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[2020] ZAGPJHC 105
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Firstrand Bank Ltd t/a First National Bank v Moonsamy t/a Synka Liquors (07747/2018) [2020] ZAGPJHC 105; 2021 (1) SA 225 (GJ) (15 April 2020)
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NO: 07747/2018
1. Reportable: No
2. Of interest to other
judges: No
3. Revised: Yes, 14 April
2020
In
the matter between:
FIRSTRAND
BANK LTD T/A FIRST NATIONAL BANK
Applicant
and
YUGASH
MOONSAMMY T/A SYNKA LIQUORS
Respondent
Summary judgment
refused for the summons being excipiable and for non-compliance with
sections 129
and
130
of the
National Credit Act 34 of 2005
. Line of
cases about compliance by attaching a
section 129
demand to the
summons to purge non-compliance with the
National Credit Act, not
followed
.
JUDGMENT
DE VILLIERS, AJ
Introduction
[1]
There are two issues for determination in
this application for summary judgment relating to (a) a defence that
the summons is excipiable,
and (b) non-compliance with sections 129
and 130 of the National Credit Act 34 of 2005 (“the NCA”)
and its effect at
summary judgment stage. In the end the defence on
the merits and the NCA defence overlap. When I refer to sections 86,
129 and
130 below, it is in each case a reference to the section in
the NCA.
[2]
The defence on the merits in essence is
that the contract required a prior demand before the debt became
payable. No such notice
was given. If such a notice was necessary, it
had to be given, and it had to be alleged as having been given,
before a default
notice could be given under section 129. Other
defences on the merits were raised, but they need not be addressed in
this judgment.
The defence on non-compliance with section 129 is that
it is clear from the wording of the so-called “
track-and-trace
”
report, that the default notice was sent to the incorrect post
office.
[3]
The
matter came before me in the opposed summary judgment court as one of
two similar matters on successive days. The counsel for
the
applicants in both cases relied on
SA
Taxi Development Finance (Pty) Ltd v Phalafala
[1]
to the effect that there was proper compliance with the NCA if the
section 129 default notice is attached to the summons. Counsel
for
both applicants knew of no further cases in point. I questioned the
correctness of the submissions on the law. The counsel
for the
applicant in this matter argued that judges (in the plural) accept
the case as setting out the law. The representatives
for the
respondents could not refer me to authority to the contrary in this
division. In fact, the attorney in this matter referred
me to no
authority.
[4]
I did not reserve judgment in the second
matter. I did so because the only defence raised was non-compliance
with section 129. I
postponed the matter in terms of section 130(4)
for re-service of the section 129 notice at an agreed stipulated
address, acting
in terms of my residual discretion in summary
judgment matters. By then I had already reserved judgment in this
matter where a
defence on the merits was raised. I first address that
defence.
Defence on the merits
[5]
In issue in this case was a loan granted under a written
so-called
“
overdraft facility
agreement
”
.
The particulars of claim did not reflect any obligation on the
defendant to make “
regular and
sufficient deposits and credits into the facility account to repay
interest, costs, fees and charges debited
”
,
yet the plaintiff relied upon alleged non-compliance with such an
obligation as a breach of contract by the defendant entitling
it to
call up the loan. I could not find such a term in the written
agreement. In addition, the contract contained notice terms
that the
plaintiff had to comply with, before the loan became repayable. Those
terms were not pleaded, but clause 5.1.2 of the
applicable terms
reads (underlining added):
“
5.1
An event of default shall occur should
:
5.1.1
…
5.1.2 the Client, fail to
comply with any term or condition of this Agreement
and fail to
remedy that breach within 5 (five) days after having been called upon
do so
;
5.1.3
…”
[6]
As such, notice to the defendant in terms of clause 5.1.2
was
required before it could be alleged that the defendant was in breach
of the repayment obligation and that thus an event of
default had
occurred, entitling the plaintiff to call up the loan. No notice in
terms of clause 5.1.2 has been pleaded. This case
therefore is one
that is governed by
Caltex
Oil (SA) Ltd v Crescent Express (Pty) Ltd and Others
[2]
,
in which it was held that although the defendant may be indebted to
the plaintiff, it does not follow that that indebtedness is
due and
payable. In a summary judgment context, the learned judge held:
“…
For
there to be a verification of a cause of action within the meaning of
Rule 32(2) it seems to me that there must be made to appear
a
complete cause of action. Unless a complete cause of action is made
to appear it does not seem to me that it can be said to be
verified
.
…”
[7]
This statement of the law accords with
Bentley
Maudesley and Company, Ltd v 'Carburol' (Pty) Ltd and Another
[3]
.
The facts of this matter do not apply in every case where the claim
is based on an overdraft agreement, but arises from the wording
of
the contract. In a case addressed later herein,
Amardien
and Others v Registrar of Deeds and Others
[4]
,
the Constitutional Court also makes the point that it is only after a
debt has become due that the credit consumer is obliged
to make
payment.
[5]
[8]
Accordingly, the plaintiff did not plead a completed
cause of action,
such a cause of action was not verified, and the particulars of claim
are excipiable. Added thereto, is that the
defendant is not alleged
to have been in default when the section 129 default notice was
attached to the summons.
[9]
In the circumstances I ought to refuse summary judgment
and I do as
the summons is excipiable. See too
Buchner
and Another v Johannesburg Consolidated Investment Co Ltd
.
[6]
The matter does not end here, the applicant alleged that it has
complied with sections 129 and 130. It may amend its particulars
of
claim, and in that case, compliance with sections 129 and 130 will
have to be addressed again. Accordingly, I address the issue.
Sections
129 and 130 of the NCA
[10]
Thirteen years ago, these two sections in
the NCA came into effect and four years ago important changes were
made to them by the
National Credit Amendment Act 19 of 2014, as
reflected in the footnotes below (underlining added):
“
129
Required procedures before debt enforcement
(1) If the
consumer
is in default
under a credit agreement, the credit provider-
(a) 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 agreement up to date; and
(b) subject to section
130(2),
may not
commence any legal proceedings to enforce the
agreement
before
-
(i)
first
providing notice to the consumer, as contemplated in paragraph (a)
,
or in section 86(10),
[7]
as the case may be;
and
(ii)
meeting any further requirements set out in section
130.
(2) …
(5)
[8]
The
notice contemplated in subsection (1)(a)
must
be
delivered
to the consumer-
(a)
by registered mail
;
or
(b)
to an adult person at the
location
designated by the
consumer.
(6)
[9]
The
consumer
must
in writing
indicate the preferred manner of delivery contemplated in subsection
(5).
(7)
[10]
Proof
of delivery contemplated in subsection (5) is satisfied by-
(a) written
confirmation by the postal service or its authorised agent,
of
delivery to
the relevant post office or postal agency; or
(b) the signature or
identifying mark of the recipient contemplated in subsection (5) (b).
130 Debt procedures
in a Court
(1) Subject to
subsection (2), a credit provider may approach the court for an order
to enforce a credit agreement
only if
, at that time, the
consumer is
in default
and has been in default under that
credit agreement for at least 20 business days
and
-
(a)
[11]
at
least 10 business days have elapsed since the credit provider
delivered a notice
to the consumer as contemplated in section 86 (10), or section 129
(1), as the case may be;
(b) in the case of a
notice contemplated in section 129 (1), the consumer has-
(i)
not responded to that notice; or
(ii) responded to the
notice by rejecting the credit provider's proposals; and
(c) in the case of an
instalment agreement, secured loan, or lease, the consumer has not
surrendered the relevant property to the
credit provider as
contemplated in section 127.
(2) …
(3) Despite any
provision of law or contract to the contrary, in any proceedings
commenced in a court in respect of a credit agreement
to which this
Act applies, the court may determine the matter only if the court is
satisfied that-
(a) in the case of
proceedings to which sections 127, 129 or 131 apply,
the
procedures required by those sections have been complied with
;
(b) …
(4) In any proceedings
contemplated in this section, if the court determines that-
(a) the credit
agreement was reckless as described in section 80, the court must
make an order contemplated in section 83;
(b)
the credit
provider has not complied with the relevant provisions of this Act,
as contemplated in subsection (3) (a), or has approached the court in
circumstances contemplated in subsection (3) (c)
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;
(c)
…”
[11]
Section 129(1)(b)(i) and section 130(1)(a)
refer to a notice in terms of section 129(1), the notice in issue in
this case, or to
one in terms of section 86(10). A notice under
section 86(10) is a notice by the credit provider to terminate
certain debt
review procedures.
[12]
Although the NCA is the subject matter of
repeated criticism in our courts due to the poor quality of its
drafting, such criticism
cannot be levelled against the sections I
have to interpret. One does not need to address the other drafting
difficulties in the
NCA to give effect to them. In summary
on
the issues of this case
:
[12.1]
If
the credit consumer is in default under a credit agreement, the
credit provider
must
[12]
draw the default to the notice of the credit consumer in writing;
[12.2]
The credit provider
may
not
commence any legal proceedings to
enforce the agreement before giving such a notice of default;
[12.3]
The notice of default under section 129
must contain certain detail such as a proposal that the credit
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 agreement up to date
”;
[12.4]
A credit provider
may
only
approach the court for an order to
enforce a credit agreement if, at that time-
[12.4.1]
The credit consumer is in default;
[12.4.2]
The credit consumer has been in default for
at least 20 business days;
[12.4.3]
At least
10
business days have elapsed
since the
credit provider delivered a notice of default and-
[12.4.3.1]
The credit consumer has not responded to
the default notice;
[12.4.3.2]
The credit consumer responded to the
default notice by rejecting the credit provider's proposals; and
[12.4.3.3]
In the case of an instalment agreement,
secured loan, or lease, the credit consumer has not surrendered the
relevant property to
the credit provider as contemplated in section
127;
[12.5]
A court may determine the matter
only
if
the court is satisfied that the
procedures required by (in this case) section 129 has been complied
with; and
[12.6]
If the court determines that the credit
provider did not give notice of default as contemplated in section
129 “
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
”.
[13]
Had I been the author of the section 130, I
would have added a provision that would have empowered a credit
grantor to fix an error
in complying with section 129 without prior
intervention by a court, and to seek condonation when the matter gets
to court.
[14]
A
court may disagree with the legislation, but the wording is clear. In
none of the judgments that I differ with, did the court
find that the
clear wording means something different. In none of the judgments
that I differ with, did the court rely on the Constitution
to read
words into the legislation. The question that I raise is, with great
respect, if those judgments did not impermissibly
cross the line
between an adjudication function, and a legislative function. I
further respectfully point out that when faced with
an impractical
interpretation of the NCA (and I do not find that section 130(4) is
an impractical remedy), the Supreme Court of
Appeal (“the SCA”)
felt bound by the clear text of the NCA. See
Du
Bruyn NO and Others v Karsten
[13]
where the court
concluded:
“…
That
it is an imperfect solution is readily accepted, but it is for the
legislature to remedy, rather than for the courts to attempt
to
accommodate deficient drafting by attributing a meaning to s 40(1)(b)
that is not justified by the wording of the statute
.”
[15]
In a judgment more fully addressed below,
Kubyana
v Standard Bank of South Africa Ltd,
[14]
the
court expressed the limitations on interpretation of legislation as
follows (underlining added):
“
It
is well established that statutes must be interpreted with due regard
to their purpose and within their context.
[15]
This general principle is buttressed by s 2(1) of the Act, which
expressly requires a purposive approach to the statute's
construction.
[16]
Furthermore, legislation must be understood holistically and, it goes
without saying, interpreted within the relevant framework
of
constitutional rights and norms.
[17]
However,
that does not mean that ordinary meaning and clear language may be
discarded, for interpretation is not divination and
courts must
respect the separation of powers when construing Acts of
Parliament
.
[18]
”
[16]
I
do not lightly disagree with several judgments. I am acutely aware of
the finding in
Camps
Bay Ratepayers and Residents Association and Another v Harrison and
Another
[19]
where the court held (footnotes omitted):
“…
This
argument raises issues concerning the principle that finds
application in the Latin maxim of stare decisis (to stand by
decisions
previously taken) or the doctrine of precedent.
Considerations underlying the doctrine were formulated extensively by
Hahlo and
Kahn. What it boils down to, according to the authors, is:
“certainty, predictability, reliability, equality, uniformity,
convenience: these are the principal advantages to be gained by a
legal system from the principle of stare decisis.” Observance
of the doctrine has been insisted upon, both by this Court and by the
Supreme Court of Appeal. And I believe rightly so. The doctrine
of
precedent not only binds lower courts but also binds courts of final
jurisdiction to their own decisions. These courts can depart
from a
previous decision of their own only when satisfied that that decision
is clearly wrong. Stare decisis is therefore not simply
a matter of
respect for courts of higher authority. It is a manifestation of the
rule of law itself, which in turn is a founding
value of our
Constitution. To deviate from this rule is to invite legal chaos
.”
The relevant decisions
of the Constitutional Court
[17]
There
have been three main judgments in the Constitutional Court addressing
the NCA that are relevant to this matter, the most recent
being the
one already referred to,
Amardien
and Others v Registrar of Deeds and Others
.
[20]
This matter dealt with a case where default notices in terms of
section 129 were given, but these did not specify the outstanding
amount. The notices were held to be defective. In setting out its
reasoning, the Constitutional Court made the point that section
129
provides protection to credit consumers by requiring that notice of
default must be given before legal remedies could be enforced
in the
courts by creditor providers, giving notice to the credit consumer to
consider what steps to take.
[21]
Paragraph 56 of
Amardien
on the purpose of section 129 is instructive (underlining added):
“
[56]
The purposes of section 129 of
the NCA are as follows
:
(a)
It brings to
the attention of the consumer the default status of her credit
agreement
.
(b)
It provides the
consumer with an opportunity
to rectify the default status of the
credit agreement
in order to avoid legal action being instituted
on the credit agreement or to regain possession of the asset subject
to the credit agreement.
(c)
It is the only gateway
for a credit provider to be able
to
institute legal action
against a
consumer who is in default under a credit agreement.
”
[18]
In my view a finding that a default notice
attached to a summons would achieve the three purposes, is
unsustainable, with respect.
Amardien
made it clear that a section 129 notice is a
distinct document with a particular notice purpose. It is a prior
step that must be
complied with. The credit provider’s rights
to enforce the credit agreement are suspended pending compliance. The
process
prescribes a pause in the proceedings (underlining added and
footnotes omitted):
“
[57]
This section reveals that in the event of the consumer being in
default of her repayments of the loan,
the
credit provider is obliged to draw the default to the attention
of the consumer. It prescribes that the notice given to
the consumer
must be in writing and specifies what the notice must contain. The
notice must propose the options available to the
consumer who is in
financial distress and unable to purge the default
.
It must point out that the consumer has the option to refer the
credit agreement to a debt counsellor, dispute resolution
agent,
consumer court or ombudsman. The purpose of the referral must also be
stated in the notice.
[58] There are two
statutory conditions
which must be met
before the credit
provider may institute litigation under section 129
. In
peremptory terms, the section declares that legal proceedings to
enforce the agreement
may not commence before
(a) providing
notice to the consumer; and (b) meeting further requirements set out
in section 130.
[59] The reference to
section 130 reveals a strong link between the two provisions hence
they are required to be read together.
When a credit provider
seeks to enforce the agreement by means of litigation,
it must
first show compliance with section 130
,
which, by extension,
refers back to section 129
.
The application of these sections
is triggered by the consumer’s failure to repay the loan
.
These sections
suspend the credit provider’s rights under
the credit agreement until certain steps have been taken
.
The credit provider is not entitled to exercise its rights
immediately under the agreement.
It is first required to
notify the consumer of the specific default and demand that the
arrears be paid. If the consumer pays
up the arrears, then the
dispute is settled
.”
[19]
In many ways the matter could end here. In
my respectful view, both the text of sections 129 and 130, and the
reasoning in
Amardien
would
stand firmly against a finding that non-compliance with section 129
could be cured by attaching such a notice to the summons,
to an
application for payment, for default judgment, or for summary
judgment. The NCA clearly requires prior default notice in
terms of
section 129 and the lapse of ten business days before litigation may
commence. It provides for the process to be followed
in case of
non-compliance.
[20]
In most cases the obligation on creditors
to give notice in terms of section 129 would cause no hardship. Both
the amendments to
section 129 and 130 and earlier Constitutional
Court cases addressed next, did not impose an unduly burdensome
process. In some
cases, an error may creep in and the default notice
would for example be re-directed by the postal services to the wrong
post office
(as what seemed to have happened in the case before me).
If an error has crept in, the fact that such prior default notice in
terms
of section 129 has not been given is not fatal, as section
130(4) of the NCA provides a remedy: A court must adjourn the matter
and must make an appropriate order setting out the steps the credit
provider must complete before the matter may be resumed.
[21]
Before
Amardien,
sections
129 and 130 of the NCA were dealt with in
Sebola
and Another v Standard Bank of South Africa Ltd and Another
,
[22]
as clarified in
Kubyana
v Standard Bank of South Africa Ltd
,
[23]
already referred to. I do not refer to them in full. Both cases dealt
with the sections before their amendment by the National
Credit
Amendment Act 19 of 2014, and presumably caused the amendments.
[22]
In
Sebola
the
Constitutional Court interpreted the NCA saying the notice is a prior
step that must be taken before litigation commences. Section
129 is
“
a
'gateway' provision, or a 'new pre-litigation layer to the
enforcement process
”,
[24]
it is a compulsory notice, and the NCA “
precludes
legal enforcement of a debt before the credit provider has suggested
to the consumer that he or she explore non-litigious
ways to purge
the default
.”
[25]
Sebola
stated that compliance with section 129 had to be pleaded (footnotes
omitted and underlining added):
“
[77]
The credit provider's
summons or
particulars of claim should allege that the notice was delivered to
the relevant post office and that the post office
would, in the
normal course, have secured delivery of a registered item
notification slip, informing the consumer that a registered
article
was available for collection. Coupled with proof that the notice was
delivered to the correct post office
,
it may reasonably be assumed in the absence of contrary indication,
and the credit provider may credibly aver, that notification
of its
arrival reached the consumer and that a reasonable consumer would
have ensured retrieval of the item from the post office.”
[23]
It is for this reason that I stated at the
outset that the two defences dealt with in this judgment, overlap.
The Constitutional
Court in
Sebola
dealt with the delaying nature of the bar on proceedings prior to
compliance with section 129 of the NCA, as set out in section
130(4),
saying:
“
[53]
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
.
But to deduce this, it is necessary to read s 129 in the light of s
130. Section 129 prescribes what a credit provider must prove
(notice
as contemplated) before judgment can be obtained, while s 130 sets
out how this can be proved (by delivery)
.”
[24]
The remark in
Sebola
that non-compliance with section 129 is
a dilatory defence, does not mean that it is not a valid defence or a
time-wasting defence.
The Constitutional Court is quite clear that
the NCA must be complied with, despite its effect (in many or in some
cases) to be
no more than a pause in the court processes.
[25]
Some
aspects of
Sebola
were clarified in
Kubyana.
The
Constitutional Court also reasoned that compliance with the section
129 notice is a step before litigation commences
[26]
and that it is an essential step for a credit provider to enforce its
rights.
[27]
The intent
is that the creditor must avoid hasty recourse to litigation.
[28]
Finally, the court held (underlining added):
“
[85]
If the court is not satisfied that the s 129 notice was delivered to
the consumer,
it is obliged to
adjourn the proceedings and specify steps to be taken by the credit
provider before resuming the hearing of the
matter. This illustrates
that enforcement of the credit agreement through litigation is
suspended for as long as the credit provider
has not complied with
the requirements of the relevant sections
.”
[26]
Sebola
dealt
with an appeal against a refusal of an application for rescission,
Kubyana
dealt
with an appeal against the judgment in a trial, and
Amardien
dealt with an appeal regarding the
cancellation of instalment sale agreements and eviction in opposed
motion proceedings.
[27]
There
is one more matter to address,
in
Allpay
Consolidated Investment Holdings (Pty) Ltd And Others v Chief
Executive Officer, South African Social Security Agency, And
Others
[29]
the Constitutional Court rejected an approach that
inconsequential irregularities could be overlooked, and that one
should
consider if the purpose of legal requirements have been met
before setting aside a procurement process.
Sebola
makes
the point that the provisions of the NCA will have significant impact
on public law too as it introduces protection for credit
consumers.
[30]
Time will tell
if the Constitutional Court will introduce the
Allpay
approach with regard to section 129 too, no matter if the
non-compliance was inconsequential (such as when the notice
improperly
delivered, in fact reaches the attention of the credit
consumer). In one of the judgments below the learned judge reasoned
that
condoning non-compliance with the section 129 would amount the
condonation of an illegality.
Relevant decisions of the
Supreme Court of Appeal
[28]
The
SCA too has stressed that compliance with section 129 is a
pre-litigation step. Indeed, it found that a failure to allege
compliance
with the section renders the summons excipiable. See
Blue
Chip 2 (Pty) Ltd t/a Blue Chip 49 v Ryneveldt and Others (National
Credit Regulator as Amicus Curiae)
.
[31]
Similarly to the reasoning of the Constitutional Court in
Sebola
,
Kubyana
,
and
Amardien
the
SCA reflected that notice in terms of section 129 accords with the
broad purposes of the NCA.
[32]
Compliance with section 129 is a mandatory requirement, and the court
approved of the statement in
Kubyana
that the purpose of a section 129 notice was to establish a framework
where a creditor and a consumer who has defaulted could resolve
their
dispute “
without
expensive, acrimonious and time-consuming recourse to the
courts
”.
[33]
Paragraphs 18-20
in
Blue Chip 49
are
of importance (underlining added):
“
[18]
The delivery of a s 129 notice
is
a peremptory step which is a prerequisite for any judgment sought on
a claim arising out of a default of a credit agreement
.
The failure to take the necessary steps prior to judgment will result
in a court refusing to grant judgment in favour of the claimant.
It
is a step which is recognised in the NCA as essential to granting
judgment in favour of a claimant. Hence, in para 87 of Sebola
it is
pointed out that, if indeed a litigant has failed to comply with any
provision of the NCA, including s 129, s 130(4)(b)
provides
for steps which may be taken in order to remedy the situation in
terms of an order of the court. A failure to allege and
prove
compliance with s 129(1) (even after s 130 procedures) would render a
summons excipiable and the matter would end without
judgment in
favour of the claimant being granted
.
[19]
As was said by Majiedt AJP in Beets v Swanepoel
[34]
para 19:
'A plaintiff must in
my view
aver compliance with these sections [s 129 and s 130] in
the summons or particulars of claim to disclose a cause of action
where the suit is based on a credit agreement to which the Act
applies. It is a material averment, the absence whereof would render
the pleading excipiable. Without the requisite notice, a claim cannot
be enforced.'
The reason for this is
that
the pleadings would lack a proper cause of action
.
[20]
In order to disclose a cause of action to enforce a claim emanating
from a default of a credit agreement,
an
averment of compliance with s 129 must be contained in the summons
and proved
.
Delivery
of a s 129 notice forms part of the cause of action
.
It is an essential component of a plaintiff's cause of action.
[35]
“
[29]
See
too
Investec
Bank Ltd t/a Investec Private Bank v Ramurunzi.
[36]
Finally, in
ABSA
Bank Ltd v Mkhize and Two Similar Cases
[37]
the SCA held (footnotes omitted and underlining added):
“
[51]
I do not think it necessary to go so far. The purpose of s
130(4)(b) is to
require the
court,
where a credit provider
has not complied with any provision of the NCA (in this instance it
would be non-compliance with s 129(1),
as interpreted in Sebola),
to adjourn the matter
and 'make an appropriate order setting out the steps the credit
provider must complete before the matter may be resumed'.
Once
the credit provider complies with the court order, when the
matter is set down again the court will doubtless be able
to grant
judgment
. As Alkema J pointed
out, the adjournment will increase the burden on the credit
provider and on the courts, and will of course
increase the cost of
providing credit. But that is the consequence of the poorly drafted
NCA and the interpretation of its provisions
by the
Constitutional Court. That court appreciated that consumers would
bear the additional costs of obtaining credit by requiring
proof of
receipt of notices sent by registered mail at post offices. But that
was warranted by the importance of ensuring that
s 129(1) notices be
provided to consumers. Cameron J said:
'I
accept that this judgment may heighten the cost of credit and that
this will affect the pockets of not only credit institutions
but
also consumers, particularly those new to the credit market. That is
a social burden the legislation imposes. The alternative
would be to
underplay the importance of the notice, and under-weigh the impact of
the wording of s 129
.'”
[30]
It
seems to me that two matters are emphasised in the Supreme Court of
Appeal, compliance with section 129 of the NCA is a step
that must
precede the litigation for good reason, and where it has not taken
place, litigation must be stayed pending rectification
in terms of
section 130(4) of the NCA. Compliance with the provisions of
section 129(1)(a) is thus mandatory notwithstanding
the use of the
word “
may
”.
See
Nedbank
Ltd and Others v National Credit Regulator
.
[38]
[31]
Blue Chip 49
dealt
with an appeal regarding the jurisdiction of a Magistrate’s
Court,
Ramurunzi
dealt
with an appeal regarding a prescription defence, and
Mkhize
and Two Similar Cases
dealt with an
appeal against a postponement to rectify non-compliance with section
129.
[32]
In
Navin
Naidoo v The Standard Bank of South Africa
[39]
the SCA dealt with what seems to be an appeal against a default
judgment. The court held that actual receipt of the section 129
default notice is proper compliance with sections 129 and 130. The
court applied a purposive interpretation. The Constitutional
Court
refused leave to appeal the decision.
[40]
Authority in Gauteng
against the bank’s contentions and comments thereon
[33]
Due
to the provincial manner in which
stare
decisis
is still applied,
[41]
I
focused in this judgment on Gauteng judgments.
[34]
In
African
Bank Ltd v Myambo NO and Others
[42]
the majority of a full court held at 310I-311B that a cause of action
is not complete without an averment in the summons that “…
ss
129(1)(a) or 86(10) has been complied with or an allegation that
notice was not necessary, stating the reason”
.
[43]
This accords with the reasoning in
Blue
Chip 49
by
the SCA and in
Sebola
by the Constitutional Court.
Myambo
dealt with a review of a decision by a magistrate in an application
for rescission of judgment.
[35]
Three more judgments by single judges in
Gauteng address non-compliance with sections 129 and 130.
[36]
First,
in
Land
and Agricultural Development Bank of South Africa v Chidawaya and
Another
[44]
the court dealt with an application for summary judgment and held
(underlining added and quotation from
Sebola
omitted):
“
[21]
To my mind, the reasoning in both the Phalafala and the Jardine
[45]
decisions is flawed and should be rejected. It is flawed because
it
does not take into account one of the basic purposes for which the
NCA was brought into existence
.
That purpose is captured succinctly in Sebola v Standard Bank 2012
(5) SA (CC) at 161 (para 59 - 60) where the following was stated:
"[59] ….
[60
…."
[22]
A Section 129 notice may be attached to a summons as
proof
of compliance with the Act but not as constituting compliance. It is
clear from the wording of the Act that it is a pre-litigation
step
and must accordingly precede litigation
.
If litigation is embarked upon without compliance with Section 129
then Section 130 (4) provides the
procedural mechanism to remedy this defect.
To hold otherwise would render
Section 130 (4) irrelevant and would ignore the directives of the
legislature as well as undermine
the purpose of the Act as set out in
Section 3, namely to address issues such as over indebtedness and
debt restructuring. These
would be undermined if the pre-litigation
notice is dispensed with.
”
[37]
Second,
in
Kgomo
and Another v Standard Bank of South Africa and Others
[46]
dealt with an application for rescission judgment and held (footnote
omitted and underlining added)-
“
[54]
Based on Kubyana,
strict
compliance with s 129(1) remains the order of the day. Strict
compliance requires that where s 129(1) is not complied with,
section
130(4)(b) comes into play. It peremptorily requires that the court
"must ... adjourn the matter
... and make an appropriate order setting out the steps the credit
provider must complete before the matter may be resumed".
[55] The bank as
plaintiff pleaded delivery of the notice to the applicants as
defendants, in its particulars of claim.
Yet it is clear
that its pleading was erroneous and that there was no such delivery.
In terms of s 129(1)(b), the respondent was
precluded from commencing
any legal proceedings without delivering a s 129(1) notice
beforehand. In terms of s 130(1)(a), ten business
days had to have
lapsed after any notice, before legal proceedings were commenced.
That too was not complied with. The judgment
was therefore
erroneously sought.
[56]
The flawed s 129(1) notice,
reflecting the incorrect address for the applicants, was an annexure
to the particulars of claim
.
That the address was incorrect was apparent by comparing it with the
correct address reflected in the particulars of claim. That
address
reflected a street number that did not coincide with the erf number.
The error was thus apparent on the record when default
judgment was
granted. In any event, it is not necessary for compliance with the
requirements for rescission in rule 42(1)(a) that
the error be
apparent on the record.
In those
circumstances, the court was required to proceed in terms of s
130(4)(b)(i) and (ii) of the NCA by adjourning the proceedings
and
directing what steps the bank must take before the proceedings were
resumed
. It did not do so. The
judgment was thus erroneously granted within the meaning of rule
42(1)(a)
”
.
[38]
Third,
in
More
v BMW Financial Services
[47]
the court dealt with an application for rescission of judgment. The
court held that compliance with section 129 is a mandatory
statutory
procedure that must be complied with before the credit provider can
sue upon a credit agreement.
[48]
Although the credit receiver had no defence on the merits,
non-compliance with section 129 is a sufficient ground for a
rescission
application.
[49]
The court held that “
if
the Court refuses to set aside such a default judgment, then it
confirms and perpetuates an illegality
”.
[50]
[39]
The wording of the NCA, the purpose of the
act (especially the purpose with sections 129 and 130), and the
judgments referred to
above in the Constitutional Court, in the SCA
and these the four judgments in Gauteng, are incompatible with
reasoning that
the NCA could be complied with by attaching a section
129 default notice to a notice to the summons, to an application for
payment,
for default judgment, or for summary judgment.
Authority in Gauteng
in favour of the bank’s contentions and comments thereon
[40]
The
judgment relied upon by the bank,
SA
Taxi Development Finance (Pty) Ltd v Phalafala
[51]
,
referred to earlier, was handed down on 20 March 2013, before the
changes to the wording of sections 129 and 130 of the NCA were
effected as indicated above. It also predates
Amardien
and
Kubyana
in
the Constitutional Court,
Blue
Chip 49
and
Ramurunzi
in
the SCA
,
Chidawaya, Kgomo
and
More
in
Gauteng. It was by no stretch of the imagination the only case in
point.
[41]
In
Phalafala
the default notice in terms of section 129 was duly sent by
registered mail to the correct post office, but the credit consumer
did not collect it. The relevant portion of the judgment reads
(underlining added):
“
[12]
Non-receipt of the notice prior to receiving the summons is not a
defence, dilatory or otherwise, to the plaintiff’s
claim in
this matter.
The
subsequent receipt of notice at the time of service of the summons
and the defendant’s reaction thereto
,
entitle the plaintiff to approach the court for an order to enforce
the credit agreement. No purpose would be served to give him
the
notice for a second time -
it
would be placing form above substance to require a further notice to
be sent to the defendant
.
It is accordingly unnecessary to adjourn the matter or to make any
orders in terms of s 130(4)(b), since the defendant actually
received
the notice and since the time periods of s 130(1) and (1)(a) have
actually expired. I consequently find that the fact
that the
defendant did not receive the notice
prior
to service of summons “does not render the notice invalid and
the issue of summons premature
.
[52]
”
[42]
The
reasoning in
Phalafala
was
followed by single judges in Gauteng at least in
SA
Taxi Finance Solutions (Pty) Ltd v Ringani,
[53]
SA
Taxi Finance Solutions (Pty) Ltd v Mthembu,
[54]
Standard
Bank v Jardine,
[55]
Wentzel
v Absa Bank Limited
,
[56]
and in
Shongwe
v Firstrand Bank Limited t/a Land Rover Financial Services
.
[57]
The central reasoning in these cases is that by attaching the section
129 notice to the summons, or application for payment, for
default
judgment, or for summary judgment, default notice has been given.
[58]
A theme in several of these judgments is that the credit receiver did
not plead what steps she or he would have taken had proper
notice in
terms of section 129 been given, what prejudice was suffered.
[59]
(The onus to show compliance with the NCA rests on the credit
grantor.) None of these judgments refer to the judgments to the
contrary in Gauteng. In fact, most predate the judgments to the
contrary in Gauteng.
[43]
The
judgment, with respect, that seeks to address the current wording of
the NCA most completely, is
Shongwe.
However
in that matter the acting judge criticises the Constitutional Court
for adding “
glosses
and complexities to the provisions of the NCA that were neither
called for nor necessary
”,
[60]
criticises the architecture of the NCA (with some merit),
[61]
criticises the reasoning in
Sebola
and
Kubyana,
[62]
and
criticises the legislature for taking its lead from the
Constitutional Court in providing primarily for service by registered
post.
[63]
All of this was
unnecessary, with respect, as it was common cause that section 129
had been complied with in
Shongwe
.
[64]
[44]
Before
I state the reasons why I believe
Phalafala
and the cases that followed its reasoning are clearly wrong, I need
to address a full court judgment that supports the reasoning:
Benson
and Another v Standard Bank of South Africa (Pty) Limited and
Others
.
[65]
In this matter, the full court dealt with the same issue: a section
129 notice attached to the application for default judgment
as
compliance with section 129.
[45]
The section 129 notice was given on 26 May
2011, but the legal proceedings commenced prematurely on 5 May 2011
The court held (underlining
added):
“
18. What
the Sebola decision did not have to decide is whether any
non-compliance with the provisions of the
NCA
that
is cured prior to the hearing of the application for judgment by
default, nevertheless requires an adjournment of the application
.
The answer to this question flows from the provisions of s
130(4)(b)(ii). If there are no further steps that are required
of the
credit provider,
there can be no
purpose served in adjourning the proceedings. Further delay would
serve no purpose, and, as Sebola makes
plain, any
non-compliance does not invalidate the proceedings but simply delays
their finalization to ensure that due process is
followed and the
credit receiver can enjoy his or her rights
.
Of course, the non-compliance
must
be properly cured
, and the
credit receiver must be given
the
statutory time
to consider his
or her position. But if that is done between the time that the
non-compliance is cured and the time that the matter
is heard in
court, to require an adjournment for its own sake has no point and is
inconsistent
with the scheme of
ss129 and 130
. In so far as the
decision in Kgomo suggests otherwise, I am in respectful
disagreement with it.
19. On
the facts in this appeal, the Appellants obtained actual notice of
their rights
as
required in terms of s 129
.
The Appellants take no issue with the contents of the letter from the
attorneys of the Standard Bank advising them of their rights
under
the NCA. That being so, no further steps were required to give notice
under s 129 to the Appellants. The Standard Bank application
was
served on the Appellants on 5 May 2011.
[66]
The
Standard Bank application was heard on 1 June 2011. By that time, the
Appellants had been in default under their credit agreements
for at
least 20 days and 10 business days had elapsed since delivery of the
s129 notice on 5 May 2011. By my calculation, some
18 business days
had elapsed.
There
was accordingly compliance by the Standard Bank with the requirements
of ss129 and 130
at the time the Standard Bank application was heard on 1 June 2011.
The default judgment was thus not erroneously sought and granted.
And
for these reasons also this appeal must fail.
”
[46]
As reflected earlier, I too would welcome a
legislative amendment that would enable a credit provider who
realises that an error
has crept in with the default notice process,
to fix the error and seek forgiveness without having to approach the
court, but I
disagree with the solution in
Benson
,
with respect.
Conclusion
[47]
With great respect, for the reasons already set out, non-compliance
with
section 129 is not cured by attaching proof of purported
compliance with section 129 to a summons, an application for default
judgment,
or for summary judgment. With respect, the flaws in that
reasoning are the following:
[47.1]
I have already addressed the limits on statutory interpretation, and
that
the judiciary should not step into the legislative terrain. I
have to add, with respect, that decisions by the Constitutional Court
and by the SCA must be applied by lower courts. It is not a matter of
substance over form to find that non-compliance with section
129
cannot simply be overlooked and that a court does not have such a
discretion;
[47.2]
Compliance with sections 129 and 130 is not
elective, but compulsory. The net effect of
Phalafala
,
Ringani
,
Mthembu
,
Jardin
e,
Wentzel
,
Shongwe
and
Benson
is that the provisions in the NCA (as interpreted by the
Constitutional Court and the SCA) that require prior notice in terms
of section 129, before proceedings may be launched, are elective. Of
course, one could tweak this simplistic summary of the reasoning
by
adding provisos such as that there must have been an attempt to
comply with section 129 and/or that there must have been a mere
error
before one could follow the reasoning in those cases. Even such a
more sophisticated formulation, in my view would still
boil down to
the effect of the judgment being that compliance with sections 129
and 130 is elective, not compulsory. I respectfully
disagree;
[47.3]
The NCA in fact makes no provision for the
curing of the non-compliance with section 129, other than a stay of
proceedings until
a court order in terms of section 130(4) is given
effect to. The wording of the NCA is that if the credit provider has
not complied
with section 129, the court must adjourn the matter
before it. This gives effect to the purpose of the notice under
section 129
of the NCA, and ensures that proper notice of default is
given;
[47.4]
The NCA does not provide for a parallel process (court proceedings
and compliance
with the NCA happening at the same time), but for a
series of processes commencing with the default notice. The intent is
to make
a creditor take steps in series, to slow down debt recovery
for alternate solutions to be considered by the credit receiver;
[47.5]
Attaching a section 129 default notice to a
summons, or application for payment, for default judgment or for
summary judgment is
not notice to a consumer of default, advising her
or him what options she or he may have. It does not bring about a
pause;
[47.6]
The very purpose of such an attachment is
to prove prior compliance with section 129 and no notice is given to
the credit receiver
that she or he has time to consider alternate
steps whilst litigation is paused;
[47.7]
Accordingly, nothing could be deduced from
the lack of a reaction by the credit receiver to the notice in terms
of section 129 attached
to the summons, or application for payment,
for default judgment, or for summary judgment. She or he is not
called upon to react
to the notice; and
[47.8]
The law requires of the creditor, as part
of its cause of action, to allege compliance with section 129 of the
NCA. This judgment
does not address the question if the summons must
be amended to reflect due compliance with section 129 and 130 after a
court order
in terms of section 130(4). The question did not serve
before me.
[48]
I
do not have to follow the full court decision in
Benson
as this matter is distinguishable. The matter before me included a
defence that the summons is excipiable. Such a defence was not
addressed in
Benson
.
The issue of an excipiable summons was considered in another full
court decision in
African
Bank Ltd v Myambo NO and Others
[67]
(as set out in
Blue
Chip 2 (Pty) Ltd t/a Blue Chip 49 v Ryneveldt and Others
).
[68]
African
Bank
remains a full court decision despite being a split decision, and I
may elect to follow it. See
Fellner
v Minister of the Interior
1954 (4) SA 523
(A) at 538D. In my view, by applying
African
Bank
,
I also apply the relevant decisions in the Constitutional Court and
the SCA referred to earlier herein, an approach that gives
proper
effect to the NCA. It would not promote a speedy resolution of this
matter if I only to dismiss the application and not
also make an
order addressing the non-compliance with the NCA.
[49]
I make the following order:
1.
The application for summary judgment is
dismissed;
2.
The defendant is granted leave to defend
with effect from date of this judgment;
3.
The defendant is to deliver its
consequential pleading within the time allowed in the Uniform Rules
of Court;
4.
The action proceedings are stayed until ten
business days after the plaintiff, in due compliance with sections
129 and 130 of
National Credit Act 34 of 2005
, has served a notice as
contemplated in
section 129(1)(a)
of the
National Credit Act on
the
defendant at […], Lenasia South in the manner contemplated in
section 129(5)
of the
National Credit Act;
5.
Costs
are to be costs in the cause.
DP de Villiers AJ
Heard
on:
27
February 2020
Delivered
on:
14
April 2020 electronically, by e-mail
On
behalf of the Applicant:
Adv C
Denichaud
Instructed
by:
Jay
Mothobi Inc
On
behalf of the Respondents:
Mr R
Zimerman
Instructed
by:
Taitz
& Skikne
[1]
2013
JDR 0688 (GSJ).
[2]
1967
(1) SA 466
(D) at 469C.
[3]
1949
(4) SA 873 (C).
[4]
2019
(3) SA 341 (CC).
[5]
Para
33-35.
[6]
1995
(1) SA 215
(T)
.
[7]
Not
relevant in this case, a provision dealing with debt review.
[8]
This
sub-section was only added with effect from 13 March 2015 by section
32 of the National Credit Amendment Act 19 of 2014.
[9]
This
sub-section also was only added with effect from 13 March 2015 by
section 32 of the National Credit Amendment Act 19 of 2014.
[10]
This
sub-section also was only added with effect from 13 March 2015 by
section 32 of the National Credit Amendment Act 19 of 2014.
[11]
This
sub-section was added with effect from 13 March 2015 by section 33
of the National Credit Amendment Act 19 of 2014.
[12]
The
meaning of “
may
”
in this instance is addressed later herein.
[13]
2019
(1) SA 403
(SCA) para 28.
[14]
2014
(3) SA 56
(CC) para 18.
[15]
“
20
See Wary Holdings (Pty) Ltd v Stalwo (Pty) Ltd and Another
2009 (1)
SA 337
(CC)
(2008 (11) BCLR 1123
;
[2008] ZACC 12)
in para 61; and
Mistry v Interim Medical and Dental Council of South Africa and
Others
1998 (4) SA 1127
(CC)
(1998 (7) BCLR 880
;
[1998] ZACC 10)
in
paras 17 – 18
.”
[16]
“
21
Section 2(1) states that '(t)his Act must be interpreted in a manner
that gives effect to the purposes set out in section 3'.
I set out
those purposes in [19] – [21] below
.”
[17]
“
22
See generally Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs and Others
2004 (4) SA 490
(CC)
(2004 (7) BCLR
687
;
[2004] ZACC 15)
.”
[18]
“
23
In S v Zuma and Others
1995 (2) SA 642
(CC)
(1995 (1) SACR 568
;
1995
(4) BCLR 401
;
[1995] ZACC 1)
Kentridge AJ, in paras 17 – 18,
stated:
'I am well aware of
the fallacy of supposing that general language must have a single
''objective'' meaning. Nor is it easy to
avoid the influence of
one's personal intellectual and moral preconceptions. But it cannot
be too strongly stressed that the
Constitution does not mean
whatever we might wish it to mean.
We must heed Lord
Wilberforce's reminder that even a constitution is a legal
instrument, the language of which must be respected.
If the language
used by the lawgiver is ignored in favour of a general resort to
''values'' the result is not interpretation
but divination.'
While
these remarks referred to constitutional interpretation, they apply
even more forcefully in relation to statutory interpretation
generally. See also Investigating Directorate: Serious Economic
Offences and Others v Hyundai Motor Distributors (Pty) Ltd and
Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit
NO and Others
2001 (1) SA 545
(CC)
(2000 (2) SACR 349
;
2000 (10)
BCLR 1079
;
[2000] ZACC 12)
in paras 23 – 24 and 26
.”
[19]
2011
(4) SA 42
(CC) para 28.
[20]
2019
(3) SA 341 (CC).
[21]
Para
43.
[22]
2012
(5) SA 142 (CC).
[23]
2014
(3) SA 56 (CC).
[24]
Para
45.
[25]
Para
45.
[26]
Para
22.
[27]
Para
24.
[28]
Para
34
[29]
2014
(1) SA 604 (CC).
[30]
Para
41.
[31]
2016
(6) SA 102
(SCA) para 16-20.
[32]
Para
16.
[33]
Para
17.
[34]
“
10
Beets v Swanepoel
[2010] ZANCHC 55
.”
Also
reported as [2010] JOL 26422 (NC).
[35]
“
11
Rossouw and Another v FirstRand Bank Ltd
2010 (6) SA 439
(SCA)
([2010] ZASCA 130) para 38
”.
[36]
2014
(4) SA 394
(SCA) para 23.
[37]
2014
(5) SA 16 (SCA)
[38]
2011
(3) SA 581
(SCA) paras 8, 9 and 14.
[39]
[2016]
ZASCA 9.
[40]
Naidoo
v Standard Bank of South Africa
[2017]
ZAGPPHC 780 para 19.
[41]
It
may be questioned if time has not come to develop the Common Law for
one unitary High Court for our country, as opposed to
the remnants
of colonies and old Boer Republics determining which courts judges
must follow.
[42]
2010
(6) SA 298 (GNP).
[43]
310I-311B.
[44]
2016
(2) SA 115 (GP).
[45]
Standard
Bank v Jardine
[2014] ZAGPPHC 790.
[46]
2016
(2) SA 184 (GP).
[47]
[2018]
ZAGPPHC 583.
[48]
Para
17.
[49]
Para
18.
[50]
Para
18.
[51]
2013
JDR 0688 (GSJ).
[52]
“
12
Majola v Nitro Securitisation 1 (Pty) Ltd)
2012 (1) SA 226
SCA para
[19]
.”
[53]
[2013]
ZAGPJHC 307 para 9.
[54]
[2013]
ZAGPJHC 238 para 11-12.
[55]
2014
JDR 2129 (GP) para 31.
[56]
[2017]
ZAGPJHC 63 (6 March 2017) para 13-14.
[57]
2017
JDR 0453 (GJ).
[58]
Ringani
para
7;
Jardine
para 31;
Mthembu
para
11;
Wentzel
para
13;
and
Shongwe
para
26
[59]
Phalafala
para
10;
Ringani
para
8;
Mthembu
para
10-11; and
Wentzel
para
13.
[60]
Para
15.
[61]
Para
16.3-16.10.
[62]
Para
17-20
[63]
Para
22
[64]
Para
23-25.
[65]
2019
(5) SA 152
(GJ).
[66]
The
date when the application for default judgment was served.
[67]
2010
(6) SA 298 (GNP)
[68]
2016
(6) SA 102
(SCA).