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[2010] ZAWCHC 199
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Absa Bank Ltd v May, Absa Bank Ltd v Zacpac Warehousing CC, Absa Bank Ltd v Nuet Engineering CC (18440/2010, 18437/2010, 18438/2010) [2010] ZAWCHC 199 (6 September 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
NO: 18440/2010
In
the matter between:
ABSA BANK LIMITED
…......................................................................
Applicant
and
ROBERT
J MAY
…..............................................................................
Respondent
CASE
NO: 18437/2010
ABSA BANK LIMITED
….....................................................................
Applicant
and
ZACPAC
WAREHOUSING CC
….........................................................
Respondent
CASE
NO: 18438/2010
ABSA BANK LIMITED
…......................................................................
Applicant
and
NUET ENGINEERING CC
…...................................................................
Respondent
JUDGMENT HANDED DOWN
ON 6 SEPTEMBER 2010
1.
These
three
ex
parte
applications
to have goods sold to the respondents
attached, served before me
in motion court on Friday, 27 August 2010. It is
appropriate to
briefly set out the facts of each application.
ROBERT
J MAY
2. On 10 December 2009
the respondent entered into an instalment agreement with the
applicant in terms whereof he purchased a
2009 VW Polo. This
agreement is subject to the provisions of the National Credit Act,
Act No. 34 of 2005. Clause 19.2
1
of the agreement provides for the applicant's rights should the
respondent be in default.
3. On 8 March 2010 the
parties entered into a further instalment agreement on identical
terms to the first agreement. This agreement
is in respect of a 2006
Volvo XC90.
4. In respect of the
first agreement, the respondent is in arrear in an amount of R2
696,01, the monthly instalment being R2 777,02,
and in respect of
the second agreement the respondent is in arrear in an amount of R6
262,63, the monthly instalment being R6
258,40.
5. Put differently, the
respondent is in arrear with approximately the amount of one
instalment.
6. On 23 June 2010 a
letter was addressed in terms of section 129 of the National Credit
Act, wherein the respondent was warned,
should he fail to respond,
legal action would be instituted against him,
inter
alia,
for
cancellation of the agreement and return of the goods. A similar
letter was dispatched in respect of the second agreement.
ZACPAC
WAREHOUSING CC
7. On 19 March 2008 the
parties entered into an instalment sale agreement in terms of which
the respondent purchased a MAN truck.
8. Clause 10.3 of the
instalment sale agreement provides that:
"In the event of
any breach of this agreement,
[including
a failure to make payment in terms of this agreement],
if
the seller elects not to act in accordance with 10.2
[to
increase the finance charge rate to the maximum rate],
the
seller may, in addition to any other remedies that it may have in
terms of this agreement or at law:
10.3.1 without notice
terminate this agreement and to retain all payments already made;
and/or
10.3.2. claim, at the
purchaser's cost, the return and possession of the goods, together
with all licensing documents in respect
of the goods, at the
seller's address or at such other address as the seller may have
notified the purchaser of in writing; and/or
10.3.3. claim damages
(which may include immediate payment of all arrear payments plus
finance charges thereon)."
9. On 21 February 2007
the parties concluded an instalment sale agreement in terms of which
the respondent purchased a MAN truck.
The terms and conditions of
the second agreement are identical to the first.
10. On 24 August 2007
the parties concluded an instalment sale agreement in terms of which
the respondent purchased a trailer.
The terms and conditions of this
agreement are also identical to the agreements referred to above.
11. On 31 August 2007
the parties entered into an agreement for the purchase of a trailer,
the terms and conditions again being
identical to the other
agreements.
12. The respondent
appears to be in arrears with between four to six instalments in
respect of the four agreements with the applicant.
13. The agreements are
not governed by the provisions of the National Credit Act.
14. No demand was made
ex
facie
the
papers.
NUET ENGINEERING CC
15. On 13 September 2006
the parties entered into an instalment sale agreement in terms of
which the respondent purchased a
"3CX
TLB Backhoe Loader".
The
terms and conditions of this agreement are identical to that of the
agreements entered into with Zacpac Warehousing CC.
16. On 30 October 2006
the parties entered into an instalment sale agreement for the
purchase of a Toyota Hilux. This agreement
is in Afrikaans, but the
terms and conditions are again identical to the other agreement
entered into between the parties.
17. The respondent
appears to be in arrears by approximately nine instalments.
The
ex
parte
nature
of the application
18. At the hearing I
raised with Mr Knoetze, who appeared for the applicants, my concerns
regarding the ex
parte
aspect
of the applications. The approach by our Courts to ex
parte
applications
have been summarised in
Knox
D'Arcv Ltd and Others v Jamieson and Others
1994 (3) SA 700
(W) at
707J-708A, where Stegmann J said as follows:
"The making of
an order which affects an intended defendant's rights, in secret, in
haste, and without the intended defendant
having had an opportunity
of being heard, is grossly undesirable and contrary to the
fundamental principles of justice. It can
lead to serious abuses and
oppressive orders which may prejudice an intended defendant in
various ways, including some ways that
may not be foreseeable."
19.
On
appeal E M Grosskopf JA, in
Knox
D'Arcv Ltd and Others v Jamieson and Others
[1996] ZASCA 58
;
1996 (4) SA 348
(A)
expressed his agreement with Stegmann J's comments, set out above,
and said:
"I add that the
procedure adopted is even more objectionable if the applicants case
rests largely on untested hearsay"
(at
380G-H).
He continued:
"While it is
probably not correct to say that an application of this sort should
never be heard in camera and without notice
to the respondent (Cf.
Shoba
v Officer Commanding, Temporary Police Camp, Wagendrift Dam, and
Another, Maphanga v Officer Commanding, South African Police
Murder
and Robbery Unit, Pietermaritzburg, and Others.
1995 (4) SA 1
(A)), I
consider that this should happen only in very clear cases where
justice cannot be served otherwise than by depriving
the respondent
of his right to be heard. In the nature of things such cases would
be exceptional."
20. Against this general
background, I turn to the applications which served before me. I
deal with the allegations in the context
of these being ex parte
applications. They are noteworthy in the following respects.
21. The exact selfsame
allegations are levelled against each and every one of the
respondents. The salient allegations are to
the word the same and
are as follows:
"18.1 I have
been in the credit control (sic) for many years. During my period of
employment with applicant I have been actively
involved in the day
to day business activities of the applicant and especially in the
repossession of goods by the applicant.
I speak from experience and
know the signs and consequences of companies (sic) which are in
financial trouble. The respondent
is one such example. The following
facts are relevant to the present application.
22.
I pause to point out
that the application against mr May was against him in
person,
and no attempt was made to adjust the rote allegation. The
affidavit
continues -
"18.2 The
respondent is experiencing extreme financial problems. The
respondent has been unable to keep to its commitments
towards the
applicant for some time and is unable to meet deadlines to settle
the debt."
To
which is appended in the applications against the two company
respondents
"Yet,
the Respondent has not volunteered to return the goods to the
Applicant."
23.
Again
there is no factual basis set out for what is little else than a
conclusion
drawn by the deponent.
2
As set out above, and in respect of mr May, who
appears to have
been in arrears for only one instalment, they are simply
and
patently, at least on the papers before me, incorrect. The
allegations
continue -
"18.3 As a
result of the aforegoing the applicant has no alternative but to
terminate the situation as a result of the respondent's
unacceptable
conduct. I know of no communication from the respondent in which it
seeks indulgence from the applicant to suspend
payment of agreed
instalments.
18.4. The goods
itself is the only security the applicant holds for the said debt.
18.5. The applicant
runs the risk that the goods might be stolen, lost or damaged, with
the result that the applicant might lose
its security. The applicant
is unable to confirm whether the goods are comprehensively insured
at this time. The arrear monthly
instalments have run up to a
substantial amount, and without knowing whether the goods are
insured, or whether the respondent
can afford the insurance
premiums, or whether the respondent is up to date with its insurance
premiums, the applicant is exposed
to huge losses.
24.
The
risk the applicant is running is a risk it has contractually
accepted all along. It does not, by itself, constitute grounds
on
which to grant the relief now sought. The question of insurance, or
the feared lack thereof, is again a contractual issue.
"18.6
On
the other hand the respondent is using the goods to generate an
income, and on the other hand the respondent is not paying
the
applicant the instalments. The applicant cannot tolerate the
situation where the respondent is causing the goods to be used
and
to deteriorate in value whilst the respondent is not paying for it.
25.
The
goods, in respect of Mr May, are first, a 2006 Volvo XC19 2.5 T5C -
presumably a luxury motor vehicle - and a 2009 Volkswagen
Polo.
Again there is nothing to indicate that it is being used to generate
an income.
"18.7
The
goods are wasting assets. The applicant must repossess the goods to
limit its damages. Once the goods are in the possession
of the
applicant, the applicant will be in a position to service the goods,
and sell it at the best possible price, which amount
will be
credited to the respondent's account, which would also be in the
respondent's favour.
26. The goods have all
along been wasting assets and, again, this does not afford a basis
upon which the applicant can seek repossession
of the goods.
27. For good measure,
the following is also added in terms of justification for the
application under the heading
"ex
parte".
"18.16 Should
the respondent receive any form of notice that the applicant is of
intention to remove the goods from its possession
with a court
order, and know that it will have no other option but to hand the
goods over, pending the outcome of the main action,
there
is no doubt that it will frustrate the sheriff's attempts to attach
the goods and remove same from his premises. The applicant
has on
numerous occasions asked the respondent to return the goods but the
respondent has failed to do so
."
28.
In
this regard I point out that the only evidence of any demand
included in the papers, and then only in the application against
Mr
May, was a notice in terms of section 129 of the National Credit
Act, Act 34 of 2005, which was dispatched to the respondent
on 23
June 2010 by registered post. Therein the respondent was forewarned
that should the respondent fail to respond to the letter
"legal
action will be instituted against you for: 1) cancellation of the
agreement; 2) return of the goods which is subject
to the agreement;
3)
payment of the full outstanding balance and/or damages; and 4)
legal costs.
29. There are no other
allegations made in any of the applications which would sustain the
contention that the respondents would
remove the goods. Nor is there
any evidence of the numerous demands made. Ironically one would have
expected, if the applicant's
beliefs are well grounded, that the
respondents would by now have absconded with the goods.
30. In addition, the
certificate of compliance in terms of section 129(1) of the Act,
reflects that Mr May had been in default
for more than 20 days.
"18.17 The
respondent has been unco-operative all along and has not voluntarily
returned the goods, subsequent to breach
of contract. This
application comes as a last resort for the applicant to protect its
rights and security in the goods. Prior
to this application being
launched, the respondent would have received a telephone call
inviting him to either pay or co-operate
or negotiate, and
thereafter would have received a personal visit from a risk
mitigation officer. The fact of this application
is proof that the
respondent failed to co-operate.
31.
There
is no evidence of any such telephone call being made or a visit from
the
"risk
mitigation officer",
having
taken place. The deponent to the affidavit merely asserts that that
is what would have happened, without stating, that,
as a fact that
was what had taken place.
18.18 The applicant's
recent experience with debtors has been that they drive vehicles or
remove goods across the border to neighbouring
countries, each time
they receive notice of an application of this kind.
32. The allegation does
not fit in with the ex
parte
nature
of the relief sought. No notice is to be given in an
"application
of this kind".
The
applicant itself has already given notice, in the application
against Mr May, of its intention when it gave the section 129
notice. That, ironically, would have triggered the very apprehension
which the applicant now states it has. So too would the
numerous
demands that have been directed to the respondents.
33. The applicant seeks
cancellation of the agreement(s) it has with the various respondents
contending
a) As againts Mr May
that:
"The
applicant has duly cancelled the agreements as stated in the
aforementioned section 129 letter, alternatively notice
of
cancellation is hereby given to the respondent".
b) The section 129
letter states as follows:
"The
purpose of this letter is to kindly request payment from you thereof
(the arrears amount).
The
letter continues, as stated above, that:
"Should
you fail to respond to this letter ... legal action will be
instituted against you for 1) cancellation of the agreement".
c) The section 129
letter did not serve to cancel the agreement. In terms of the
letter, cancellation would still be sought in
terms of an
application to court.
d) As against the other
respondents that
"(i)n
the circumstances the Applicant has no alternative but to cancel the
agreement between theparties. This application
and affidavit serves
as notice of cancellation to the Respondent."
34. In
Swart
v Vosloo
1965
(1) SA 100
(A) at 105G Holmes JA said :
"to sum up so
far, it must be taken as settled that, in the absence of agreement
to the contrary, a party to a contract who
exercises his right to
cancel must convey his decision to the mind of the other party; and
cancellation does not take place until
that happens."'
35. The agreements with
Mr May are governed by the National Credit Act and provide
extensively with the remedies available to
the applicant in the
event of default by Mr May - the remedy of cancellation is not a
stipulated remedy.
3
Implicit in the demand made in terms of the section 129 notice,
namely that the applicant may institute legal action for
cancellation
of the agreement, is that notice of such action would
be given and that a Court should order the cancellation. It would
seem
that the cancellation is at the very least ineffective until
the cancellation has been communicated to Mr May.
36. In respect of the
other respondents, their agreements do provide for termination
without notice, but only provide for a claim
to be made for the
return of the goods.
4
37. Though cancellation
may not be a pre-requisite to the grant of the relief (on the
supposition that otherwise a proper case
has been made out), the
respondents may well contend that they do not accept the
cancellation as a valid cancellation, and either
maintain that they
are contractually entitled to the possession of the goods,
alternatively that the return of the goods must
be sought by way of
a claim to be made.
38. It is the
cornerstone of our legal system that a party be afforded the
opportunity to be heard. The
ex
parte
nature
of the procedure envisaged by the applicant cuts through this basic
principle.
39. I am of the view
that the applicant has not made out a proper case for the relief
sought. In addition to what I have already
set out above, I add the
following -
a) The allegations I set
out above levelled against all the respondents, are levelled
mechanically and on identical terms. These
are mostly conclusions
and they lack the underlying facts underpinning such conclusions.
b)
I
pause
to point out that, presumably, and in respect of each respondent,
each would have received a credit clearance from the applicant.
Presumably their credit records were clean, or at least such as
would permit the applicant to make available to them the finances
for the purchase of the goods from the suppliers.
c) The application is
predicated upon the allegation that
"the
applicant's recent experience with debtors has been that they drive
vehicles or remove goods across the border to neighbouhng
countries,
each time they received notice of an application of this kind".
d) I am not prepared, in
each of the cases that served before me, to assume such conduct on
the part of the respondents without
further proof by way of primary
facts which support the apprehension under which the applicant
labours.
40. I have already
herein above set out the principles underlying
ex
parte
applications.
In my view the applicant has not made out a case to bring each of
these applications within the ambit of the requirements
of ex
parte
applications.
41. When I raised my
preliminary views with Mr Knoetze, who appeared on behalf of the
applicant, he requested that I merely issue
an order that the
sheriff
"attach"
the
goods without removing them. This would then serve as a notification
to the respondent of the
"attachment"
and
would allow the sheriff to
"write
the goods up".
42. Again, it would seem
to me that the weight of an order of court is little other than a
threat to the respondents. Of course,
the route suggested by Mr
Knoetze would no afford the applicant of the protection it seeks
against the conduct set out in paragraph
18.19.
"18.19 The
applicant requests the court to authorise immediate removal of the
goods should it be found by the sheriff, since
the applicant has a
reasonable fear that the respondent will jeopardise the applicant's
relief once the goods are attached by
the sheriff. The applicant has
dedicated storage and service facilities, whereas the sheriff not
always has secure facilities.
The applicant can also store goods
much easier that (sic) the sheriff can do so. The benefit of such
storage and service facilities
will go to the respondent.
43. It seems to me that
the order proposed by Mr Knoetze will either have the effect of
depriving the respondents of some of their
rights, without notice,
in which event I am not prepared to grant the order, or it will be
of no effect, in which event I should
not grant the order
44. In the premises the
applications are dismissed with costs.
S. Olivier
1
"19.2
If the Purchaser is in default, the Bank may-
19.2.1
give
the Purchaser written notice of such default and may propose that
the Purchaser refer this 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 this
agreement or develop and agree on a plan to bring repayments up to
date;
19.2.2
commence
legal proceedings to enforce this agreement including retaking
possession of the goods and recover collection costs and
default
administration charges from the Purchaser if -
19.2.2.1
it
has given the Purchaser notice as referred to in clause 19.2.1 above
or it has given notice to terminate any debt review process
under
section 86 of the National Credit Act which may then be underway in
respect of this agreement; and
19.2.2.2
he
Purchaser is and has been in default under this agreement for at
least twenty business days; and
19.2.2.3
at
least ten business days have elapsed since the Bank delivered the
notice contemplated in clause 19.2.2.1; and
19.2.2.4
in
the case of a notice in terms of clause 19.2.1, the Purchaser-
19.2.2.4.1
has
not responded to that notice; or
19.2.2.4.2
has
responded to the notice by rejecting the Bank's proposal; or
19.2.2.4.3
the
Purchaser has not surrended the goods to the Bank in accordance with
clause 15 or in terms of section 127 of the National
Credit Act;
19.2.3
recover
collection costs and default administration charges from the
Purchaser. "
2
See
for instance
Die
Pros (Pty) Ltd and Another v Telefon Beverages CC and Others
2003
(4) SA 207
(C) as to the requirement to set out 'primary facts' from
which 'secondary facts' or conclusions may be drawn. As Van Reenen J
pointed at at paragraph [28]
"Secondary
facts, in the absence of the primary facts on which they are based,
are nothing more than a deponent's own conclusions
(see
Radebe
and Others v Eastern Transvaal Development Board
1988
(2) SA 785
(A) at 793C -E) and accordingly do not constitute
evidential material capable of supporting a cause of action."
3
See
the provisions of clause 19.2 set out above
4
Clause
10.3.1 of the respective agreements