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[2010] ZAGPJHC 32
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Matimba Management and Labour CC and Others v SA Taxi Securitisation (Pty) [2010] ZAGPJHC 32 (14 April 2010)
Links to summary
IN THE
SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE NO:
36490/2009
In the matter between:
MATIMBA MANAGEMENT AND LABOUR CC AND
MONGANE BEN HLABJAGO AND
15 OTHER APPLICANTS
Applicant
and
SA TAXI SECURITISATION (PTY) LIMITED
First
Respondent
SA TAXI FINANCE (PTY) LIMITED
Second
Respondent
J U D G M
E N T
BLIEDEN, J
:
Introduction and background history:
[1] By notice of motion dated 25
August 2009 Matimba Management and Labour CC, a debt counsellor
registered in terms of the provisions
of the National Credit Act, 34
of 2005 (the NCA) and 25 other applicants launched urgent proceedings
to be heard on Friday 28 August
2009.
[2] Relief sought in that urgent
application was,
inter
alia
, for an order
staying all actions instituted by and execution of all warrants
obtained by the first respondent against the second
to twenty sixth
applicants (hereinafter referred to as the 25 applicants) pending the
finalisation of the debt review process which
it was alleged that the
25 applicants had launched in terms of the NCA. (Matimba Management
is not a party to the rescission applications)
[3] On 28 August 2009 Lamont J
granted an order by agreement between the parties to the effect that,
pending the rescission applications
to be launched by the 25
applicants (which included the application referred to in the heading
to this judgment, Hlabjago as the
19
th
applicant) no further writs of attachment would be executed on behalf
of the first respondent and none of the vehicles already
attached by
the first respondent would be sold. Paragraph 5 of that order made
provision for the setting down of the matter for
hearing in the week
of 15 September 2009.
[4] The first respondent is
registered in terms of the NCA as a credit provider and had concluded
agreements of lease with each
of the 25 applicants. In terms of
these agreements the first respondent leased a vehicle or vehicles to
each of the 25 applicants
who, it is common cause, intended to use
those vehicles as taxis in the conduct of their businesses as taxi
operators. The second
respondent is the financial arm of the first
respondent and, it is common cause, plays no part in these
proceedings. In his heads
of argument in support of the applicant’s
application counsel stated that his clients would not proceed for any
costs against
the second respondent. In the circumstances nothing
further need be said about the second respondent. In this judgment
the first
respondent will be referred to as the respondent.
[5] The respondent delivered its
answering affidavit in five of the rescission applications and
delivered notices in terms of rule
6(5)(d)(iii) in a further eight
applications to the effect that it raised questions of law only in
response to such applications.
[6] The respondent set down for
hearing in the motion court for 22 September 2009 the matters in
respect of which either answering
affidavits had been delivered or
rule 6(5)(d)(iii) notices had been given, together with a notice in
the case of one of the applicants,
Jika (the 20
th
applicant) in which it consented to the rescission of judgment.
[7] When those matters were called
before Jajhbay J on Tuesday 22 September 2009 he directed that the
matters be referred to the
Deputy Judge President for the purposes of
a special allocation on the motion court roll owing to the volume and
expected duration
of the hearing of the applications.
[8] The matters were allocated by the Deputy Judge President to
Moshidi J, to be heard on 8 February 2010. On that day the following
transpired:
1. The eight applicants in respect
of whom the jurisdictional point had been taken withdrew their
applications for rescission of
judgment and tendered costs. These
were applicants numbers 3, 5, 12, 13, 14, 17 and 24.
2. The default judgment which was
granted against the 20
th
applicant, Jika, was rescinded and set aside.
3. At the request of the remaining 15 applicants, those applications
were postponed sine die by agreement, the applicants being
directed
to pay the wasted costs occasioned thereby jointly and severally, on
the scale as between attorney and client such costs
to include the
costs of two counsel.
4. The postponement was sought to enable those remaining 15
applicants to supplement their founding affidavits in support of the
relief sought.
5. Owing to the fact that the
affidavits filed in the five applications which were ripe for hearing
(as well as the founding and
answering affidavits in the remaining
ten applications) are in virtually identical terms the parties agreed
that Moshidi J would
be called upon to decide only the application of
Mongane Ben Hlabjago (the 19
th
applicant) and that the relief sought in the remaining 14
applications would follow the outcome of the Hlabjago application.
6. It was agreed between the
parties that in the event of Hlabjago being successful in obtaining a
rescission of Judgment, the applicants
in the remaining 14
applications would be entitled to the same relief. On the other hand
in the event of Hlabjago being unsuccessful
and his application being
dismissed, the remaining 14 applicantions for recission of judgment
would similarly be dismissed and
those applicants refused relief.
7. Following on the application for
postponement, Moshidi J also directed that the supplementary
affidavits (which, in reality,
would only apply to Hlabjago, as his
application is determinative of the others) were to be delivered by
no later than 15:00 on
19 February 2010. No such affidavits were
filed. However at the hearing of the application I accepted a
supplementary affidavit
from Hlabjago, to which reference will later
be made.
The application of Hlabjago:
[9] The relevant portion of the
notice of motion filed on his behalf prays for the following relief:
“
1. Rescinding
the judgment taken against the Applicant;
Rescinding the Warrant of Execution obtained by the Respondents
against the Applicant pursuant to the default judgment referred
to
in prayer 1, above;
Directing that the debt-review process initiated by the Applicant
to resume and be finalised before the Respondents may enforce
their
rights by litigation or any other judicial process;
Directing that the Respondents
forthwith restore the vehicle repossessed by them from the Applicant
(2008 TOYOTA HIACE SUPER 16,
Engine Number: 4Y9167301; Chassis
Number: AGT41YH6309060821)
Directing that the action initiated by the Respondents against
the Applicant in this honourable Court be stayed pending the
finalisation
of the debt-review process and the outcome of the
pending debt-review process currently in the Magistrate’s
Court under
case number 0053434.
In the event that the
debt-review process is finalised and the Respondents persist with
their action initiated against the Applicant
in the High Court, the
Applicant to be permitted to file a Plea within 15 days of the
rescission of the judgment.”
[10] Default judgment had been granted against the applicant by the
registrar of this court on 17 June 2009, the applicant having
failed
to enter an appearance to defend the respondent’s summons.
[11] Although there is a factual
dispute as to whether the applicant’s vehicle was attached
following upon the grant of default
judgment, it is common cause that
the applicant is currently in possession of the vehicle referred to
in the Notice of Motion.
As a result the relief sought in paragraph
four of the notice of motion is not relevant.
The law:
[12] The applicant bears the onus
of establishing
sufficient
cause
for the rescission
of the default judgment. The existence or not of sufficient cause
depends upon whether:
1. The applicant has presented a reasonable and acceptable
explanation of his default; and
2. The applicant has shown the existence of a bona fide defence, that
is, one that has some prospect or probability of success.
[13] An acceptable explanation of
the default must co-exist with the evidence of reasonable prospect of
success on the merits.
Harris v ABSA Bank Limited t/a
Volkskas
2006 (4) SA 527
(T)
at
paragraphs 4 – 6.
The applicant’s defence:
[14] The respondent’s cause
of action is founded on the unchallenged allegation that the
applicant defaulted in the payments
due in terms of an agreement of
lease. Consequent upon this default the respondent has cancelled the
agreement and claimed the
return of the vehicle forming the subject
matter thereof. It is not disputed that the applicant’s
arrears were R31 833.10
on 5 February 2009.
[15] It is also not in dispute that
prior to the institution of its action the respondent complied with
the provisions of section
119 and 130 of the National Credit Act, No.
34 of 2005 (the NCA), in that, as contemplated in section 119 (1)
(b)(i) thereof the
respondent had furnished notice to the applicant.
In terms of section 86(10) the respondent terminated the debt review
process
which had by then been put in motion.
[16] The applicant does not dispute
his failure to pay the agreed rentals due in terms of the lease
agreement, but challenges the
respondent’s entitlement to have
instituted action or applied for default judgment “
while
the matter was pending before a debt counsellor and the magistrate’s
court”.
[17] In his founding affidavit the
applicant does not challenge the averment in the respondent’s
particulars of claim to the
effect that its notice of termination of
the debt review in terms of section 86(10) of the NCA was furnished
in the prescribed
manner to the applicant, his debt counsellor and
the national credit regulator.
[18] In his replying affidavit the
applicant admits that the section 86(10) notice was received by him
and his debt counsellor but
pleads no knowledge of whether or not the
respondent furnished that notice to the national credit regulator.
The respondent did
not annexe proof of service of that notice to his
answering affidavit, given that the allegations of notice in the
prescribed manner
were not challenged in the founding affidavit. On
the papers before the court, the respondent’s furnishing of the
notice
in terms of the NCA is therefore not in issue.
[19] In order to place the
applicant’s contentions into perspective, the relevant time
line of the debt review process in
this case is as follows:
1. On 18 July 2008 the applicant approached Matimba Management in
terms of section 86(1) of the NCA to have himself declared over
indebted.
2. On 22 July 2008 the respondent was notified by Matimba Management
of the applicant’s debt review application.
3. On 29 July 2008 the respondent was advised by Matimba Management
that the applicant’s application for debt review had
been
successful.
4. On 11 September 2008 Matimba
Management furnished the respondent with what is described as a
“
restructuring
proposal
” in terms
of which it was suggested that the lease instalment payable by the
applicant to the respondent be reduced from
R3881.41 per month to
R1470.00 per month.
5. The proposal was not accepted by the respondent.
6. No further steps were taken by
Matimba Management or the applicant in the debt review process.
7. On 5 February 2009 the respondent delivered its notice in terms of
Section 86(10) terminating the debt review.
8. The respondents’ summons was issued on 23 February 2009 and
served in terms of the rules of court on 24 February 2009.
9. By notice of application dated
11 March 2009 the applicant made application in the Magistrate’s
court for the district
of Johannesburg for an order contemplated in
section 87 of the NCA. That application was issued by the relevant
Magistrate’s
court on 20 March 2009. This section of the NCA
reads:
“
Magistrate’s
Court may re-arrange consumer’s obligations.
– (1) If a debt counsellor makes a proposal to the Magistrate’s
Court in terms of section 86(8)(b), or a consumer applies
to the
Magistrate’s Court in terms of section 86(9), the Magistrate’s
Court must conduct a hearing and, having regard
to the proposal and
information before it and the consumer’s financial means,
prospects and obligations, may –
reject the recommendation or application as the case may be; or
make –
an order declaring any credit agreement to be reckless, and an
order contemplated in section 83(2) or (3), if the Magistrate’s
Court concludes that the agreement is reckless;
an order re-arranging the consumer’s obligations in any
manner contemplated in section 86(7)(c)(ii); or
both orders contemplated in subparagraph (i) and(ii).”
The application was not served on
the respondent in terms of the Magistrate’s court rules but
was sent by registered post
to the Respondent, who admits receipt
thereof. However the respondent avers that by the date on which the
application was launched,
it had already cancelled the debt review
process in terms of section 86(10) which reads:
“
(10) If a consumer is in
default under a credit agreement that is being reviewed in terms of
this section, the credit provider
in respect of that 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 the debt
review.”
[20] It is the respondents’
case therefore, that at the time of the institution by the respondent
of his action there was
not in existence an application in terms of
section 86(7)(c) of the NCA which precluded the action. That
subsection reads:
“
(7) If, as a result of an
assessment conducted in terms of subsection (6) a debt counsellor
reasonably concludes that -
a…
b….
The consumer is over-indebted,
the debt counsellor may issue a proposal recommending that the
Magistrate’s court make either
or both of the following
orders-
that one or more of the consumer’s credit agreements be
declared to be reckless credit, if the debt counsellor has
concluded
that those agreements appear to be reckless; and
that one or more of the
consumer’s obligations be re-arranged by –
extending the period of the agreement and reducing the amount
of each payment due accordingly;
postponing during a specified period the dates on which
payments are due under the agreement;
extending the period of the agreement and postponing during a
specified period the dates on which payments are due under the
agreement; or
recalculating the consumer’s obligations because of
contraventions of Part A or B of Chapter 5, or Part A of Chapter
6.”
It now seems that the applicant seeks the revival of the debt review
process as contemplated in section 86 (11). This section
reads:
“
(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 debt review resume on
any conditions the court considers
to be just in the circumstances.”
On behalf of the respondent counsel
submitted that no case had been made justifying such a revival, or
the terms on which it is
to take place. He further made the point
that the applicant’s reliance on this provision ignores the
significant fact that
the agreement of lease had been validly
terminated by the respondent.
It was further submitted that there is no provision in the NCA which
entitles a magistrate’s court (or, indeed, any court)
to
reinstate an agreement that has been validly terminated. The only
remedy available to the applicant in those circumstances
is to invoke
the provisions of section of sections 86 (11) in order to obtain a
revival of the debt review process in relation
to whatever amounts
may remain outstanding by him after return of the vehicle to the
respondent and after the respondent has utilised
the provisions of
section 127 of the NCA which deals with the surrender of goods by the
consumer, being the present applicant.
In such case the applicant
would be entitled to be credited with the price received on the sale
of the goods by the respondent
which is in excess of the debt at that
time outstanding.
In my view the submissions of the respondent’s counsel as
stated above have substance in the circumstances.
The termination of the debt
review process and its effect:
[21] The termination of the debt review process initiated in terms of
section 86(1) of the NCA through the utilisation of section
86(10)
requires the existence of the following jurisdictional factors:
1. The consumer (applicant) must be
in default under the credit agreement;
2. At least sixty business days must have elapsed after the date on
which the consumer applied for debt review;
3. action can only be instituted after at least ten business days
have elapsed since the credit provider delivered the notice
contemplated in section 86(10) of the NCA.
[22] In the instant case these factors were all present as the
unchallenged evidence shows:
1. It is not in dispute that the applicant was in default under the
lease agreement (the allegations in the particulars of claim
had not
been challenged);
2. The notice in terms of section 86(10) delivered on 5 February 2009
was delivered more than 60 business days after the applicant
approached Matimba Management to have himself declared over indebted.
The application was made on 18 July 2008.
[23] Ten business days elapsed
between 5 February 2009 (the date of the section 86(10) notice) and
24 February 2009 (the date of
the service of the summons on the
applicant).
[24] In my view counsel for the
respondent is correct in his submission that once the debt review
process has terminated in the
circumstances already referred to, the
only remedy remaining available to a consumer such as the applicant
is that contemplated
in section 86(11) of the NCA which allows for
the resumption of the debt review process by the magistrate’s
court hearing
the matter on such terms and conditions as that court
considers to be just in the circumstances. It is plain that the
section
contemplates an application for that relief. See
Standard
Bank SA Ltd v Panayiotts
2009 (3) SA 366
W
.
[25] Despite the fact that
paragraph 3 of the Notice of Motion seeks a directive that a debt
review process initiated by the applicant
resume, no case is made out
by the applicant for the relief claimed in terms of section 86(11).
The applicant relies in his founding
papers on two contentions:
1. Firstly the allegation that
action should not have been instituted by the first respondent and
default judgment not applied for
in the circumstances in which the
debt review process remained pending before a magistrate’s
court.
2. Secondly the applicant contends
that that the respondent acted in bad faith by failing to properly
co-operate in the debt review
process and, it is suggested
circumvented that process by the institution of action and the
application for default judgment.
In my view there is no substance
in this contention as it is the applicant and the debt counsellor who
are responsible for not
having proceeded in terms of the provisions
of the NCA.
[26] An additional ground raised in
the applicant’s supplementary affidavit is that the respondent
had granted him credit
recklessly within the meaning of section 80 of
the NCA. In my view there is no substance in this contention in the
present case
as a debt counsellor had been appointed by the
applicant, and part of the relief claimed by him was a declaration
that the respondent
had granted credit recklessly.
[27] The propositions in 25.1, 25.2
and 26 above lose sight of the possible outcomes of a debt review
application as legislated
for in the NCA. Section 86(7) makes
provision for only three possible outcomes:
1. The debt counsellor may find that the consumer is not over
indebted;
2. The debt counsellor may find that although the consumer is not
over indebted, he / she is experiencing, or is likely to experience
difficulties in satisfying his / her obligations;
3. The debt counsellor may find
that the consumer is over indebted.
National Credit Regulator
v Nedbank Limited 2009(6) SA 295 (GNP)
at 303 a – b.
[28] There is no provision in the
NCA which allows for a finding of over indebtedness on the part of
the debt counsellor for the
restructuring of a consumer’s debt
without such debt counsellor being obliged to refer that proposal to
the magistrate’s
court in terms of section 86(7)(c) for a
determination as contemplated in that subsection and in section 87 of
the NCA. See
National Credit Regulator v Nedbank Ltd
(supra)
at 317 A -B
[29] In the present matter the
approach adopted by the debt counsellor and the applicant is contrary
to the provisions of the NCA.
Once the finding of over indebtedness
had been made by the debt counsellor as contemplated in section
86(7)(c) of the NCA, rather
than make a proposal or recommendation to
a magistrate’s court, the debt counsellor unilaterally
determined through the form
of his proposal (Annexure K5 to the
applicant’s founding papers) that the applicant’s monthly
lease instalment should
be reduced from R3881.41 to R1470.00.
[30] Despite the fact that no
judicial approval for the reduction was furnished (notwithstanding
the requirement for judicial oversight
of the entire process:
National Credit Regulator
v Nedbank
supra
at 304I – 305D)
the applicant terminated his agreed monthly lease instalments and
(partly) paid what had been determined (albeit irregularly) by
the
debt counsellor.
[31] It is claimed by the
respondent that since November 2008 to the date of the default
judgment, the applicant paid the respondent
the sum of R8 811.57 in
reduction of his lease instalments. However in terms of his own
restructuring proposal, the amount that
should have been paid over
that period was R14 700.00. In the circumstances at the time of the
granting of default judgment the
applicant had not even complied with
his own version of reduced payments.
[32] Sec 88(3)(b)(ii) allows for
the enforcement by litigation by a credit provider, such as the
respondent, of its rights in terms
of a credit agreement in the event
that the consumer (applicant) defaults on any obligation in terms of
the rearrangement agreed
to between the consumer and credit provider
or ordered by a court. Although in this instance there was no such
agreement or court
order, the continued non-payment by the applicant
of what had been proposed through his debt counsellor, demonstrates
that the
applicant has no clear intention of servicing his debts.
[33] In reply to the allegations of
non payment made in the respondents’ answering affidavit, the
applicant says no more than
he has made payments and denies that he
is in arrears in terms of that proposal. No proof of payment is
furnished and this contention
must be rejected as being “
needlessly
bald, vague and sketchy”
.
See
Breytenbach v Fiat
1976 (2) SA 226
T.
[34] Neither the applicant nor the
debt counsellor have furnished any explanation for the delay between
the application in terms
of section 86(1) which was made on the 18
th
of July 2008 and the issue of the Magistrate’s court
application on 11 March 2009 - a delay of almost eight months. As
submitted on behalf of the respondent the inference is inescapable
that the applicant utilised the provisions of section 86(1) of
the
NCA for the purposes of seeking to delay the enforcement of the
provisions of the lease agreement despite his breach thereof
and by
failing to pay any reasonable instalments in terms of such agreement.
[35] In the circumstances the
relief sought in the rescission application for a reinstatement of
the debt review process in terms
of section 86(11) of the NCA cannot
succeed.
[36] In all the circumstances I
find that there is no basis for relief in terms of section 86(11) of
the NCA and consequently the
applicant has not presented facts which
furnish him with a defence which has any prospect of success at the
trial.
The applicant’s explanation for his default:
[37] In explaining his failure to
enter into an appearance to defend in his founding affidavit, the
applicant states that he was
told by his debt counsellor that as the
debt review process had not been finalised, he was not required to
enter an appearance
to defend the respondents’ action. He says
he was told the debt counsellor would inform the registrar of the
pending application
at the Johannesburg magistrate’s court. No
mention is made of the name of the debt counsellor involved nor was
there any
affidavit from such counsellor confirming this.
[38] What is significant is that in
these founding papers the applicant did not dispute receiving the
summons. By implication he
must have received it in order to have
obtained the advice he relied upon.
[39] The respondent’s summons
had been served on the principle door of the applicant’s chosen
domicilium citandi et
exucutandi which was an address in Pimville
Soweto and was the applicant’s residential premises.
[40] In his replying affidavit the
applicant denies having received a copy of the summons. He states
that had he received such
a copy he would have entered into an
appearance to defend. This is in direct contradiction to what he
said in his founding papers.
This in itself is a cause for concern
as to the applicant’s bona fides in the present application.
[41] However, counsel for the
respondent submitted that even if I found that an acceptable
explanation had been furnished by the
applicant for his failure to
defend the matter timeously, this was not sufficient to justify a
rescission of the judgment either
in common law or in terms of the
rules of the court. As is plain from what is stated in
Harris
v ABSA Bank Ltd t/a Volkskas
supra
at paragraph 5, the test to be applied in this application is that an
acceptable explanation of the default must co-exist
with evidence of
a reasonable prospect of success on the merits. The test in
conjunctive not disjunctive.
[42] There is also no room for the
application of rule 42(1)(a) in the present matter as service of the
summons had been properly
effected and there was no question of the
default judgment being erroneously sought or granted as claimed by
the applicant as I
already found the debt review process had been
lawfully terminated by the respondent by the time the summons was
served.
Conclusion:
[43] In all the circumstances, and
for the reasons stated above, the application for rescission of
judgment fails and is dismissed
with costs.
[44] Counsel for the respondents
submitted that this was a matter which justified the employment of
two counsel. I am of the view
that this is correct as it involved no
less than 15 applications and was a matter of importance both to the
applicant and the respondent.
[45] In the circumstances the
application for rescission of judgment brought by the following
applicants is dismissed with costs,
such costs including the costs of
two counsel, for which all 15 applicants are liable jointly and
severally:
1. Mongane Ben Hlabjago;
2. Zakheleni Andries Khanile;
3. Vusumzi Mtabane;
4. Cardinal Moloi;
5. Bennet Jeleni;
6. Sibongile Ndlela;
7. Nkosinathi Valentine Khumalo;
8. Vhunyani Simon Muridili;
9. Mulalo Norman Mulaudzi;
10. Sefoloko David Ratau;
11. Daniel Thabo Habanyane;
12. Joseph Tsotetsi;
13. Francina Lineo Mokhethi;
14. Lesetja Norman Mojapelo;
15. Welcome Monwabisi Mnotoza.
_________________________
P BLIEDEN
JUDGE OF THE HIGH COURT
COUNSEL FOR THE APPLICANT Adv. C.
Georgiades
INSTRUCTED BY Nzoku Nxusani
Inc.
COUNSEL FOR THE RESPONDENTS Adv.
A. Subel (SC)
Adv. A.R.G. Mundell
INSTRUCTED BY Marie-Lou Bester
Inc.
DATE OF HEARING 03 March 2010