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[2014] ZASCA 67
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Investec Bank Limited t/a Investec Private Bank v Ramurunzi (445/13) [2014] ZASCA 67; [2014] 3 All SA 34 (SCA); 2014 (4) SA 394 (SCA) (19 May 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
No: 445/13
In
the matter between:
INVESTEC
BANK LIMITED T/A
INVESTEC
PRIVATE
BANK
..........................................................................................
APPELLANT
and
MAVUNGU
DAVID
RAMURUNZI
..............................................................................
RESPONDENT
Neutral
citation:
Investec Bank v Ramurunzi
(445/13)
[2014] ZASCA 67
(19 May 2014)
Coram:
Lewis, Ponnan, Bosielo and Saldulker JJA and
Mocumie AJA
Heard:
2 May 2014
Delivered:
19 May 2014
Summary
:
Where a credit provider institutes action to enforce payment of a
debt arising from a credit agreement, the running of prescription
in
respect of the debt is interrupted by service of the summons even
though a notice in terms of s 129(1) of the National Credit
Act 34 of
2005 (the NCA) is delivered to the consumer only after the
prescription period has elapsed.
ORDER
On
appeal from:
Western Cape High Court,
Cape Town (Savage AJ sitting as court of first instance):
1
The appeal is upheld with costs.
2
The order of the high court is set aside, and replaced with:
‘
The
defendant’s special plea that the debt has prescribed is
dismissed with costs.’
JUDGMENT
Lewis
JA (Ponnan, Bosielo and Saldulker JJA and Mocumie AJA concurring):
[1]
Section 129(1) of the National Credit Act 34 of 2005 (NCA) provides
that if a consumer is in default in paying a debt, a credit
provider
may (interpreted, as I shall indicate later, to mean ‘must’)
draw the default to the attention of the consumer
by notice which
sets out the options open to the consumer to resolve his or her
default. (I shall refer in general only to s 129,
rather than s
129(1), for the sake of convenience.) Section 130(3) of the NCA
provides that a credit provider may enforce a credit
agreement only
where there has been compliance with s 129. And s 130(4)
(b)
requires a court, where there has not been compliance with s 129, to
adjourn the matter and make an order setting out the steps
to be
taken in order to ensure compliance by the credit provider.
[2]
The issue in this appeal is whether a credit provider’s claim
against a consumer prescribes in circumstances where, although
summons has been issued and served on the consumer prior to the
elapse of three years from the debt becoming due in terms of the
Prescription Act 68 of 1969
, the credit provider has complied with
the provisions of
s 129
of the NCA only after the proceedings
have been adjourned by a court in terms of
s 130(4)
to enable
the credit provider to send the requisite notice, which is done more
than three years after the debt has become due.
Put differently, does
a summons served before the requisite notice in terms of
s 129
of the
NCA has been delivered to the consumer interrupt the running of
prescription? Is the summons of no effect until the
s 129
notice has
been served?
[3]
The Western Cape High Court (Savage AJ) held that service of a
summons without first having served a notice under
s 129
did not
interrupt the running of prescription. She thus upheld an argument
that in effect amounted to a special plea, but gave
the service
provider the opportunity to lead evidence to show that there had in
fact been compliance with
s 129
of the NCA. The appellant, Investec
Bank Ltd (the bank), abandoned its right to lead such evidence when
seeking leave to appeal
against the high court order. That court gave
leave to appeal to this court on the strength of the argument that
its decision was
contrary to the principles expressed by Cameron J in
Sebola & another v Standard Bank of South Africa Ltd &
another
2012 (5) SA 142
(CC). The Constitutional Court considered
that where an action is instituted without prior compliance with
s
129
of the NCA the summons is not void: the bar on obtaining judgment
is not absolute but only dilatory, and leads to a pause in the
proceedings until there is compliance.
[4]
The appeal thus depends on an interpretation (yet again) of
ss 129
and
130
of the NCA, read with the
Prescription Act. But
a brief
discussion of the facts giving rise to the action and the defence of
prescription is first necessary. I should note at
this stage that
the consumer, the respondent, Mr M D Ramurunzi appeared for
himself in both the high court and this court.
[5]
In July 2003 the bank issued a credit card to Mr Ramurunzi. In
December of the following year the bank financed his purchase
of a
Jaguar X type motor vehicle. The credit card was linked to a ‘journey
card’ for the Jaguar. In February 2008 the
bank wrote to Mr
Ramurunzi advising that he was in arrears with payment on his
account. In March 2008 it sent a notice in terms
of
ss 123
and
129
of
the NCA advising that he was in breach, owed some R20 987, that his
credit facility had been suspended and that the bank was
entitled to
claim the balance outstanding in respect of the Jaguar motor vehicle.
It advised him of the options open to him in
terms of
s 129
of the
NCA.
[6]
The notice was sent by ordinary mail and by registered mail to the
address Mr Ramurunzi had chosen as his domicilium citandi
and
executandi when he first entered into a credit agreement with the
bank. In July 2008 a certificate of balance was issued by
the bank
reflecting that Mr Ramurunzi owed it the sum of R120 588. And on 1
August 2008 the bank issued and served summons (at
the same address)
claiming this amount plus interest. Mr Ramurunzi responded to the
summons by email, stating that he had changed
his address and that
the summons had been served on his former address. He also advised
that he had sent notice of his change of
address to the bank in
August 2008. Whether the bank received the notice of change of
address is in dispute. It was this dispute
in respect of which the
high court would have heard oral evidence had the bank not abandoned
its reliance on the service of the
s 129
notice in March 2008. It is
accordingly not relevant on appeal.
[7]
In September 2008 the bank applied for summary judgment. Mr Ramurunzi
opposed the application on a number of grounds and apparently
the
application was refused: he was given leave to defend. In his plea
(amended in June 2009) Mr Ramurunzi raised two special defences:
that
the bank had no locus standi (a point subsequently abandoned) and,
second, that the bank had failed to deliver a
s 129
notice before
commencing proceedings.
[8]
The matter remained unresolved (there is no reason why that is so
apparent from the record) until 19 April 2012 when the parties
held a
pre-trial conference in terms of rule 37 of the Uniform Rules of
Court. The minutes of the meeting reflect that Mr Ramurunzi
indicated
that he was persisting with his two points in limine. They agreed
that the matter be adjourned as envisaged in terms
of s 130(4)
(b)
of the NCA. The agreement was made an order of court on 19 April 2012
and referred to the reservation of rights by both parties;
the action
was postponed to 26 November 2012. In terms of the order the bank was
required to send a new s 129 notice to Mr Ramurunzi
by email, which
it did in April 2012.
[9]
The hearing of the action started in March 2013. At the outset Mr
Ramurunzi argued that because the s 129 notice had been sent
to him
only after a period of three years had elapsed since the debt became
due, the claim had prescribed. It was agreed that the
high court
would determine that point before any evidence was led as to whether
a s 129 notice had in fact been duly delivered
to Mr Ramurunzi
within the prescription period. Savage AJ found, as I have said, that
prescription was not interrupted when the
summons was served
(assuming non-compliance with s 129). She thus issued a
declaratory order that the ‘special plea
of prescription’
was upheld, and that the costs of the hearing would stand over for
later determination.
[10]
I turn now to the relevant legislative provisions.
Section 15(1)
of
the
Prescription Act provides
:
‘
The
running of prescription shall, subject to the provisions of
subsection (1), be interrupted by the service on the debtor of any
process whereby the creditor claims payment of the debt.’
A
summons is such a process as is a notice of motion in an application.
Subsection
(2) states:
‘
Unless
the debtor acknowledges liability, the interruption of prescription
in terms of subsection (1) shall lapse, and the running
of
prescription shall not be deemed to have been interrupted, if the
creditor does not successfully prosecute his claim under the
process
in question to final judgment . . . .’
[11]
Section 16
of the
Prescription Act provides
that the provisions in
the chapter dealing with extinction of debts shall, ‘save in in
so far as they are inconsistent with
the provisions of any Act of
Parliament which prescribes a specified period within which a claim
is to be made or an action is
to be instituted in respect of a debt
or imposes conditions on the institution of an action for the
recovery of a debt
, apply to any debt arising after the
commencement of this Act’. (My emphasis.)
[12]
It is Mr Ramurunzi’s argument that the provisions of ss 129(1)
and 130(4) of the NCA impose conditions on the institution
of action
under the
Prescription Act as
envisaged in
s 16(1)
, and thus affect
the way in which an action will interrupt the running of
prescription. The high court accepted this argument,
finding that
without prior compliance with
s 129
the summons was void. I shall
return to Mr Ramurunzi’s argument after dealing with the
relevant provisions of the NCA.
[13]
In so far as relevant,
s 129(1)
(a)
provides that if a consumer
is in default, the credit provider
may
(interpreted by this
court as
must
in
Nedbank Ltd & others v National Credit
Regulator & another
2011 (3) SA 581
(SCA)) draw the default
to the notice of the consumer in writing and alert the consumer to
the various options available to him
or her under the NCA.
Section
129(1)(
b)
provides that a credit provider may not commence any
legal proceedings to enforce the credit agreement before first
providing the
s 129(1)
(a)
notice or other notices required in
terms of specific provisions of the NCA.
[14]
Section 130
of the NCA regulates debt procedures in a court.
Subsection 3 provides that a court may determine a matter only if it
is satisfied
that, in the case of proceedings to which
s 129
(amongst
others) applies, that section has been complied with. But subsection
4 then allows for compliance to be effected after
the proceedings
have commenced. The subsection provides that:
‘
[I]n
any proceedings contemplated in this section, if the court determines
that--
. . .
(b)
the credit provider has not complied with the
relevant provisions of this Act, as contemplated in subsection (3)
(a)
. . .
the court must--
(i) adjourn the
matter before it; and
(ii) make an
appropriate order setting out the steps the credit provider must
complete before the matter may be resumed; . . .’
[15]
The high court found, as I have said, that delivery of a s 129 notice
is peremptory, a finding consistent with judgments in
this court,
including
Roussow & another v Firstrand Bank Ltd
2010 (6)
SA 439
(SCA), and in the Constitutional Court in
Sebola
(above) and more recently in
Kubyana v Standard Bank of South
Africa Ltd
[2014] ZACC 1
(20 February 2014). It held also that
the NCA constitutes legislation which imposes conditions on the
institution of action for
the recovery of a debt, such that
non-compliance with s 129(1) of the NCA rendered service of the
summons ineffective. The notice
served pursuant to the court order
made in terms of s 130(4)
(b)
of the NCA did not
retrospectively validate the summons, held the high court: Mr
Ramurunzi had a vested right to plead prescription.
[16]
The high court considered (and Mr Ramurunzi on appeal argued) that
the summons had been served prematurely. It relied on the
majority
judgment of Corbett JA in
Evins v Shield Insurance Co Ltd
1980
(2) SA 814
(A) which dealt with the prescription of a dependant’s
action under the Compulsory Motor Vehicle Insurance Act 56 of 1972.
Section 25 of that Act required that before action could be
instituted against an authorized insurer for damages suffered as a
result of a motor accident, the plaintiff had to send a claim
in the prescribed form setting out the nature of the bodily
injuries
suffered, medical reports and various other details to the insurer.
Section 25(2) read:
‘
No
such claims shall be enforceable by legal proceedings commenced by a
summons served on the authorized insurer before the expiration
of a
period of 90 days from the date on which the claim was sent or
delivered by hand . . . to the authorized insurer.’
[17]
The plaintiff had sent a claim in the required form in respect of her
claim for personal injuries sustained in a motor collision
that
occurred when her husband had been killed in a collision. But
although she had indicated in the form that she also had a
dependant’s action for loss of support, she had not given the
requisite details of her damages in this regard. When she instituted
action for damages for personal injury and for loss of support
against the insurer it raised the defence that she had not properly
served the requisite notice in respect of the claim for loss of
support. She subsequently delivered another notice in the prescribed
form claiming damages for loss of support, amended the summons so as
to exclude the claim for loss of support, and issued a second
summons
in respect of that action. The insurer raised a special plea that the
claim for loss of support had prescribed.
[18]
This court held that while the two claims (for personal injury and
for loss of support) arose from the same occurrence they
were
separate and independent causes of action, and that the claim for
loss of support had prescribed. Although the court indicated
that it
was possible for a second summons to be re-served after compliance
with s 25(2) of the MVA, in that case the second claim
form was
served after three years had elapsed from the date when the causes of
action arose. The first summons had not interrupted
prescription in
respect of the claim for loss of support because the requisite claim
form had not been delivered timeously (at
842C-H).
[19]
The high court relied also on a passage in M M Loubser
Extinctive
Prescription
p 127 where the author states that the service of
process on a debtor must commence in a ‘legally effective
manner’.
Thus where a provisional sentence summons is defective
it does not interrupt prescription (
Barclays National Bank Ltd v
Wollach
1986 (1) SA 355
(C)). This begs the question whether the
summons in this matter was defective because it was not preceded by
delivery of a s 129
notice on Mr Ramurunzi.
[20]
Although the NCA is silent on the effect on prescription of
non-compliance with s 129, the high court held that the legislature
could not have intended compliance to have retrospective application.
The principles set out in
Evins
thus applied. It also
distinguished cases that have dealt with the effect of non-compliance
with notice provisions in other legislation,
such as the
Institution
of Legal Proceedings Against Certain Organs of State Act 40 of 2002
,
where express provision is made for a court to condone non-compliance
with notice provisions. Because there is no express provision
allowing for condonation, said the high court, failure to comply with
s 129
before the end of the three-year prescription period meant that
the bank’s claim against Mr Ramurunzi had prescribed.
[21]
On appeal, the bank argued that this conclusion was not consonant
with the analysis of
ss 129
and
130
of the NCA in
Sebola
.
Cameron J said (paras 52 and 53):
‘
In
my view the notice requirement in
s 129
cannot be understood in
isolation from
s 130.
This emerges from three considerations.
First, it is
impossible to establish what a credit provider is obliged and
permitted to do without reading both provisions. Thus,
while
s
129(1)
(b)
appears to prohibit the commencement of legal
proceedings altogether (‘may not commence’),
s 130
makes
it clear that where action is instituted without prior notice, the
action is not void.
Far from it. The proceedings have life,
but a court ‘must’ adjourn the matter, and make an
appropriate order requiring
the credit provider to complete specified
steps before resuming the matter. The bar on proceedings is thus not
absolute, but only
dilatory. The absence of notice leads to a pause,
not to nullity.’ (My emphasis.)
[22]
Apart from the fact that this finding is binding on this court, it is
the only logical analysis of the purpose and effect of
s 130(4)
(b)
.
Section 130
regulates debt procedures in court. It ensures that any
shortcoming in the pre-summons enforcement procedures is made good:
that
is for the benefit of the consumer. He or she is entitled to the
opportunity, before the debt can be recovered, to embark on the
processes envisaged by the NCA – to seek debt counseling or
alternative dispute resolution, for example, or even to make
payment.
That purpose is different from that in legislation like the MVA,
where the purpose of sending a claim 90 days before serving
summons
is to enable the insurer to assess the claim and deal with litigation
accordingly. There was thus no need for a provision
in that
legislation that would allow for proceedings to be adjourned so that
a claim in the prescribed form could be served after
the summons was
served.
[23]
Section 130(4)
is unusual, for it requires a court to pause (adjourn)
the proceedings so that the service provider gives the consumer the
benefit
of notice as to his or her options – a notice that
should ordinarily be given before summons is issued and served. It is
the consumer who might be prejudiced were he or she not to be given
those options. Thus the proceedings have a life, as Cameron
J has
said, and are not void, despite the absence of a
s 129
notice.
The very fact that a court must make an order as to how the
proceedings are to be continued indicates the validity of the
summons
rather than its nullity.
[24]
It is true, as Mr Ramurunzi argued, that
Sebola
did not deal
with prescription pertinently.
Sebola
was concerned with the
issue of delivery of a
s 129
notice as was
Kubyana
(above).
But it is implicit in the reasoning in
Sebola
that an
otherwise valid summons interrupts prescription when it is served.
The purpose of
s 130(4)
(b)
is to ensure that even though
summons has been served, the consumer is still provided with a
s 129
notice so that he or she knows what options are available to resolve
the matter before the debt is enforced. This is in line with
the
principles of the common law that have developed in relation to
prescription: a summons and particulars of claim can be cured
where
defective after the period of prescription has run. Even an
excipiable summons, or one that is amended so as to introduce
a new
cause of action (where substantially the same debt is being claimed)
has the effect of interrupting prescription (see
CGU Insurance Ltd
v Rumdel Construction (Pty) Ltd
2004 (2) SA 622
(SCA) para 5 and
the cases cited in it).
[25]
Mr Ramurunzi conceded before us that the summons was valid. But he
argued that it had no effect until the
s 129
notice had been properly
delivered – which occurred more than three years after the debt
became due. But he could not explain
when interruption would occur in
the ordinary course of a credit provider’s attempt to enforce a
debt. He accepted that the
s 129
notice would not itself interrupt
prescription if delivered before the summons was served.
[26]
In my view, therefore, the summons interrupted the running of
prescription when it was served on Mr Ramurunzi. The high court
could
not, however, grant a judgment against him until, after adjourning
the matter for this purpose, a
s 129
notice was delivered to
him. It was delivered timeously in accordance with the court order.
The special plea should have been dismissed
and the trial should have
continued. The appeal against the order of the high court must thus
be upheld.
[27]
Mr Ramurunzi submitted that the costs of the appeal should not be
awarded against him should he be unsuccessful: the bank had
appealed
because it wanted to obtain a decision in principle on the
interruption of prescription by a summons served before compliance
with
s 129.
The bank argued, on the other hand, that it had been
forced to appeal against what it considered to be an incorrect
judgment. And
while accepting that this was a test case, contended
that there were other reasons for pursuing the appeal. Mr Ramurunzi
had raised
a variety of technical defences over a period stretching
from 2008 to 2013, but had not ever raised a defence on the merits.
[28]
I see no reason to deviate from the usual rule that costs should
follow the cause. It will be recalled that the high court
did not
make any costs order as, at the time when judgment was given, the
bank had indicated that it would lead evidence that a
s 129
notice had in fact been properly delivered before the summons was
served. Once the bank had abandoned that route it is appropriate
that
a cost order be made in that court too, and equally, costs must
follow the cause.
[29]
In the result:
1 The appeal is
upheld with costs.
2 The order of the
high court is set aside, and replaced with:
‘
The
defendant’s special plea that the debt has prescribed is
dismissed with costs.’
____________
C
H Lewis
Judge
of Appeal
APPEARANCES:
For
the Appellant: J Muller SC
Instructed
by:
De
Klerk & Van Gend Inc, Cape Town
McIntyre
& Van Der Post, Bloemfontein
For
the Respondent: In Person