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2010
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[2010] ZAGPJHC 24
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SA Taxi Securitisation (Pty) Ltd v Mbatha; SA Taxi Securitisation (Pty) Ltd v Molete; SA Taxi Securitisation (Pty) Ltd v Makhoba (51330/09, 52948/09, 53080/09) [2010] ZAGPJHC 24; 2011 (1) SA 310 (GSJ) (30 March 2010)
IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
(REPUBLIC OF SOUTH AFRICA)
CASE NO: 51330/09
In the matter between:
SA TAXI SECURITISATION (PTY) LTD
Plaintiff
and
MBATHA, BHEKITHEMBA MISHACK
Defendant
CASE NO: 52948/09
SA TAXI SECURITISATION (PTY) LTD
Plaintiff
and
MOLETE, CHRISTOPHER QENEHELO
Defendant
CASE NO: 53080/09
SA TAXI SECURITISATION (PTY) LTD
Plaintiff
and
MAKHOBA, AARON VELAPHI
Defendant
JUDGMENT
I. INTRODUCTION
In this case, three separate applications for summary judgment were
argued before me simultaneously. In each instance the
Applicant/Plaintiff was represented by the same counsel and each
Respondent/Defendant was represented by the same counsel.
In each case, the Plaintiff, SA Taxi Securitisation (Pty) Ltd (“the
Plaintiff”), had financed the acquisition of
a taxi by the
Defendant through an agreement pursuant to which the Plaintiff
leased a vehicle to each Defendant. Each Defendant
was required to
pay rental, which included capital plus finance charges. It is
common cause that each of the lease agreements
(collectively “the
lease agreements”) is a credit transaction as defined in
section 1 of the National Credit Act
34 of 2005 (“the NCA”
or “the Act”).
Each Defendant allegedly defaulted in its obligation to pay the
rental. The Plaintiff alleges that it has validly cancelled
each of
the lease agreements and the Plaintiff seeks to repossess each of
the leased vehicles (“the vehicles”).
The Plaintiff has
applied for summary judgment seeking return of each of the vehicles
in terms of Rule 32(1)(c).
Although the Plaintiff has claimed other relief in the notice of
application for summary judgment, the Plaintiff’s Senior
Counsel, Mr
Subel
, indicated during the course of
argument that the Plaintiff was not pursuing the other remedies
sought in the notice of application
for summary judgment.
Accordingly, in each instance, the Plaintiff sought only return of
the relevant vehicle together with
costs on the attorney and client
scale.
1
In each action, the Defendant raised various defences under the NCA.
In addition, in case number 09/51330 (“the first
action”),
the Defendant raised certain procedural defences based upon the
format of the affidavit in support of the application
for summary
judgment.
By agreement between the parties, the parties argued only those
issues that arose in the first action. The parties were in agreement
that, if summary judgment was granted in the first action, summary
judgment should be granted in the other two actions because
the
substantive defences raised in all three actions were the same.
2
II. THE POINT
IN LIMINE
IN THE FIRST ACTION
In the first action, the Plaintiff asserts two separate claims for
the return of two separate vehicles based upon two separate
lease
agreements.
The Defendant in the first action took a point
in
limine
against the Plaintiff based upon the language of the confirming
affidavit.
Paragraphs 4 and 5 of the affidavit filed in support of the
application for summary judgement stated:
“
4. I have read the Plaintiff’s summons,
Particulars of Claim and Application for Summary Judgment in this
matter. I can
and do swear positively to the
claims
set out in the Summons and Particulars of Claim and verify the
Plaintiff’s cause of
action.
5. I can and do swear positively to the facts herein
contained and verify that the Defendant is truly and lawfully
indebted to
the Plaintiff in the sum of R39 310.38 in respect
of Claim A and R46 387.75 in respect of Claim B with interest
upon
the grounds as stated in the Summons.”
[emphasis added].
The Defendant contended that the Plaintiff verified only one cause
of action instead of the two causes of action that the Plaintiff
relied upon. This proposition is untenable.
Paragraph 4 of the affidavit refers to
“claims”
.
The reference to
“cause of action”
instead of to
“causes of action”
is plainly a mere grammatical
error. When the supporting affidavit is read with the notice of
application and the summons, there
can be no doubt that the deponent
intended to verify each claim for the return of each motor vehicle.
3
In any event, it is clear from the affidavit in opposition to the
summary judgment application that the Defendant was left in
no doubt
that the Plaintiff was verifying both causes of action. The point
in
limine
was not even raised in the opposing
affidavit.
Accordingly, even if there is a defect in the supporting affidavit,
the Defendant has suffered no prejudice.
III. THE CONTRACTUAL INTERPRETATION DEFENCES
In each action, the Plaintiff alleged that the Defendant had
breached its agreement by failing to pay rentals on due date and
that, as a consequence of the breach, the Plaintiff had terminated
the agreement.
In paragraph 21 of the opposing affidavit in the first action, the
Defendant states:
“
21 The plaintiff contends that I am in breach of
the credit agreement by failing to pay monies due in terms of the
agreement and
I am in arrears with my payments. On this basis the
plaintiff sought to cancel the agreement. I have already denied
that I
am in breach of the agreement nor am I in arrears in the
alleged amount, if at all.
22. I specifically aver that I have made and i (sic) am
still making regular payments under my debt counsellor’s
proposal
in the National Credit Regulator’s (NCR) accredited
payment distribution agent the Consumer Protection Excellence
(CPE).”
This denial by the Defendant that he is in default falls
significantly tort of the standard required by
Breitenbach v
Fiat (SA) Edms (Bpk)
1976 (2) SA 226
(T)
– (see below). For the denial to be effective, the Defendant
would have been required to state that he had made all of
his
payments, when he had made those payments, and the amount of each
payment.
In any event, the Defendant’s denial appears to be not so much
a factual one but one calculated to clarify that he has
not
abandoned certain defences. When read in the context of the
affidavit as a whole, the Defendant’s denial seems to
be
premised upon two contentions:
That there can be no default under each lease agreement because the
lease agreements do not specify the date of payment of
instalments
after the first instalment. This defence is dealt with below.
The default is not yet justiciable because the action is barred by
the provisions of the NCA. This contention is also dealt
with
below.
The language of each lease agreement is similar. The Defendant
maintains that, in each action, having regard to the language
of the
agreement, the Plaintiff’s cancellation of the agreement is
invalid. The Defendants appear to have raised two points
in this
regard, based upon the language of the various lease agreements.
Clause 9 of each lease agreement provides:
“
9.1 An event of default shall occur if the
Lessee –
9.1.1 fails to make punctual payment of any of the
instalments ...
9.2
Upon an event of default
or the loss, damage or destruction of the vehicle as determined in
6.1 the Lessor may, subject to the provisions of the Act and
any
other applicable legislation, at its election and without prejudice
to any remedy which it may have in terms of this agreement
or
otherwise - ...
9.2.2.
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, whether same are due
for payment or not or the proceeds of any insurance
policy paid by
the Lessor in respect of the vehicle. In addition, the Lessor shall
be entitled to claim from the Lessee any
amount of any value added
tax payable in respect of such damages.
For
the purposes of this sub-clause “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.”
[emphasis added].
Based upon the language of clause 9.2.2, the Defendant maintains
that there should have been a demand before the Plaintiff could
terminate the agreement. As far as I can understand the Defendant’s
argument, it appears to be that two steps are required
for the
termination of the agreement. First, demand must be made and,
thereafter, notice of default must be given. In other
words, there
must be an
interpellatio
before the Plaintiff can claim.
I see nothing in the language of the lease agreements that justifies
such an interpretation. On the contrary, the language of
clause
9.2.2 makes it clear that, as soon as demand is made, the Plaintiff
is entitled to return of the vehicle. In this respect,
the
allegation is made in paragraphs 15 and 27 of the particulars of
claim in the first action that the agreement has been terminated
“alternatively the agreement is terminated herewith”
.
As a matter of law, to the extent that demand is required, summons
constitutes demand.
4
The Defendants’ second point is based upon clause 1.1 of each
lease agreement which provides that:
“
The first instalment will be payable on the date
provided for in Part D and subsequent instalments will be payable on
the stipulated
Payment Date.”
The Defendants maintain that, while a date for the first instalment
is stipulated in Part D of the lease agreement, the relevant
lease
agreement does not provide for a
“payment date”
.
Therefore, the Defendants contend that the Plaintiff should have
stipulated a payment date before an event of default could
have
occurred. In other words, once again, the Defendants argue that
there should have been an
interpallatio.
This argument is
also unsustainable.
In relation to the agreement that is annexure “A” to the
particulars of claim in the first action, the payment date
for the
first and final instalments and the payment date of each instalment
is clearly set out.
In relation to the other agreements, each agreement contains a
specific date for payment of the first instalment. Each agreement
provides that payments are to be made by way of 60 monthly
instalments. There can be no doubt that, upon a proper construction
of the agreement, each instalment was payable on the same day in
each month as the first instalment. Even if I am wrong in this,
at
the very least each instalment would have been payable on or before
the last day of the month in which each instalment was
paid.
Accordingly, the payment date is stipulated and no
interpallatio
is necessary.
IV. THE STANDARD THAT THE DEFENDANT HAS TO MEET IN ORDER TO
DEFEAT A CLAIM FOR SUMMARY JUDGMENT
In
Breitenbach v Fiat SA (Edms) Bpk
1976 (2) SA 226
(T) 228
Colman J, delivering the judgment of the Full Court,
held:
“
It must be accepted that the sub-rule was not
intended to demand the impossible. It cannot, therefore, be given
its literal meaning
when it requires the defendant to satisfy the
Court of the
bone fides
of his defence.
It will suffice, it seems to
me, if the defendant swears to a defence, valid in law, in a manner
which is not inherently and seriously
unconvincing
.
Another provision of the sub-rule which causes
difficulty, is the requirement that in the defendant’s
affidavit the nature
and grounds of his defence, and the material
facts relied upon therefore, are to be disclosed “fully”
.
A literal meaning of that requirement would
be to impose on a defendant the duty of setting out in its affidavit
the full details
of all the evidence which he proposed to rely upon
in resisting the plaintiff’s claim at the trial. It is
inconceivable,
however, that the draftsman of the Rule intended to
place that burden upon a defendant. I respectfully agree ... that
the word
“fully” should not be given its literal meaning
in Rule 32(3), and that no more is called for than this: that the
statement of material facts be sufficiently full to persuade the
Court that what the defendant has alleged, it is proved at the
trial, will constitute a defence to the plaintiff’s claim.
What I would add, however, is that if the
defence is averred in a manner which appears in all the
circumstances to be needlessly
bald, vague or sketchy, that will
constitute material for the Court to consider in relation to the
requirement of
bona fides
...”
[emphasis added].
The principles enunciated in
Breitenbach v Fiat
are no
less applicable when the defendant deposing to an affidavit
resisting summary judgment is relying upon defences based
upon
sections of the NCA. Since the enactment of the NCA, there seems to
be a tendency in these Courts for defendants to make
bland
allegations that they are
“over-indebted”
or that
there has been
“reckless credit”
. These
allegations, like any other allegations made in a defendant’s
affidavit opposing summary judgment, should not be
“inherently
and seriously unconvincing”
, should contain a reasonable
amount of verificatory detail, and should not be
“needlessly
bald, vague or sketchy”
. A bald allegation that there was
“reckless credit”
or there is
“over-indebtedness”
will not suffice.
5
It is with this guiding principle in mind that I approach the
Defendants’ defences in the three actions.
I make a further general observation on the manner in which the
Defendants have set out their defences in the three actions.
The
Defendants in the second and third action raise identical defences
and provide identical information to the Defendant in
the first
action. It is almost as if the affidavits contain a laundry list of
standard defences extracted from a word processor.
It is unlikely that three separate Defendants, even if bound by
similar agreements with similar defences available to them under
the
NCA, could satisfy the summary judgment requirements stipulated in
Breitenbach v Fiat
with a series of bland and
identical allegations. The details of each Defendant’s
experience with the Plaintiff should
have been provided and these
would surely have been different in some way, even if the events
merely occurred on different dates.
V. THE POLICY BEHIND THE NCA
The preamble to the NCA states that the purpose of the NCA is:
“
To promote a fair and non-discriminatory market
place for access to consumer credit and for that purpose to provide
for the general
regulation of consumer credit and improved standards
of consumer information; to promote black economic empowerment and
ownership
within the consumer credit industry; to prohibit certain
unfair credit and credit-marketing practices; to promote responsible
credit granting and
use
and for that purpose to prohibit reckless credit granting; to
provide for
debt reorganisation in cases of
over-indebtedness
...”
[emphasis added].
Section 3 of the NCA provides that the
“Purposes of
the Act”
are,
inter alia
, as follows:
“
The purposes of this Act are to promote and
advance the social and economic welfare of South Africans, promote a
fair
, transparent,
competitive,
sustainable
,
responsible,
efficient
,
effective and accessible credit marketing industry, and to protect
consumers, by –
(a) promoting the development of a credit market that
is accessible to all South Africans, and in particular to those that
have
historically been unable to access credit under sustainable
market conditions;
...
(c) promoting responsibility in a credit market by:
encouraging
responsible
borrowing
,
avoidance
of over-indebtedness and fulfilment of financial obligations by
consumers
; and
discouraging reckless credit granting by credit
providers
and contractual default by
consumers;
(d) promoting equity in the credit market
by
balancing the respective rights and responsibilities of credit
providers and consumers
;
(e) addressing and correcting imbalances in negotiating
power between consumers and credit providers by ...
(g) addressing and preventing over-indebtedness of
customers, and providing mechanisms for resolving over-indebtedness
based on
the principle of
satisfaction by the
consumer of all responsible financial obligations
;
(h) providing for a consistent and accessible system of
consensual resolution of disputes arising from credit agreements;
and
(i) providing for a consistent and harmonised system of
debt restructuring,
enforcement and judgment,
which places priority on the eventual satisfaction of all
responsible consumer obligations
under
credit agreements.”
[emphasis added].
The purpose of the NCA is to provide a more efficient and equitable
credit system by
balancing
the rights of credit providers and
consumers. The intention of the legislature was not to shift the
balance of power so much
that all power in the credit relationship
would amass into the hands of the consumer.
The NCA is also structured in such a way as to prevent
“over-indebtedness”
and to provide for more
efficient discharge of consumer debts. If, as the Defendants
maintain, the purpose of the Act was to
enable an over-indebted
consumer to retain a lender’s depreciating security while at
the same time not making debt payments,
the NCA would make it
significantly more unlikely that over-indebted consumers would ever
discharge their indebtednesses. The
restoration of a lender’s
security to the lender while it still has value facilitates the
efficient reduction and discharge
of indebtedness. The retention of
deteriorating security has the opposite effect.
A major purpose of the Act is to assist over-indebted consumers to
pay off their indebtedness. In certain limited circumstances,
the
NCA affords them a
moratorium
on the repayment of the
indebtedness in order to enable them to get back on their feet. The
Act may also allow consumers to be
relieved of indebtedness that was
incurred as result of reckless credit.
I stress that all of these objectives are directed at the consumer’s
indebtedness –
i.e. the claim for the outstanding
deficiency
after
realisation of the lender’s securities
(“the deficiency claim”). The intention is not to
unfairly deprive
lenders of their security.
Where a consumer is over-indebted, the creditor provider’s
prospects of recovering from the consumer are often effectively
limited to the recovery of the creditor’s security. If
lenders are unable to recover deteriorating security, such as motor
cars, promptly the consequences would be economically disastrous for
asset-based lenders, especially those lending to the less
affluent.
It would have the effect of reducing available credit and pushing up
the cost of credit for those consumers who are
performing their
obligations. Taking these practical factors into account is part of
balancing the interests of credit providers
and consumers.
While one purpose of the NCA is to discourage reckless credit, the
Act is also designed to facilitate access to credit by borrowers
who
were previously denied such access. An over-critical armchair
approach by the Courts towards credit providers when evaluating
reckless credit, or the imposition of excessive penalties upon
lenders who have recklessly allowed credit, would significantly
chill the availability of credit especially to the less affluent
members of our society.
Interpretation of the various sections of the NCA involves an
attempt to balance the interests of both lenders and borrowers
in
such a way as to facilitate the flow of credit in a responsible
manner and to provide debt relief where appropriate. The financial
stability of credit providers is in this context as important as
those of the consumers. The more successful the credit provider,
the more credit that is available in the capital markets and the
more favourable the rates that are available to consumers.
Consumers benefit when credit providers are successful. The failure
of credit providers adversely affects consumers and the flow
of
credit. Both groups are dependent upon each other and that is why a
balancing act is necessary.
V. THE DEFENCE OF
“RECKLESS CREDIT”
A.
The provisions of the NCA concerning reckless credit
Section 80 of the NCA provides:
“
(1) A credit agreement is reckless, if at the
time that the agreement was made, or at the time when the amount
approved in terms
of the agreement is increased ...–
the credit provider failed to conduct an assessment as
required by section 81(2), irrespective of what the outcome of
such
an assessment might have concluded at the time; or
the credit provider, having conducted an assessment as
required by section 81(2) entered into the credit agreement
with the
consumer despite the fact that the preponderance of
information available to the credit provider indicated that –
the consumer did not generally understand or appreciate
the consumer’s risks, costs or obligations under the proposed
credit
agreement; or
entering into that credit agreement would make the
consumer over-indebted.”
Section 80(2) provides that a determination of recklessness
must be made based upon the circumstances that prevailed at
the time
that the obligation was entered into and not at the time when the
determination is made.
Section 80(3) sets out some of the factors that must be
considered in determining whether there has been reckless credit.
These include a determination of the value of any credit facility
available to the borrower at the time that the credit was granted
and the amount of any pre-existing credit guarantees.
Section 83 of the NCA provides:
“
(1) Despite any provision of law or agreement to
the contrary, in any court proceeding in which a credit agreement
has been considered,
the court may declare that the credit agreement
is reckless, as determined in accordance with this Part.
(2) If a court declares that a credit agreement is
reckless in terms of section 80(1)(a) or 80(1)(b)(i), the court
may make
an order –
setting aside all or part of the consumer’s
rights and obligations
under that agreement,
as the court determines just and reasonable in the circumstances; or
suspending the force and effect of that credit
agreement
in accordance with subsection
(3)(b)(i).”
[emphasis added].
Section 84(1) provides:
“
(1) During the period that the force and effect
of the credit agreement is suspended in terms of this Act –
the consumer is not required to make any payment
required under the agreement;
no interest, fee or other charge under the agreement
may be charged to the consumer; and
the credit provider’s rights under the agreement,
or under any law in respect of that agreement, are enforceable,
despite
any law to the contrary.”
Accordingly, if a Court declares a credit agreement to be reckless
it can either
“set aside”
the consumer’s
“rights and obligations”
in whole or in part or
suspend the force and effect of the credit agreement.
It is significant that, in relation to the suspension of a credit
agreement, section 84 focuses on whether the consumer
is
required to make
payments
or is obliged to
pay
any
interest, fee or other charge during the period of suspension.
Although section 84(1)(c) contemplates that the credit
provider
will not be entitled to enforce its rights during the period of
suspension, that sub-section must be read with sections 84(1)(a)
and (b). There is no basis for reading into the language of the NCA
a provision that, when suspension is appropriate, the Court
also has
the power to permit the consumer to utilise the security in a manner
which will permit it to deteriorate during the
period of suspension.
It seems unlikely that the legislature ever intended that the
consumer could keep the
“money and the box”
. If
the consumer obtained possession and use of a motor vehicle in
circumstances in which no credit should have been extended
to the
consumer, it would be fundamentally unfair and counterproductive for
the consumer to continue to use the vehicle while
at the same time
not making any payments under the agreement.
If the consumer has a valid complaint that, but for the recklessness
of the credit provider, the consumer would never have become
involved in the credit transaction, it might be
“just and
reasonable”
to
“set aside”
the
agreement. In that event, the agreement would be null and void and
as if it had never been. As a consequence, the credit
provider, who
remains the owner of the vehicle, would be entitled to restoration
of the vehicle. On the other hand, the consumer,
who no longer has
any obligations under the agreement that has been set aside would be
relieved of any further indebtedness or
deficiency claim under the
agreement. In certain circumstances, this would be a fair and
symmetrical resolution.
On the other hand, if the effect of the agreement is merely
suspended,
all elements
of the agreement would have to be
suspended. This would mean that the consumer would not be entitled
to continue to retain possession
of the vehicle during the period of
suspension. At the same time, the consumer would not have to make
any payments under the
agreement during the suspension period.
I agree with the following statements of my sister Masipa J in
Standard Bank of South Africa Limited v Panayotts
2009
(3) SA 363
(W) 370:
“
[77] In any event, my view is that the NCA does
not envisage that a consumer may claim to be over-indebted whilst at
the same
time retaining possession of the goods which form the
subject-matter of the agreement. Such goods should be sold to reduce
the
defendant’s indebtedness.
...
[81] The purpose of the NCA is,
inter
alia
, to provide for the debt
re-organisation of a consumer who is over-indebted, thereby
affording such consumer the opportunity
to survive the immediate
consequences of his financial distress and to achieve a manageable
financial position ...”
6
That the NCA does not contemplate the consumer retaining
“the
money and the box”
is also borne out by the provisions of
section 130(1) of the NCA. That section provides that the
failure of a consumer to
surrender its security is a factor that
militates in favour of immediate enforcement of the credit agreement
by the credit provider.
B.
The manner in which the defence of
“reckless
credit”
is formulated
In paragraph 5 of the opposing affidavit, the Defendant, in the
first action, Mbatha, has formulated the defence of reckless
credit
in the following fashion:
“
(b) The agreement constitutes a
reckless
agreement as contemplated in section 80 [of the NCA] in that
the Plaintiff failed to conduct an assessment as required of
it
under section 80(1)(a) of the NCA. Accordingly, I am entitled
to an order setting aside and suspending the Agreement
as
contemplated in section 83(2) of the NCA.
(c) Even if an assessment was made (which I deny), the
preponderance of information available to it would clearly have
shown that
I did not understand or appreciate the risk, costs and
obligations thereof. Accordingly, I am entitled to an order setting
aside
or suspending the Agreement as contemplated in section 83(2)
of the NCA.
(d) An assessment would also have shown that entering
into the Agreement would have rendered me over-indebted.
Accordingly, I
submit that I am entitled to an order as contemplated
in section 83(3) of the NCA. ...”
A further allegation, which takes the matter no further concerning
reckless credit, is made in paragraph 26 of the opposing affidavit.
The agreement that forms the subject matter of Claim A in the first
action was concluded on 24 April 2007. Part D of the
NCA,
which deals with over-indebtedness and reckless credit, only became
effective on 1 June 2007 – i.e. after the
conclusion of
the first agreement of lease. In terms of Schedule 3, Transitional
Provisions, Chapter 4, Part D does not apply
to a pre-existing
credit agreement (defined to mean an agreement that was made before
the effective date and to which the NCA
applies) in respect of
reckless credit. Accordingly, the defence of reckless credit is in
any event not available to the Defendant
in the first action in
relation to Claim A.
The credit agreements giving rise to Claim B in the first action and
the claims in the second and third actions were all concluded
after
1 June 2007. Accordingly, the defence of reckless credit (to
the extent that it could be a bar to the recovery of
the vehicles
leased) is available on these agreements.
As appears from what is stated above, I do not believe that the NCA
permits the consumer to retain the security while at the
same time
suspending its obligations under the credit agreement.
In any event, even if I am wrong in that view, the Defendants have
not set out their defence of reckless credit in any of the
actions
with sufficient particularity to comply with the requirements of
Breitenbach v Fiat
. In order to demonstrate that
reckless credit was granted, the Defendants should have provided
some particularity concerning
the following:
Details should have been given of the negotiations leading up to
the conclusion of the agreement. The Defendant should have
identified the parties involved in the negotiations, to the extent
that the Defendant is able to do so. The Defendant should
also
have disclosed details concerning any credit application that the
Defendant signed and the circumstances in which the
Defendant
signed those credit applications. This information would have
enabled the Court to evaluate whether there is a basis
for the
allegation that no assessment was conducted under the NCA.
To the extent that each Defendant wishes to avail itself of
section 80(1)(b), the Defendants should provide information
demonstrating his level of education and experience at the time
relating to the risk of incurring credit. This would have involved
a disclosure by each Defendant of prior credit transactions that
each Defendant had entered into.
If the Defendants wish to rely on section 80(1)(b)(ii), each
Defendant should provide details of all of its indebtedness
at the
time that the lease agreement was concluded, as well as information
concerning the Defendants’ potential income
and expenditure,
including any income that might derive from the utilisation of the
motor vehicle as a taxi.
Information should have been provided concerning the Defendants’
current levels of indebtedness and income and expenditure
in order
to enable the Court to evaluate whether the Court might, in the
exercise of its discretion, either set aside the credit
agreement,
or suspend it.
In outlining the type of information that the Defendant should have
provided if it wished to avail itself of the defence of
“reckless
credit”
, I do not intend to be didactic or to lay down any
immutable principle of law or procedure. It may be that, even if a
defendant
does not provide as much information as is suggested in
the previous paragraph, a defendant will nevertheless be entitled to
defeat some aspect of the claim for summary judgment on the basis of
“reckless credit”
. Suffice it to say that, in
the present case, the Defendants have not even come close to
providing sufficient information to
substantiate the defence.
VI. OVER-INDEBTEDNESS
A.
The relevant provisions of the NCA
Section 86 of the NCA permits a consumer to apply to a debt
counsellor for a declaration that he is over-indebted. On receipt
of
such an application, the debt counsellor is required to notify all
of the consumer’s credit providers and every registered
credit
bureau.
Section 86(5) provides:
“
(5) A consumer who applies to a debt
counsellor, and each credit provider contemplated in
subsection (4)(b), must –
(a) comply with any reasonable request by the debt
counsellor to facilitate the evaluation of the consumer’s
state of
indebtedness and the prospects for responsible debt
re-arrangement; and
(b) participate in good faith in the review and any
negotiations designed to result in responsible debt rearrangement.”
The NCA does not appear to impose any sanction on a credit provider
who does not participate in the process in good faith.
If, as a result of the assessment, the debt counsellor
“reasonably
concludes”
that the consumer is or is not over-indebted,
the debt counsellor has various options available. If a debt
counsellor concludes
that the consumer is over-indebted, the debt
counsellor may make a proposal recommending that a magistrate’s
court make
various alternative orders, including an order declaring
that there has been reckless credit or for rearrangement of the
consumer’s
obligations.
Section 86(10) of the NCA provides:
“
(10) If a consumer is in default under a credit
agreement that has been reviewed in terms of this section, the
credit provider
in respect of the credit agreement may give notice
to terminate the review in the prescribed manner to –
the consumer;
the debt counsellor; and
the National Credit Regulator,
at any time
at least 60 business
days after the date on which the consumer applied for debt review.
(11) If a credit provider who has given notice to
terminate a review as contemplated in subsection (10) proceeds
to enforce
that agreement in terms of part C of chapter 6, the
Magistrate’s Court hearing the matter may order that the debt
review
resume on any conditions the court considers to be just in
the circumstances.”
[emphasis added].
Section 86(10) contains no limitation on the creditor’s
right to give notice under section 86(10), provided that
the
consumer is in default and 60 days have elapsed since the debt
review process commenced. The creditor’s right under
section 86(10) does not appear to be reciprocal to the
obligation to deal in good faith under section 86(5).
It may be that, if the credit provider fails to comply with the good
faith provisions, a magistrate may order that the debt review
resume. If such an order is made, the credit provider might have to
wait a further 60 days before it could enforce its rights.
In the
absence of such an order, there is nothing to prevent the Plaintiff
from pursuing its rights in this Court, provided that
it has
complied with the provisions of section 86(10).
7
B.
The defence of over-indebtedness as formulated by the
defendant
It is common cause on the papers that:
The Defendant applied for debt review under section 86 of the
NCA.
No order has been made by any Magistrate’s Court
“rearranging”
any of the Defendant’s
obligations under section 87 of the NCA.
Subject to the Defendant’s interpretation defence arising out
of the language of the lease agreements (which has disposed
of
above) the Defendant was in default of its obligations to pay
instalments under the various lease agreements.
Sixty days after the Defendant applied for debt review, the
Plaintiff purported to give notice of termination of the debt
review in terms of section 86(10) of the NCA.
In the light of the common cause facts, the Defendants’
defences of over-indebtedness are difficult to follow. Among other
things, the Defendants have made the following allegations:
“
(10) I applied to the debt counsellor Matimba
Management and Labour CC to have myself declared over-indebted in
terms of section 86(1)
of the NCA. The debt counsellor did an
assessment on me and found that I am indeed over-indebted.
(11) The plaintiff was in terms of section 86(4)(b)(i)
of the Act notified of the application and was requested to provide
a certificate of balance indicating the outstanding amount which was
still being owed by me and such was never received.
(12) Subject to the plaintiff’s failure to
furnish the debt counsellor with the requested certificate of
balance, an assessment
was nevertheless done and the plaintiff was
informed by means of a letter that my application for credit review
was successful.
(13) The debt counsellor sent a proposal to the
plaintiff containing the rearrangement of my obligations for
consideration and
bona fide reply.
(14) The plaintiff failed to reply to my debt
counsellor’s proposal to date. I was advised by my debt
counsellor that such
failure by the debt counsellor (sic) infringes
upon the provisions of section 86(5)(b) of the NCA which
enjoins, amongst
other persons, the plaintiff (credit provider) to
participate in good faith in the review and any negotiations
designed to result
in responsible debt rearrangement.
(15) Despite the plaintiff’s failure to
participate in a debt review, let alone in good faith, the plaintiff
addressed a
letter to me and the debt counsellor in which it
purported to terminate the debt review in terms of section 86(10)
of the
NCA.
(16) I state that the plaintiff’s purported
termination lacked substance and is at odds with the spirit and
purport of the
NCA in that the Plaintiff never participated in the
debt review process initiated by my debt counsellor but merely
waited for
the lapsing of the 60 (sixty day period) to terminate the
debt review.”
Although the line of defence is convoluted, it seems to be that the
Plaintiff is barred from availing itself of the provisions
of
section 86(10) of the NCA because the Plaintiff allegedly did
not participate in good faith in the debt review procedure.
I
express no opinion on whether a credit provider’s failure to
participate in good faith in the debt review procedure
may
constitute a defence to a
monetary claim
under the NCA.
However, I cannot see how a lender’s failure to participate in
good faith would entitle the borrower to
retain the security while
at the same time suspending all payments under the credit agreement.
Moreover, as noted above, the right of the credit provider to
terminate the review is not dependent upon a reciprocal obligation
on the part of the credit provider to participate in good faith in a
credit review.
In any event, even if I am wrong on this point, the Defendants’
defence of over-indebtedness falls short of what is required
by
Breitenbach v Fiat
. For the Defendants’ defence
on this issue to be adequately set out, the Defendants should have
provided some of the following
information:
an outline of each Defendant’s assets and liabilities, income
and expenditure sufficient to enable the Court to ascertain
whether
the allegation of over-indebtedness is
bona fide
;
the date when each Defendant approached the debt counsellor and the
identity of the individual debt counsellor;
copies of documents that each Defendant submitted to the debt
counsellor or an explanation for their absence;
to the extent that each Defendant maintains that the
“debt
counsellor did an assessment on me and found that I am indeed
over-indebted”
, each Defendant should have provided
copies of the documents that it received from the debt counsellor
(or explain the absence
of such documents) and more details
concerning the debt counsellor’s findings;
more precise details concerning when the debt counsellor allegedly
approached the Plaintiff for information concerning each
Defendant’s indebtedness as well as of the proposal that the
debt counsellor allegedly sent to the Plaintiff;
copies of all documents generated by the debt counsellor, or an
explanation for the absence of such documents.
Once again, in setting out a list of information that should have
been provided, I do not wish to be prescriptive or to lay down
a law
of the Medes and the Persians. It may be that a Defendant does not
have to go as far as I have suggested in the previous
paragraph.
Suffice it to say that, in this case, once again, the Defendant has
not even come close to complying with the requirements
of
Breitenbach v Fiat
.
VII. CONCLUSION
As appears from what is set forth above, the Defendant in the first
action, Mbatha, has failed to set out a
bona fide
defence. As
the defences raised in the second and third actions are identical,
it follows that the Defendants in the second and
third action have
also failed to set out a
bona fide
defence to the claims for
repossession of the leased vehicles.
All of the lease agreements contain attorney and client cost
provisions. Accordingly, the Plaintiff is entitled to judgment
compelling restoration of each of the vehicles.
In each of the actions, the Plaintiff has, in its particulars of
claim, claimed significantly more relief than it is entitled
to by
way of summary judgment. Rule 32(6)(b) permits the Court to grant a
partial judgment by way of summary judgment. Of course,
the grant of
summary judgment on the limited issues that are justiciable in
summary judgment proceedings, do not prevent the
Plaintiff from
pursuing the other remedies or relief claimed in the summons after
it has obtained summary judgment or repossession
of the vehicles.
Accordingly, I make the following orders:
In the first action (case number 51330/09) I grant an order against
the Defendant, Bhekithemba Mishack Mbatha that:
The Defendant return the 2007 Toyota Siyaya with engine number
4Y9188607 and chassis number AHT41YH6309081138 to the Plaintiff
forthwith.
The Defendant return the 2008 Quantum Sesfikile with engine number
2TR8108796 and chassis number JTFSX22PX06035529 to the Plaintiff
forthwith.
That the Defendant pay the costs of the action incurred by the
Plaintiff so far with respect to Claims A and B (including the
costs of the summary judgment application) on the attorney and
client scale.
In the second action (case number 52948/09) against the Defendant,
Christopher Qenehelo Molete:
The Defendant is ordered to return the 2008 Toyota Quantum
Sesfikile with engine number 2TR8105909 and chassis number
JTFSX22P006040643
to the Plaintiff forthwith.
That the Defendant pay the costs of the action incurred by the
Plaintiff so far (including the costs of the summary judgment
application) on the attorney and client scale.
In the third action (case number 53080/09) against Aaron Velaphi
Makhoba:
The Defendant is ordered to return to the Plaintiff forthwith the
2008 Cam Inyathi XGD 2.2i High Roof with engine number
SF491QEO7126442A and chassis number LPBMDDE77H120147.
That the Defendant pay the costs of the action incurred by the
Plaintiff so far (including the costs of the summary judgment
application) on the attorney and client scale.
______________________________________
P.N. LEVENBERG, AJ
ACTING JUDGE OF THE HIGH COURT
Counsel for the Plaintiff: A Subel SC
A Mundell
Attorney for the Plaintiff: Marie-Lou Bester
Counsel for the Defendants: C. Georgiades
Attorneys for the Defendants: Nozuko Nxusani Attorneys
1
Each lease agreement contains a provision that permits that the
Plaintiff to recover attorney and client costs.
2
Case No 09/52948 is hereinafter referred to as (“the second
action”). Case No 09/53080 is hereinafter referred to
as
(“the third action”).
3
Standard Bank of South Africa Limited v Roestof
2004
(2) SA 492
(W).
4
Noble v Laubscher
1905 TS 125
, 126;
Alpha
Properties (Pty) Ltd v Export Import Union (Pty) Ltd
1946
WLD 518
, 519-520;
Thelma Court Flats (Pty) Ltd v McSwigin
1954 (3) SA 457
(C) 462C-D;
Middelburgse Stadsraad v
Trans-Natal Steenkoolkorporasie Bpk
1987 (2) SA 244 (T)
249.
5
Standard Bank of South Africa Limited v Panayiotts
2009 (3) SA 363
(W).
6
See also
Firstrand Bank Limited v Olivier
2009 (3)
SA 353
(SECLD).
7
See
Changing Tides 17 (Pty) Ltd v Dege
,
unreported
decision of the North Gauteng-Pretoria High Court under case number
55819/2009 delivered on 2 February 2010.