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SA Taxi Securitisation (Pty) Ltd v Sima (49779/2010) [2011] ZAGPJHC 111 (13 September 2011)

80 Reportability
Contract Law
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Brief Summary

Contract — Lease agreement — Cancellation of lease — Applicant sought confirmation of cancellation of vehicle lease agreement due to Respondent's default on rental payments — Respondent contended that notice of termination was invalid and that application should have been brought as action proceedings — Court found that Respondent's default was established, and the notice of cancellation was validly served, thus confirming the cancellation of the lease and authorizing the return of the vehicle.

Comprehensive Summary

Summary of Judgment


1. Introduction


The proceedings were motion (application) proceedings brought in the South Gauteng High Court, Johannesburg, in which the applicant sought judicial confirmation of its cancellation of a motor-vehicle lease/credit agreement and an order authorising repossession of the vehicle that formed the subject of the agreement. In addition, the applicant sought leave to return to court on the same papers (supplemented if necessary) to claim any post-sale shortfall after compliance with section 127 of the National Credit Act 34 of 2005.


The parties were SA Taxi Securitisation (Pty) Ltd (applicant), a registered credit provider under the National Credit Act, and Mxolisa Andries Sima (respondent), the credit receiver/lessee under the agreement. The applicant’s case was premised on the respondent’s alleged payment default, the applicant’s termination of the respondent’s debt review under section 86(10), and the ensuing cancellation of the agreement.


Procedurally, the respondent opposed the application and raised two preliminary objections (points in limine): first, that the applicant should have proceeded by action rather than application due to alleged factual disputes; and second, that the section 86(10) notice was not properly delivered and was not received, allegedly rendering the proceedings defective under the National Credit Act. The court addressed the points in limine before turning to the merits, and ultimately granted the applicant the relief sought.


The general subject-matter of the dispute concerned the enforceability of cancellation and repossession remedies under a credit/lease agreement regulated by the National Credit Act, in circumstances where the consumer had entered debt review but the credit provider purported to terminate that review and proceed with enforcement.


2. Material Facts


On 13 March 2009, the applicant and respondent concluded an agreement in terms of which the applicant leased to the respondent a 2009 Toyota Quantum Sesfikile identified by specified engine and chassis numbers. A material term was that, despite delivery, ownership remained vested in the applicant until compliance with the agreement’s terms.


The respondent was obliged to pay an initial deposit of R50 000 and thereafter 59 monthly rentals of R9 058,48, with the first instalment due on 1 May 2009. The agreement contained default provisions entitling the applicant, in the event of non-payment or other default, to cancel the agreement, reclaim possession, and pursue certain contractual financial consequences (including a damages/shortfall-type claim calculated with reference to outstanding amounts and the vehicle’s value or resale value).


It was common cause that the respondent became unable to meet his financial obligations under the agreement. As at 12 November 2010, he was in arrears in the amount of R33 858,12, and the arrears continued to increase thereafter.


On 17 August 2010, the respondent applied to be declared over-indebted and initiated debt review under section 86(1) of the National Credit Act. On 29 September 2010, he filed an affidavit in support of debt rearrangement and proposed paying lower amounts which he considered affordable, commencing around mid-October 2010 and continuing until June 2011, rather than paying the contractual instalment.


The court relied on the fact (treated as established in the papers) that the respondent failed to comply even with his own restructuring proposal, resulting in ongoing and increasing shortfalls relative both to the contractual instalments and the proposed reduced payments. This non-compliance formed part of the factual foundation for the applicant’s decision to terminate debt review and proceed with enforcement.


On 12 November 2010, the applicant delivered a notice to the respondent, his debt counsellor, and the National Credit Regulator purporting to terminate the debt review in terms of section 86(10). The notice was sent by prepaid registered post to the respondent’s chosen domicilium citandi et executandi under the agreement. The respondent disputed receipt and challenged the adequacy of the proof of posting, contending that delivery requirements had not been met.


Following termination of the debt review, the applicant purported to cancel the agreement and sought an order confirming cancellation and authorising repossession of the vehicle, together with costs and leave to seek any further monetary shortfall after compliance with section 127.


3. Legal Issues


The central legal questions were, first, whether the application was procedurally competent in motion proceedings, given the respondent’s contention that factual disputes were foreseeable and action should have been used. This issue was primarily procedural and turned on whether the respondent substantiated the alleged factual disputes sufficiently to defeat motion proceedings.


Second, the court had to determine whether the applicant had validly terminated the respondent’s debt review under section 86(10) and whether the manner of “delivery” of that notice (registered post to the chosen domicilium) was legally sufficient despite the respondent’s denial of actual receipt and criticisms of the proof of posting. This was a question of the application of statutory requirements and contractual notice provisions to the facts.


Third, on the merits of enforcement, the court had to decide whether the applicant had validly cancelled the agreement and whether the application itself could constitute a sufficient and unequivocal intimation of cancellation and demand (where required), such that repossession relief could follow. This involved applying general contractual principles of cancellation for breach, as well as the interaction between those principles and the notice regime under the National Credit Act.


A further issue was whether, at the time of enforcement, there existed any pending debt-review-related process contemplated by section 130 that would preclude the applicant from enforcing the agreement in court. This required a factual assessment against the statutory enforcement preconditions.


4. Court’s Reasoning


On the first point in limine (that action proceedings should have been used), the court held that the respondent’s answering affidavit did not meaningfully set out the basis for the alleged factual disputes, and the point was not substantively advanced in argument. On that footing, the court found the respondent had not substantiated the objection, and it was dismissed.


On the second point in limine (defective termination notice under section 86(10)), the court approached the matter through both the contractual notice clauses and the governing statutory position “as it was at the time”. The agreement’s domicilium clause provided that notices sent by registered post to the chosen domicilium would be deemed received on the third day after posting. The court treated this as significant in assessing the adequacy of delivery, and it held that actual receipt was not required for the notices to be effective, provided delivery occurred in the legally recognised manner.


In dealing with the respondent’s reliance on Standard Bank of South Africa Ltd v Elsje Hand and SA Taxi Securitisation (Pty) Ltd v Mbatha and 2 Similar Cases 2011 (1) SA (GSJ), the court analysed the contractual breach provisions and the logic of “breach-demand-cancellation-judicial process” discussed in Elsje Hand. It distinguished the Standard Bank case on the basis that, in that matter, the applicant had merely alleged an “election” to cancel without adequately alleging that it had in fact cancelled and how cancellation was conveyed, and without addressing the “due demand” requirement. By contrast, in the present case the court found that the applicant had alleged the necessary elements which Halgryn AJ found lacking in Elsje Hand. The second preliminary objection therefore failed.


Turning to the merits, the court accepted as established that the respondent was in default and that statutory time periods relevant to enforcement had been met, including that the respondent had been in default for at least 20 business days, that at least 60 business days had elapsed since the debt review application, and that at least 10 business days had elapsed since delivery of the section 86(10) notice. The court also accepted the applicant’s contention that it participated in the debt review process in good faith and acted bona fide in terminating it.


The court further reasoned that there was no relevant matter pending before a debt counsellor, alternative dispute resolution agent, consumer court, or ombudsman as contemplated in section 130, which could produce an order affecting the issues before the court. On that basis, enforcement proceedings were not barred by a pending process of the kind contemplated by the Act.


On cancellation and the sufficiency of demand/notice, the court relied on the established principle that the issue and service of summons (and by extension the initiation of formal court process) may constitute a formal intimation to the other party that the contract is regarded as cancelled and that repossession is demanded. The court cited authorities indicating that court process can serve as the requisite intimation of cancellation and demand in appropriate cases. Applying these authorities, the court concluded that the applicant had correctly and procedurally elected to cancel the agreement and that the application constituted such an election. It therefore held the applicant was entitled to possession of the vehicle, with the possibility of pursuing damages/shortfall later.


The court also considered practical and evaluative considerations concerning prejudice and risk: the vehicle was the applicant’s only security; it remained the applicant’s property; it was being used as a taxi with attendant risks of depreciation, damage, or loss; and ongoing retention by the respondent risked increasing arrears and potential loss to the applicant. The applicant’s tender to refund any excess (if the vehicle value exceeded the outstanding balance) and its undertaking to comply with section 127 were treated as part of the context supporting the repossession relief.


On the request for “confirmation” of cancellation, the court considered that such confirmation was justified in the circumstances. Confirmation was granted, and repossession was treated as the natural consequence of confirmed cancellation.


5. Outcome and Relief


The court granted the application. It confirmed the cancellation of the agreement concluded on 13 March 2009 between the applicant and the respondent.


It authorised and directed the Sheriff (or lawful deputy) to attach, seize, and hand over the specified vehicle (the 2009 Toyota Quantum Sesfikile identified by engine and chassis numbers) to the applicant.


The respondent was ordered to pay the costs of suit.


The applicant was granted leave to approach the court on the same papers, duly supplemented if necessary, for payment of any difference between the outstanding balance and the settlement value should any amount remain owing after the applicant complied with section 127 of the National Credit Act 34 of 2005.


Cases Cited


Noble v Laubscher 1905 TS 125


Alpha Properties (Pty) Ltd v Export Import Union (Pty) Ltd 1946 WLD 519-520


Jowell v Behr 1940 WLD 144


Thelma Court Flats (Pty) Ltd v Mc Swigin 1954 (3) SA 457 (C)


Middelburgse Stadsraad v Trans-Natal Steenkoolkorporasie Bpk 1987 (2) SA 244 (T)


Rossouw & Rossouw v First Rand Bank Ltd t/a FNB Home Loans (Case No. 640/2009, Supreme Court of Appeal, 30 September 2010)


SA Taxi Securitisation (Pty) Ltd v Mbatha and 2 Similar Cases 2011 (1) SA (GSJ)


Standard Bank of South Africa Ltd v Elsje Hand (South Gauteng High Court, 15 June 2011)


Legislation Cited


National Credit Act 34 of 2005 (sections 86(1), 86(4)(b)(i), 86(10), 88, 127, 129(1)(a), 130)


Rules of Court Cited


No rules of court were expressly cited in the judgment.


Held


The court held that the respondent’s procedural objections were unsubstantiated or without merit: the challenge to the use of application proceedings failed for lack of substantiation, and the challenge to termination of debt review failed because delivery by registered post to the chosen domicilium was treated as legally effective and actual receipt was not required.


The court held that the respondent was in default under the agreement and that the statutory preconditions for enforcement following termination of debt review were satisfied. It held that the applicant’s cancellation was procedurally and substantively effective, and that the initiation of the application constituted a sufficient intimation of the applicant’s election to cancel and reclaim the vehicle.


The court held that cancellation should be confirmed and that the applicant, as owner and credit provider, was entitled to repossession of the vehicle, with leave to pursue any residual shortfall after compliance with section 127 of the National Credit Act.


LEGAL PRINCIPLES


The judgment applied the principle that a party relying on cancellation for breach must establish the breach and must comply with any contractual cancellation mechanism (including any “due demand” requirement) unless the contract dispenses with notice. The court treated the adequacy of cancellation allegations and the conveyance of cancellation as critical, distinguishing prior authority where such allegations were found wanting.


The judgment applied the principle that, where an agreement contains a domicilium and a deeming provision for notices sent by registered post, actual receipt is not necessarily required, and delivery in accordance with the agreed method may be treated as sufficient for notice purposes, in line with the legal position the court considered applicable at the time.


It further applied the established contractual principle that the issue and service of formal court process (such as summons, and by analogy the launching of an application) can constitute a formal intimation of cancellation and demand for return of property in cases of this nature, supporting enforcement and repossession where cancellation is otherwise justified.


Finally, the judgment applied the National Credit Act enforcement framework in the context of terminated debt review, accepting that once statutory preconditions are met and there is no qualifying pending process under section 130, the credit provider may proceed to enforce its rights under the credit agreement, including repossession, while remaining obliged to comply with section 127 in relation to the handling and sale of repossessed goods and accounting for any surplus or shortfall.

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[2011] ZAGPJHC 111
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SA Taxi Securitisation (Pty) Ltd v Sima (49779/2010) [2011] ZAGPJHC 111 (13 September 2011)

SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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SOUTH GAUTENG HIGH COURT, JOHANNESBURG
REPORTABLE
CASE NO
:
49779/2010
DATE:13/09/2011
In the matter between:
S
A TAXI SECURITISATION (PTY)
LTD
............................................
Applicant
(Registration Number 2005/021852/07)
and
SIMA,
MXOLISA
ANDRIES
..............................................................
Respondent
(Identity Number ...)
J U D G M E N T
KGOMO, J
:
INTRODUCTION
[1] The Applicant herein
instituted proceedings in this Court against the Respondent for the
confirmation of its cancellation of
the agreement entered into
between it and the Respondent and a further order that the Sheriff of
this Court or his lawful deputy
be authorised, directed and empowered
to attach, seize and hand over to it (Applicant) the vehicle which is
the subject of the
agreement, to wit, a 2009 Toyota Quantum Sesfikile
with engine number 2TR8187976 and chassis number JFTSX22P-806059442
(the vehicle).
The Applicant further seeks an order that it be given
leave to approach this Court on the same papers, duly supplemented,
as may
be necessary, for payment of any difference between the
balance outstanding and the settlement value in the event of there
remaining
an amount owing by the Respondent to the Applicant after
compliance by the Applicant with the provisions of section 127 of the
National Credit Act, 34 of 2005 (the Act). The Applicant also
applied for any further or alternative relief this Court may deem
fit
to grant.
[2] The Respondent is opposing the application.
THE PARTIES
[3] The Applicant, S A Taxi
Securitisation (Pty) Ltd is a limited liability company duly
incorporated in terms of the company laws
of the Republic of South
Africa, having its principal office at Finance House, 230 Jan Smuts
Avenue, Dunkeld, Johannesburg. The
Applicant is a registered credit
provider as defined in the Act which undertakes credit vetting
processes on behalf of applicants
for credit finance and also
administer credit agreements concluded between it as credit provider
and various credit receivers such
as the Respondent.
[4] The Respondent, Mxolisi
Andries Sima, is an adult male credit receiver whose
domicilium
citandi et executandi
is given as 5952 Extension 3, Khutson, 2499. Khutsong is within the
area under the town Carletonville.
[5] The Applicant is the credit
provider and the Respondent, the credit receiver herein and their
relationship is governed by the
credit agreement entered between
them.
HISTORY AND BACKGROUND
[6] On 13 March 2009 the Applicant and the Respondent entered into
an agreement in terms whereof the Applicant was leasing to
the
Respondent and the Respondent leasing from the Applicant the vehicle
as set out hereinbefore. It was an express term of the
agreement
that despite delivery of the vehicle to the Respondent, ownership
thereof remains vested in the Applicant until all terms
relating to
the lease agreement have been complied with.
[7] In terms of the above-said agreement the Respondent was to pay
an initial deposit of R50 000,00 and thereafter 59 monthly
rentals of
R9 058,48, the first rental instalment being payable on 1 May 2009,
on consecutive months, until the principal debt
was extinguished.
[8] The agreement provided further that should the Respondent fail
to pay any rental on the due date thereof or fail to satisfy
any of
his other obligations in terms of the agreement, the Applicant would,
without prejudice to any of its rights in law, be
entitled to:
cancel the agreement and in the case of such cancellation:
- claim return and possession of
the vehicle;
- retain all payments already made by the Respondent;
- claim payment of the difference between:
- the amount outstanding at the date of cancellation of the agreement
less a rebate on finance charges calculated from the date
of
termination of the agreement; and
- the amount at which the vehicle
is valued in terms of the agreement or the re-sale value thereof,
whichever is the greater;
- claim interest on the balance
remaining at the date of cancellation at the rate of 29,50% per
annum,
alternatively
, at
the current interest rate linked to the fluctuation of the interest
rate calculated from the date of termination of the agreement
to the
date of payment;
- costs on attorney and client scale;
- claim all expenses incurred in tracing the respondent before or
after the institution of legal proceedings, attaching the vehicle,

removing it, valuing it, storing and re-selling it.
[9] The Respondent defaulted on
his rental payments and as at 12 November 2010 he was in arrear to
the tune of R33 858,12.
[10] On 17 August 2010 the Respondent applied to have himself
declared over-indebted as contemplated in
section 86(1)
of the
National Credit Act 34 of 2005
, as amended, (NCA).
[11] On 29 September 2010 the Respondent deposed to an affidavit in
support of an application for debt re-arrangement. The Respondent

proposed and started paying amounts he felt he could afford in the
sum of R3 980,9 5 from 16 October 2010 until 14 June 2011, instead
of
R6 181,18, in terms of the debt re-arrangement proposals he made.
[12] In terms of the lease agreement over the period September 2010
to June 2011 the amount the Respondent was obliged to pay
in rental
instalments was R90 584,80, i.e. R9 058,48 x 10 months). The
shortfall was R54 756,25 at the time and growing each succeeding

month.
[13] During the corresponding period, i.e. September 2010 to June
2011 the Respondent ought to have paid a total of R61 811,18.
He was
in arrear in the amount of R25 982,63.
[14] Pursuant to the above
scenario, on 12 November 2010 the Applicant gave notice to the
Respondent, his debt counsellor and the
National Credit Regulator of
its election to terminate the debt review in terms of
section 86(10)
of the NCA, which notice was sent to the Respondent by prepaid
registered post to the chosen
domicilium
citandi et executandi
.
[15] As stated above, the arrears as at the above date was R33
858,12 and has been rising by R6 181,18 a month since then to date.
[16] When the Respondent’s
debt review was purportedly terminated on 12 November 2010 he was in
default, not only in terms
of the original lease or credit agreement,
but also in terms of his own payment restructuring proposal.
[17] In the light of the above state of affairs the Applicant
purported to cancel the lease agreement and claim return of the

vehicle and also claim damages as set out in the lease agreement.
[18] The Applicant now seeks confirmation of the cancellation of the
lease agreement and an order authorising the return of the
vehicle.
THE LEGAL POSITION
[19]
Point
in limine 1
The Respondent raised the first
point
in limine
,
being that since it was clear to all and to the Applicant that
various factual disputes were going to arise, it ought to have
used
action proceedings instead of Application proceedings. He submitted
that on this ground alone this application should be
dismissed with
costs.
The Respondent’s Answering
Affidavit is eerily quiet as to the real or actual grounds upon
which this point
in
limine
is based.
Even during arguments in court nothing was said about this point.
As a result, the Respondent has
not proved or substantiated this point
in
limine
.
It is thus dismissed.
[20]
Point
in limine
2
The second point
in
limine
raised by the
Respondent was that the purported notice of termination of debt
review the Applicant avers he sent to him was not
dealt with as
required by law and that he never received it. Furthermore, the
purported
section 86(10)
notice’s mode of remittance, namely,
registered mail was invalid in that the document attached as proof
of sending does
not have a signature of the person who sent it (and
the other letters sent together with it), does not indicate how many
letters
were sent at that occasion and does not contain or have the
signature of the post office clerk who allegedly put the official
post office stamp on it. That being the case, so argues the
Respondent, the said notices fall foul of
sections 88
and
130
of the
NCA, rendering the entire application bad in law and thus
necessitating this Court to dismiss it with costs.
[21] The above is all substantiation the Applicant gave in the
Answering Affidavit.
[22] In argument in court
counsel for the Respondent presented submissions based on the
principles set out in a judgment delivered
by Halgryn AJ on 15 June
2011 in the South Gauteng High Court of
Standard
Bank of South Africa Ltd v Elsje Hand
as
well as
S A Taxi
Securitisation (Pty) Ltd v Mbatha and 2 Similar Cases
2011 (1) SA (GSJ).
[23] The hullaballoo surrounding the notices of termination of debt
review has their origin in the terms of the agreement relating
to
breach thereof. This aspect is clause 8 of the lease agreement
herein, clause 8.2.2 whereof reads as follows:
“
8.2.2
after due demand, cancel this agreement, obtain possession of the
vehicle and recover from the Lessee as pre-estimated, liquidated

damages, the total amount of payments not yet paid by the Lessee …
…
For purposes of this
subclause ‘due demand’ shall mean immediately on demand
unless the Lessee is entitled to notice,
in which case ‘due
demand’ shall mean the giving of such notice to which the
Lessee is entitled.
”
[24] Clause 8.2 of the lease agreement explains the above scenario
as follows:
“
8.2
Upon an event of default or the loss, damage or destruction of the
vehicle … the Lessor may, …, at its election
and
without prejudice to any remedy which it may have in terms of this
agreement or otherwise –
without notice, claim
immediate payment of all instalments, whether then due for payment
or not, provided that if the Lessee
does not make immediate
payment, the Lessor may, notwithstanding the election of claim
immediate payment on terms of this
sub-clause, claim the relief
set out in clause 8.2.2 …
”
[25] On the aspect of notices the situation is governed by clause 11
of the agreement which reads as follows:
“
11.
Domicilium and Notices
The Lessee chooses its
domicilium
… for all purposes as its address on the face of this
agreement …
11.2 Any notice delivered by
hand or sent by registered post to the Lessee’s
domicilium
shall be deemed to have been received if delivered by hand, on due
date of delivery or if sent by registered post, on the third
day
after posting.
”
[26] From the above it is apparent that there is no provision made
in the lease agreement herein for separate demands to be remitted
in
respect of termination of debt review and the cancellation of the
lease agreement. In my considered view, on the face thereof,
the
terms set out in the latter part of clause 8.2.2 of the lease
agreement, to wit –
“
…
For purposes of this sub-clause ‘due demand’ shall
mean immediately on demand unless the Lessee is entitled to notice
…
”
kick in.
[27]
Standard
Bank of SA Ltd v Elsje Hand (supra)
dealt with a situation where the Applicant in a similar case as the
one we are dealing with alleged in its founding affidavit,
among
others that –
“
6.22
cancel the agreement, take possession of the vehicle …
”
omitting from the above quotation from clause 13.2.2 of the
applicable credit agreement the words –
“
after
due demand
”
before the words – “
cancel
the agreement …
”
[28] The learned judge Halgryn AJ held in the above case that it is
trite law that a party wishing to rely on the cancellation
of an
agreement because of its breach must allege and prove –
the breach of the agreement;
that the right to cancellation has occurred because the breach was
material or in the event that the agreement contains a cancellation

clause, that its provisions have been complied with; and
that clear and unequivocal
notice of rescission was conveyed to the other party, unless the
agreement dispenses with such notice.
[29] The learned judge went on to state that –
“
Simply
put, the parties intended a logical flow of things i.e.
breach-demand-cancellation-judicial process
…”
[30] In the light of the latest
Supreme Court of Appeal decision on this aspect, namely,
Rossouw
& Rossouw v First Rand Bank Ltd t/a FNB Home Loans
under
Case No. 640/2009 decided on 30 September 2010, I need not go deeper
into the reasoning in the
Standard
Bank v Elsje Hand
judgment save to state that the facts of that case are
distinguishable from our present case.
[31] In the
Standard
Bank
case Halgryn AJ
found that the Applicant therein did not go further than mentioning
that it has “
elected
to cancel the agreement
”.
He further held that the Applicant did not allege as a fact that it
had cancelled the agreement, let alone how it did
so or how the
cancellation notice was conveyed to the Respondent in clear,
unequivocal and unambiguous terms. He went further to
hold that the
Applicant did not state that it cancels the agreement by means and in
terms of the application before the court and
that even if that was
what the Applicant intended, it did not allege that the cancellation
was preceded by “
due
demand
”.
[32] As shown above the
Applicant in our present application have alleged all those aspects
that Halgryn AJ found were not alleged
in the
Standard
Bank
case.
[33] The Respondent’s
second point
in limine
also cannot succeed in the light of the aforementioned.
THE MERITS
[34] As stated hereinbefore, the Respondent has been made aware of
the impending litigation in the legal way. Actual receipt of
the
notices to cancel debt review and the agreement is not a requirement.
[35] It is common cause that the
Respondent became unable to meet his financial obligations in terms
of the lease agreement at
some stage. He applied to have himself
declared over-indebted as contemplated in
section 86(1)
of the NCA.
His debt counsellor delivered the Respondent’s notice
contemplated in section 86(4)(b)(i) of the Act on 17 August
2010. On
17 September 2010 the Respondent’s debt counsellor filed the
latter’s proposed re-arrangement of obligations
to the
Applicant. Unfortunately, the Respondent failed to act in terms of
his own debt re-arrangement proposals. In terms of the
applicable
laws or legal position at the time the Applicant became entitled to
cancel the debt review. It did so on 12 November
2010 when it gave
notice to the Respondent, the debt counsellor and the National Credit
Regulator in the prescribed manner, of
its election to terminate the
debt review in terms of section 86(10) of the NCA. The above were
sent by prepaid registered post
to the address chosen by the
Respondent as his
domicilium
citandi et executandi
.
As I have already found above, the “
delivery
”
of the said notice was in accordance with the law as it was at the
time.
[36] As at the date of the institution of these proceedings, the
Respondent was in default in terms of the agreement. He had,
as at
the time been in default for at least 20 business days and at least
60 business days had elapsed since the date on which
the Respondent
applied for debt review. Furthermore, 10 business days had elapsed
since the Applicant delivered the notice in
terms of section 86(10)
of the NCA.
[37] I cannot disagree with the
Applicant’s submission that it participated in the debt review
process in good faith and
that it also acted
bona
fide
when it
terminated it.
[38] In the circumstances, of this case, there was no claim pending
before a debt counsellor, alternative dispute resolution agent,

consumer court or ombudsman with jurisdiction as envisaged in section
130 of the NCA. There was in short, no matter arising out
of or under
the credit agreement which was pending before a tribunal, that could
result in an order affecting the issues to be
decided by this Court.
[39] The vehicle in issue here
is the Applicant’s only security for the debt owed by the
Respondent to the Applicant. The
Applicant is the lawful owner of
the vehicle. It (Applicant) is unable to protect the value thereof
while it is in the Respondent’s
possession. It is being used as
a taxi and the risk of it being damaged or lost entirely cannot be
discounted. Protracted refusal
by the Respondent to return the
vehicle will result in the arrear amount increasing and the
Applicant’s possible prospects
of loss being increased. There
is a danger of the market value of the vehicle becoming less than the
re-sale value thereof.
[40] The Applicant has tendered refunds of any excess should the
value of the vehicle exceed the full balance outstanding and
has also
undertaken to comply fully with the requirements of section 127 of
the NCA.
[41] The notices a Respondent is entitled to receive in terms of the
NCA are those in terms of section 129(1)(a) and 86(10).
It is also
said in certain cases that they are provided in the alternative. What
is also a fact is that to the extent that any
demand is required, a
summons also constitutes a demand.
[42] In
Noble
v Laubscher
1905 TS
125
at 126, Innes CJ put it as follows:
“
I
think if the lessor wished to take advantage of clause 9, it was a
condition precedent to his doing so that he should intimate
to the
lessee his contention that the letter had broken the contract, and
that he therefore demanded his goods back … the
issue of
summons was a formal intimation to the lessee of the lessor’s
contention that he had broken the contract, that it
was cancelled,
and that the lessor insisted upon his right to reclaim the goods.
”
[43] In
Alpha
Properties (Pty) Ltd v Export Import Union (Pty) Ltd
1946
WLD at 519-520, Rathouse AJ put it as follows:
“
The
first of these points is that there has been no cancellation of the
lease on the part of the plaintiff. It is contended that
there was no
cancellation prior to the launching of the petition, and that the
petition itself did not amount to an intimation
to the defendant that
the lease was cancelled … I think, therefore, the point fails
because I am satisfied that the launching
of the petition was a
formal notice to the defendant that the lease was cancelled …
I might also refer to the case of
Jowell v Behr
1940 WLD 144.
In that case it was held that the issue of summons
claiming damages for breach of contract was, in itself, a binding
announcement
of an election to repudiate the contract on the grounds
of a breach going to the root thereof, and that there was no need for
a
specific allegation in the declaration that the contract had been
broken.
”
[44] In
Thelma
Court Flats (Pty) Ltd v Mc Swigin
1954 (3) SA 457
(C), Watermeyer AJ held among others as follows at
462C-D:
“
There
is ample authority for the proposition that the issue and service of
a summons in cases of this nature is a formal intimation
to the
Lessee of the lessor’s contention that the contract has been
broken and of the fact that he has elected to treat the
lease as
cancelled …
”
[45] Similar sentiments were
echoed in
Middelburgse
Stadsraad v Trans-Natal Steenkoolkorporasie Bpk
1987 (2) SA 244
(T) at 249 as well as in R H Christie:
The
Law of Contract in South Africa
,
5
th
Edition at p 539.
[46] It is thus my considered view and finding that the Applicant
has correctly and procedurally elected to cancel the agreement

herein. This application constitutes such an election. It is
therefore entitled to take possession of the vehicle and claim
damages, if any, from the Respondent.
[47] To the extent that the Applicant seeks confirmation of such
cancellation, it is my view and finding that this Court finds
such a
move justified. The cancellation is therefore confirmed. The return
of the vehicle is a natural consequence of the confirmation
of the
cancellation.
ORDER
[48] The following order is made:
The cancellation of the agreement entered into between the
Applicant and the Respondent on 13 March 2009 is hereby confirmed;
The Sheriff of this Court or his lawful deputy is authorised,
directed and empowered to attach, seize and hand over to the

Applicant the vehicle, namely, 2009 Toyota Qauntum Sesfikile with
engine number 2TR8187976 and chassis number JTFSX22P806059442;
The Respondent is ordered to pay the costs of suit;
The Applicant is given leave to approach this Court on the same
papers, duly supplemented as may be necessary, for payment
of any
difference between the balance outstanding and the settlement value
in the event of there remaining an amount owing
by the Respondent
to the Applicant after compliance by the Applicant with the
provisions of
section 127
of the
National Credit Act, 34 of 2005
.
_____________________________
N
F KGOMO
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL
FOR THE APPLICANT
.................
ADV
A R G MUNDELL SC
INSTRUCTED
BY
...........................................
MARIE-LOU
BESTER INC
…
.....................................................................
SAXONWOLD,
JOHANNESBURG
…
....................................................................
TEL
NO: 011 486 0775
COUNSEL FOR THE
RESPONDENT
..........
ADV I STRYDOM
INSTRUCTED
BY
...........................................
NAEEMA
GABRU ATTORNEYS
…
.....................................................................
c/o
PAULA DROTSKIE ATTORNEYS
…
....................................................................
TEL
NO: 011 447 0640
DATE OF
ARGUMENT
...................................
29
JULY 2011
DATE
OF JUDGMENT
...................................
13
SEPTEMBER 2011

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