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[2010] ZAGPJHC 70
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SA Securitisation (Pty) Limited v Matlala (6359/2010) [2010] ZAGPJHC 70 (29 July 2010)
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: 6359/2010
DATE: 29/07/2010
In the matter between:
SA SECURITISATION (PTY) LIMITED
Applicant
(Registration Number: 2005/021852/07)
and
MATLALA, GIDEON
Defendant
J U D G M E N T
KATHREE-SETILOANE, AJ
:
[1] This is an application for
summary judgment by the plaintiff, SA Taxi Securitisation (Pty)
Limited against the defendant, Mr
Gideon Matlala, in which it seeks,
inter alia,
the
return of a 2008 Toyota Quantum Sesfikile with engine number
2TR8137791 and chassis number JTFSX22P806042365 (“the
vehicle”),
which it leased to the defendant in terms of an
agreement of lease which was concluded between the parties on 25 July
2008.
[2] The plaintiff’s cause
of action is founded upon the following material facts:
2.1 despite delivery of the vehicle to the defendant, the plaintiff
remains the owner;
2.2 the defendant was obliged to pay monthly rental payments in an
agreed amount of R7 118,11 payable on the 7
th
day of each
consecutive month but, by 1 February 2010, was in arrears with his
payments in the sum of R13 670,79;
2.3 the defendant applied for debt relief in terms of section 86(1)
of the National Credit Act, 34 of 2005 (“the Act”)
on 16
October 2009, and his debt counsellor delivered to the plaintiff the
notice contemplated in section 86(4)(b)(i) of the Act
on the same
day;
2.4 The debt counsellor, by notice to the Plaintiff on 11 November
2009, proposed a re-arrangement of the defendant’s obligations
in terms of the lease agreement;
2.5 The plaintiff rejected this proposal, and gave notice to the
defendant, the debt counsellor and the National Credit Regulator
of
its election to terminate the debt review in terms of section 86(10)
of the Act; and
2.6 As a result of the defendant’s breach, the plaintiff
terminated the lease agreement, by service of its summons, on 18
February 2010.
[3]
The defendant raises the following principal
defences in his affidavit resisting summary judgment:
3.1 At the time of issue of the summons against him, he was
“under
debt review”
in terms of section 86(1) of the Act; and
3.2 the debt review process was irregularly terminated by the
plaintiff in terms of section 86(10) of the Act as the plaintiff
had
knowledge, at the time, of the date for the hearing of the
application before the Magistrate’s Court in terms of section
87 of the Act.
[4] The first issue for determination is accordingly whether or not
the plaintiff was entitled to give notice to terminate the
debt
review process in terms of section 86(10) of the Act at the time
that it did.
[5] Section 86(10) of the Act makes provision for a credit provider
to give notice to terminate a debt review where a consumer
is in
default under a credit agreement that is being reviewed. It provides:
“
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.”
[6] In Standard
Bank of South Africa Limited v Kruger and Standard
Bank of South Africa v Pretorius,
South Gauteng High Court, case
numbers 09/45438 and 09/39057, 23 April 2010 (unreported decision), I
considered the question of
whether section 86(10) of the Act empowers
a credit provider, as defined in the Act, to terminate a debt review
process once it
has been referred, by a debt counsellor with
recommendations, to a Magistrate’s Court for consideration. I
held as follows:
“
[13] It is clear from
a reading of section 86(10) that the termination of a debt review
process, referred to in the sub-section,
is expressly qualified by
the words
“that is being reviewed in terms of this
section”.
A credit
provider’s right to terminate in terms of section 86(10) of the
Act would, consequently, apply only to a debt review
to which section
86 applies. Therefore, once a debt review has been referred to the
Magistrate’s Court in terms of section
86(8)(b) of the Act,
then section 87 finds application.
...
[14]...Accordingly, any
termination of the debt review, in terms of section 86(10), would be
unlawful.
...
[16] It is clear from a proper
reading of section 86 of the Act, that the only review process that
maybe terminated, in terms of
section 86(10) of the Act, is the one
which is undertaken by a debt counsellor. In other words, any of the
review steps taken by
a debt counsellor, in terms of section 86(6) to
86(8)(a) of the Act, prior to a referral to the Magistrate’s
Court. I am
of the view that any contrary interpretation in terms of
which a credit provider would be entitled to terminate the debt
review
process after a period of 60 days, despite it having been
referred to a Magistrate’s Court, would lead to an absurdity in
that any delay by any party to such application, any delay occasioned
at the instance of the court or even any delay due to unforeseen
circumstances would deprive the consumer of the opportunity to have
the matter properly determined by that court.
[17] Furthermore, section
86(10) clearly contemplates that the debt review process before a
debt counsellor will be completed at
least 60 business days after the
date on which the consumer applied for the debt review, failing which
the credit provider may
terminate the review in the prescribed
manner. Therefore, having regard to lengthy delays when attempting to
obtain a date for
a hearing in the Magistrate’s Court, the
likelihood of multiple postponements in a review, which has a
multitude of credit
providers and other similar factors, I am of the
view that an unqualified entitlement to terminate proceedings, where
a court
has been seized with the review therein, without reference to
that court is clearly not consistent with a core objective of the
Act, which is the promotion and protection of consumers.”
[7] However, Mr Mundell appearing on behalf of the plaintiff
referred me to the recent judgment of
SA Taxi Securitisation
(Pty) Ltd v Nako and six others
, case numbers 19,21,22,77,89,104
and 842/2010, 11 May 2010, High Court
Eastern Cape, Bish
o
(unreported decision)
where
Kemp AJ disagreed with
this conclusion on the basis that section 86(11) of the Act makes
provision for a Magistrate’s Court
to order a debt review to
resume, where a credit provider, who has given notice to terminate a
review contemplated in section 86(10)
of the Act, proceeds to enforce
that agreement in terms of Part C of Chapter 6 of the Act. Although
it is not necessary to resolve
this disagreement I will,
nevertheless, attempt to do so.
[8] Kemp AJ’s disagreement with my conclusion in
Kruger and
Pretorius
is
founded upon his interpretation of section 86(11) of the Act which
provides:
“
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.”
[9] According to Kemp AJ in
SA Taxi Securitisation v Nako,
the
Magistrate’s Court referred to in section 86(11) is the
Magistrates Court to whom the debt review has been referred in
terms
of section 86(7) or (8) of the Act, and the phrase “hearing the
matter” refers to the review before it in terms
of section 87
of the Act. With all due respect to Kemp AJ, I am of the view that
his interpretation of section 86(11) is misconceived
for the
following reasons. It is clear from a proper reading of section
86(11) of the Act that the Magistrate’s Court referred
to in
that section is not the Magistrate’s Court to which the review
has been referred in terms of section 86(7) or (8) of
the Act, but
rather the Magistrate’s Court before which the credit provider
seeks to enforce the agreement in terms of Part
C of Chapter 6.
Hence, the phrase
the ‘Magistrate’s Court hearing the
matter’
refers to the Magistrate’s Court hearing the
matter which concerns the enforcement of the agreement in terms of
Part C, Chapter
6 of the Act, and not the debt review itself. Hence,
and in spite of the enforcement proceedings before it, if the
Magistrate’s
Court was to find, for whatever reason, that the
review before the debt counsellor, in terms of section 86 of the Act,
should resume,
he or she may order that that debt review resume on
any conditions the court considers to be just in the circumstances.
[10] I am of the view that the words
“debt review”
in
section 86(11) refer to a debt review before a debt counsellor in
terms of section 86 of the Act, and not the review before a
Magistrate’s Court, in terms of section 87 of the Act. This is
borne out by the use of the phrase
“ a debt review as
contemplated in subsection 10”
. In
Kruger and Pretorius
I held that the debt review contemplated in section 86(10) of the
Act, is only a debt review to which section 86 applies, as it is
clear from a reading of section 86(10) that the termination of a debt
review process, referred to in the sub-section, is expressly
qualified by the words
“that is being reviewed in terms of
this section.”(Kruger
and Pretorius,
supra
at
para.13) These words have been intentionally used by the Legislature.
Its intention must, therefore, be ascertained by giving
to the words
their ordinary, literal and grammatical meaning. To the extent that
the meaning of the words are clear and unambiguous,
and do not lead
to an absurdity or to a result contrary to the intention of the
Legislature when viewed in the context of the Act
as a whole, effect
must be given to them (
S v Tom and S v Bruce
[1990] ZASCA 38
;
1990 (2) SA 802
(A) at 807 -809). They, therefore, cannot simply be ignored, as
appears to be contended for by Kemp AJ in
SA Taxi Securitisation v
Nako (at
para.43).
[10] In concluding that
section 86(10) of the Act empowers a
debt provider to give notice to terminate a debt review process which
has been referred to
a Magistrate’s Court in terms of section
87 of the Act, Kemp AJ fails to give proper consideration to section
129(1) and
(2) of the Act, which provide:
“
129.
Required procedures before
debt enforcement.
– (1)
If the consumer is in
default under a credit agreement, the credit provider –
may draw the default to the notice of the consumer in writing and
propose that the consumer refer the credit agreement to a debt
counsellor, alternative dispute resolution agent, consumer court or
ombud with jurisdiction, with the intent that the parties
resolve
any dispute under the agreement or develop and agree on a plan to
bring the payments under the agreements up to date;
and
subject to section 130(2), may not commence any legal proceedings
to enforce the agreement before –
first providing notice to the consumer, as contemplated in
paragraph (a), or in section 86(10), as the case may be; and
(ii) meeting any further requirements set out in section 130.
(2) Subsection (1) does not apply to a credit agreement that is
subject to a debt restructuring order, or to proceedings in a court
that could result in such order.”
[11] In
Kruger and Pretorius
(at para. 26) I held that:
“
It is clear from a reading of section 129(2) of the Act,
that neither section 129(1)(a) nor 129(1)(b) of the Act applies to
instances
where a matter has been referred to a court for
determination. The provisions of section 129(1) of the Act are, in
this regard,
expressly qualified by the provisions of section 129(2);
the latter specifically excluding the application of section 129(1)
of
the Act to a credit agreement that is subject to a debt
restructuring order, or to proceedings in a court that could result
in
such an order. A referral of a debt
review by a debt
counsellor, in terms of section 86(8) of the Act, to a Magistrate’s
Court for determination, in terms of
section 87 of the Act, may
result in a restructuring or re-arranging order in terms of
sub-section (b)(i) or (ii) of the Act. It
therefore follows that in
terms of section 129 of the Act, notice to terminate a review, in
terms of section 86(10) of the Act,
would be incompetent, once the
debt review is referred, by a debt counsellor, to a Magistrate’s
Court for determination.”
[12] Kemp AJ clearly fails to give proper consideration to section
129 in
SA Securitisation v Naka
. In fact, in response to the
submission by the fifth respondent that the application did not have
the right to institute legal
proceedings against him as the debt owed
to the applicant was subject to proceedings in the East London
Magistrate’s Court
that could result in a restructuring order,
Kemp AJ stated that he did not agree as:
“
All section 129(2) provides is that the credit provider
does not have to give notice proposing that the credit receiver
refers the
credit agreement to a debt counsellor, etc. if the credit
receiver has already done so. The contention that section 129(2)
prohibits
the credit provider from taking action appears to be
clearly incorrect”
(at para.10)
[13] Again with all due respect to Kemp J, he appears to have misread
section 129(1) of the Act and, in particular has failed
to give
proper consideration to s129(2) of the Act, which when read together
with s29(1)(b)(i) of the Act, expressly provides that
legal
proceedings to enforce an agreement may not be commenced, by first
providing notice to the consumer in terms of section 129(a)
or
section 86(10) of the Act, where the credit agreement is subject to a
debt restructuring order, or proceedings in a court that
could result
in such order. In the circumstances, I remain of the view that my
interpretation of section 86(10) of the Act as
set out in
Kruger
and Pretorius
is correct, and that:
“
[O]nce the debt review process has been initiated, which
thereafter results in the referral of the debt review to the
Magistrates
Court, the credit provider is not entitled to institute
court proceedings to enforce its claim, unless the Magistrate’s
Court
has made a determination in terms of section 87 of the Act.”
(at para. 20)
[14] This then brings me to the question of what constitutes a
referral to the Magistrate’s Court. However, in order to answer
to this question, it is necessary to first determine the procedure to
be followed when a matter is referred to the Magistrate’s
Court
in terms of section 86 of the Act. In
National Credit Regulator
v Nedbank Limited and others
2009 (6) SA 295
(GNP) at 309F-310D,
Du Plessis J considered an argument, advanced on behalf of the
National Credit Regulator, that by requiring
a debt counsellor to
‘refer’ a ‘recommendation’ to the
Magistrate’s Court, the Act’s purpose
was to create a
sui
generis
procedure not governed by the Magistrate’s Court
Act, 32 of 1944 or its Rules. Recognising that the referral of a
matter
to the Magistrate’s Court under section 86(8)(b) of the
Act constitutes an extraordinary procedure, Du Plessis J stated as
follows:
“
Does it follow from the fact that the procedure is created
by the [NationalCredit] Act and is out of the ordinary that the
Magistrates’
Courts Act and the Rules do not apply? As a
general proposition, court rules are promulgated to regulate the
conduct of proceedings
of the court in question. Since the enactment
of the Rules Board for Courts of Law Act 107 of 1985, rules for
Magistrates’
Courts are made, amended and repealed by the Rules
Board for Courts of Law that exercises the power, subject to
requirements contained
in the said Act, ‘with a view to the
efficient, expeditious and uniform administration of justice’.
Put differently,
the rules prescribe the manner in which matters are
brought before the Court and the manner in which the Court then deals
with
them. I shall assume without finding that Parliament may by way
of legislation prescribe procedures that differ from the rules.
Where, however, there is no such prescription, the relevant rules of
the Magistrate’s Court must be followed.
The consumer’s initial application must be in the form
prescribed by regulation. A consumer who applies directly to the
magistrates’
court under 86(9) must also do so ‘in the
prescribed manner and form’. Section 86(8) (b) obliges a debt
counsellor
to refer certain matters to the magistrates’ court,
but does not prescribe any procedure. It follows that in such cases
the
Magistrate’s Court Act and the rules apply. Counsel for the
applicant submitted, and I agree, that the debt counsellors referral
constitutes an application to the court. The appropriate rule to
follow therefore is rule 55 of the rules that deal with applications
to the magistrates’ courts. The appropriate form to follow is
Form ‘No 1 (Notice of Application (General Form)’
that
appears in Annexure 1 to the rules.”
[15] I accordingly agree with the conclusion of Du Plessis J in
National Credit Regulator v Nedbank
(at 310H-311A) that:
“ ‘
A referral by a debt counsellor to a magistrate’s
court under 86(8)(b) (and
section 86(7)(c))
of the
National Credit
Act, 2005
, is an application within the meaning of the Magistrates’
Courts Act,1944, and the rules of the magistrates’ courts
and
falls to be treated as such in terms of
rule 55
of the Rules.
I likewise also agree with Du Plessis J (at 312F-G) that:
“
Rule 9
of the magistrates’ courts’ rules
pertaining to service is applicable to the service of process, any
recommendation
and other documents for the purpose of the referral
and hearing contemplated in
sections 86(7)(c)
,
86
(8)(b) and
87
of the
National Credit Act, 2005, but service of any such documents may,
with agreement of the affected parties, be by way of fax
or email.”
[16] I accordingly agree with Mr Mundell that, in terms of Rule 9 of
the Rules of the Magistrates’ Court, service of the
referral on
the credit provider would constitute a referral to the Magistrate’s
Court in terms of section 86(8)(b) or section
86(7)(c) of the Act. In
this regard, Mr Mundell pointed out that the referral to the
Magistrate’ Court, in terms of 86(7)
(c) of the Act, although
issued on 28 January 2010, was only served on the applicant on 15
February 2010. Hence, by the time the
referral was served on the
plaintiff it had already given notice, in terms of section 86(10) of
the Act, to terminate the debt
review process before the debt
counsellor. Accordingly, in view of the absence of service of the
referral on the plaintiff, the
debt review was not yet before the
Magistrates Court for a hearing in terms of section 87 of the Act,
and the plaintiff was thus
entitled to give notice to terminate the
review on 3 February 2010.
[17] In the circumstances, I am of the view that:
17.1 the defendant is in default under the agreement, having failed
to challenged this allegation in the particulars of claim;
17.2 the plaintiff’s notice to terminate the debt review
process before the debt counsellor was validly sent by registered
mail to the defendant’s home address on 3 February 2010, more
than sixty days after the date on which the defendant applied
for
the debt review;
17.3 the plaintiff’s summons was validly issued on 18 February
2010, after at least ten days had elapsed from the date on
which the
plaintiff delivered the notice contemplated in section 86(10) of the
Act;
17.4 the plaintiff’s summons was validly served on the
respondent on 9 March 2010; and
17.5 the plaintiff validly terminated the lease agreement in its
summons.
[18] In the result, I find that the defendant has not disclosed a
bona fide
defence to the plaintiff’s claim for return of
the motor vehicle. I accordingly grant summary judgement in favour of
the
plaintiff against the defendant, with costs as between attorney
and client, for return of the motor vehicle to the plaintiff
forthwith.
KATHREE-SETILOANE
ACTING JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL FOR THE PLAINTIFF: ADV
ARG MUNDELL
INSTRUCTED BY: MARIE-LOU BESTER INC
COUNSEL FOR THE DEFENDANT:
ADV R GOSLETT
INSTRUCTED BY: DALEEN VAN DER WESTHUIZEN ATTORNEYS
DATE OF HEARING: 17 JUNE 2010
[8]