possession of the goods following
the termination of the agreement, it may sell the goods.
Section
127(5)
(a)
says that after selling the goods 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, the credit
provider must, in
terms of s 127(5)
(b)
, give written notice to
the consumer of the relevant details regarding the determination of
the settlement figure.
[39]
Section 128 is also relevant. It says that where a consumer has
unsuccessfully attempted to resolve a disputed sale of goods
in terms
of s 127 with the credit provider it may apply to the Tribunal to
review the sale. A dispute relating to whether the goods
were sold
for the best price reasonably obtainable, as in this case, would
probably be covered by this provision.
[40]
These provisions deal with a situation where the consumer has
surrendered goods to the credit provider voluntarily. Where,
however,
there has been an attachment of goods following upon a court order,
as happened in this case, s 131 requires the application
of s 127(2)
to (9) and 128, but importantly they are to be read with the changes
that the context requires.
[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 the 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 s 127(3) and s 127(4) either. 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 applies 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,
[1]
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.
[44]
However, even if Mr Edwards was entitled to receive the s 127(2)
notice, his contention that he did not receive it has no merit.
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. This is because he bore the burden of rebutting
the inference of delivery, and to show that his conduct
was
reasonable. If he did not receive the notice because of his own
unreasonable conduct it would not matter whether or not he
actually
received delivery. He would not have rebutted the inference of
delivery.
[2]
His insistence on the notice having to be sent by registered mail is
to resort to form over substance. The question, surely, is
whether or
not he had actually received the notice or rebutted the inference
that he had, not whether it was sent to him by registered
mail.
[45]
In clause 17 of the agreement between the parties, Mr Edwards
‘agreed’ that the
domicilium
address to which all
‘legal notices’ were to be sent was […] T. Road,
Fourways, which is the address to which
the s 127(2) notice was sent.
He also accepted that he would be ‘deemed to have received a
notice or letter five (5) business
days after we have posted it to’
him. This means that he accepted that he would be regarded or
considered to have received
the notice, whether or not he had in fact
received it.
[46]
Mr Edwards provided the street address to which he had elected to
receive these notices. He denied having received the notice
and
proffered the explanation that there was no street delivery at his
address. When confronted in cross-examination with the question
why
he had provided an address where he knew there was no street delivery
he said that he did not read ‘all the fine print’.
Later
on, he lamented the fact that he did not understand ‘legal
writing’. When asked why he did not ask the person
assisting
him to explain the terms of the agreement he said the documents were
all prepared by the sales representative in an ‘incredible
hurry’ and that he did not ask the person more than ‘one
or two things’. The court a quo was justified in describing
him
as a ‘poor witness’.
[47]
Human experience has shown that contracting parties often attempt to
evade their contractual obligations by denying that they
were aware
or assented to the terms of an agreement. This is why our courts
adopted the
caveat
subscriptor
rule years ago. This
entails that a person who claims not to have read or appreciated the
terms to which he has bound himself cannot
generally escape the
consequences of not having read the document before signing it. In
other words, he has assented to what appears
in the document above
his signature.
[48]
Mr Edwards, who is 65 years of age, and hardly a man without
experience or education, cannot escape the consequences of having
selected an address where he was aware that there was no street
delivery. He bore the risk that the notice would not be delivered
to
his chosen address. His conduct in choosing this address for the mode
of delivery despite his knowledge that he would not receive
the mail
was unreasonable. It matters not whether the notice was sent by
ordinary or registered mail. He would still not have received
it. He
is thus ‘deemed’ to have received the s 127(2) notice.
[49]
The dictum of the Constitutional Court in
Kubyana
v Standard Bank of South Africa Ltd
[3]
is apposite here, even though issue there was the delivery of a s 129
notice:
‘
The Act does not imply, and cannot be interpreted
to mean, that a consumer may unreasonably ignore the consequences of
her election
to receive notices by registered mail, when the
notifications in question have been sent to the address which she
duly nominated.
While it is so that consumers should enjoy the full
benefit of the protections afforded by the Act, the noble pursuits of
a statute
should not be open to abuse by individuals who seek to
exercise those protections unreasonably or in bad faith’
[50]
I turn to consider the s 127(5) notice. Its purpose, when read with s
131, is to place the consumer, whose goods have been
attached, in a
position to dispute whether or not the credit provider has accounted
properly in respect of the matters covered
in s 127(5)
(b)
(i)-(iv).
If there is a dispute regarding the sale, which presumably also
covers the question whether the goods were sold for the
best price
reasonably obtainable in accordance with s 127(4)
(b)
, and the
consumer has not been able to resolve it, he or she may use the
procedure envisaged in s 128 by applying to the Tribunal
to review
the sale.
[51]
In this case the s 127(5) notice was sent to Mr Edwards on 1 August
2012, a few days after the sale. He says he did not receive
it. For
the same reasons given in respect of the s 127(2) notice, this
defence must fail.
[52]
In this instance the defence is even less credible. Even if he did
not receive the notice through the post, it was annexed
to the
amended particulars of claim on 13 December 2012, three months
before the trial commenced, which he did receive. (The
s 127(2)
notice was also annexed to the amended particulars, but this was
after the sale and is therefore immaterial.)
[53]
It is important in this regard to emphasise what the Constitutional
Court recently said the purpose of compliance with the
notices such
as s 127 is:
‘
Compliance is a prerequisite for “determining
the matter”. When is a matter “determined” in
proceedings
under the Act? That depends on whether the matter is
opposed and default judgment is sought, or whether it is opposed and
judgment
is to follow upon hearing evidence at the trial.’
[4]
[54]
In the three months before the trial commenced Mr Edwards could have
disputed the sale price and any other matter covered by
s 127(5), and
used the procedure available to him in s 128. If necessary he could
have sought a postponement of the trial for this
purpose. He did not
do so, but elected to go to trial and contest the merits of the
dispute, including the disputed sale price.
After considering all the
evidence, the high court ruled against him. This is not a case where
the question regarding compliance
with the s 127 notices is being
raised in connection with default judgment proceedings, where
different considerations apply to
the procedural protections of
consumers.
[55]
Mr Edwards has, no doubt acting on proper legal advice, abandoned any
challenge regarding the merits, ie the amount that he
now owes and
whether the best price was obtained. Before us all that remained was
an attempt to use the alleged non-delivery of
the notices as a
procedural shield to avoid meeting his contractual obligations, as he
had done when he raised a dispute regarding
the s 129 notice and
his other unmeritorious defences during the summary judgment
proceedings.
[56]
Even if there was substance in the complaint that he had not received
the s 127(5) notice before the proceedings had commenced,
its
purpose was to place Mr Edwards in the position to contest,
before the trial started, Wesbank’s calculations regarding
the
amount that he owed and the price obtained through the sale of the
car. These issues were fully canvassed at the trial. In
fact, as I
have mentioned, during the trial Wesbank amended its pleadings by
reducing the amount owed from R780 449 to R668 461.
Upholding his complaint that the notice was not properly delivered to
him would only allow him to abuse the protection of the Act
afforded
to consumers and to escape his contractual obligations. It would
truly be an abject case of placing form over substance.
The courts
cannot countenance such conduct, and this defence must, as I have
held with the s 127(2) notice, also fail.
[57]
To conclude, I would hold that Wesbank had no obligation to deliver a
s 127(2) notice to Mr Edwards after the agreement
had been
cancelled and the goods attached following the court order. And even
if there was an obligation to do so Wesbank complied
with the
provisions of the Act by sending it to Mr Edward’s chosen
address, as it did with the s 127(5) notice. In addition
the s 127(5)
notice was also delivered to Mr Edward’s attorney together with
the amended pleading after the sale.
[58]
For these reasons I agree with the order proposed by Shongwe JA.
_______________
A
Cachalia
Judge
of Appeal
Appearances
For
the Appellant: A A Bester
Instructed
by:
Mathew
Kerr-Phillips, Johannesburg;
Claude
Reid Incorporated, Bloemfontein.
For
the Respondent: F J Becker SC
Instructed
by:
Smit,
Jones & Pratt, Johannesburg;
Symington
& De Kok, Bloemfontein.
[1]
Baliso v
Firstrand Bank Limited t/a Wesbank
[2016]
ZACC 23
para 27.
[2]
Ibid para
16.
[3]
Kubyana v
Standard Bank of South Africa Ltd
[2014]
ZACC 1
;
2014 (3) SA 56
(CC) para 46.
[4]
Baliso v
Firstrand Bank Limited t/a Wesbank
[2016]
ZACC 23
para 11.