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[2010] ZAGPPHC 272
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Keenan-Smith and Another v Changing Tides 17 (Pty) Limited N.O (13381/2009) [2010] ZAGPPHC 272 (17 June 2010)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case
No: 13381/2009
Date
heard: 14/06/2010
Date
of judgment: 17/06/2010
In
the matter between:
Richard
Evan
Keenan-Smith
.............................................................................
1sl APPLICANT
Bianca
Keenan-Smith
......................................................................................
2nd APPLICANT
and
Changing
Tides 17 (PTY) Limited
N.O.
................................................................
RESPONDENT
In
re:
Changing
Tides 17 (PTY) Limited
N.O.
......................................................................
PLAINTIFF
and
Richard
Evan
Keenan-Smith
...........................................................................
1st DEFENDANT
Bianca
Keenan-Smith
....................................................................................
2nd DEFENDANT
JUDGMENT
DU
PLESSIS J:
Based
on a home loan secured by a mortgage bond over their property, the
applicants owe money to the respondent. The applicants
fell into
arrears with the repayment of their bond instalments. The respondent
issued summons claiming payment of the amount owing.
Despite service
of the summons on them in terms of the court rules, the applicants
did not enter a timely appearance to defend
the action. On 17 June
2009 the respondent obtained default judgment against the applicants.
The applicants now apply for the rescission
of the default judgment.
The respondent opposes the rescission.
As
will appear later, the applicants contend that the default judgment
should be set aside as the respondent proceeded against them
and
obtained judgment contrary to the provisions of the National Credit
Act, 34 of 2005 ("the NCA"). It is not in issue
that the
loan to the applicants is a credit agreement in terms of the NCA and
that the respondent is a credit provider.
The
chronological sequence of events leading up to this application is of
central importance. On 8 August 2008 the applicants applied
for debt
review under the provisions of section 86 of the NCA. I shall refer
to this application for debt review as the first application.
The
respondent was duly notified of the first application on 11 August
2008. After they had made the first application, the applicants'
income structure changed. The debt counsellor, Ms Van Rooyen, advised
them to make a new application for debt review. Accordingly,
the debt
counsellor
made no proposal pursuant to the first application and it was not
referred to the Magistrate's Court under the provisions
of section 86
of the NCA.
Following
the debt counsellor's advice, the applicants on 10 December 2008 made
a second application for debt review. On 11 December
2008 the debt
counsellor, as is required by section 86(4)(b)(i) of the NCA,
notified the respondent of the second application.
On
30 January 2009 the respondent gave notice to, inter alia, the debt
counsellor and the applicants of its decision to terminate
the debt
review as provided for in section 86(10) of the NCA. The notice
pertinently refers to the first application. In any event,
the
respondent was at that stage not entitled to terminate the debt
review in respect of the second application. That is so because,
when
the respondent gave notice to terminate the debt review, sixty
business days after the date on which the applicants made the
second
application had not passed (See the proviso to section 86(10)). It is
of note that in response to the respondent's section
86(10) notice,
the debt counsellor wrote to it and pertinently drew attention
thereto that the termination could only apply to
the first
application and not to the second.
On
25 February 2009 the debt counsellor found the applicants to
over-indebted as provided for in the NCA. The respondent was notified
of this finding. It is not in issue that the second debt review is
now pending in the Magistrates' Court.
Contending
that it had cancelled the debt review, the respondent issued summons
against the applicants on 11 March 2009. The summons
was served on
the applicants by affixing it to the principal door of their
residence on 13 March 2009. The applicants do not say
exactly when,
but they admit that the summons came to their notice. I assume in the
respondent's favour that the applicants took
notice of the summons on
13 March 2009. The applicants immediately handed the summons to their
debt counsellor who advised them
that they would have to appoint an
attorney to defend the action. Being over-indebted, the applicants
did not have the funds that
would have enabled them to instruct an
attorney. Only on 3 July 2009 were they in a financial position to
instruct their present
attorneys of record. On 7 July the attorneys
entered an appearance to defend the action.
When
the applicants' attorneys entered the appearance to defend, default
judgment had already been granted (on 17 June 2009). A
warrant of
execution had also been served on the applicants on 6 July. It
follows that the applicants became aware of the judgment
on 6 July
2009. They informed their attorney who required a further deposit so
as to enable him to apply for rescission of the
judgment. The
applicants were unable to make the deposit at that stage. They did so
later, and the present application was launched
in September 2009.
In
terms of rule 31(2)(b) of the court's rules, the application had to
be brought within 20 court days from 6 July 2009, when the
applicants
learnt of the judgment. It follows that the present application is
11/2 months out of time. In my view the delay is
adequately
explained. It is self evident that, having been found to be
over-indebted, the applicants needed a reasonable time within
which
to raise the money to apply for rescission of the judgment. The time
they took is reasonable in the circumstances.
The
same applies to the explanation for the applicants' default.
For
reasons stated earlier, the respondent did not terminate the second
debt review. It follows that when it issued summons, the
applicants'
second application for debt review was pending. In terms of section
88(3) of the NCA the fact that the respondent had
received notice of
the second debt review application precluded it from proceeding
against the applicants to enforce the credit
agreement. It follows
that the applicants have also set out a defence to the respondent's
claim.
For
the respondent Mr Prinsloo submitted that the second debt review
application should not be allowed to preclude the respondent
from
proceeding against the applicants. Counsel argued that the applicants
should not be allowed to frustrate the respondent's
right to
terminate a debt review by the simple expedient of re-applying for
debt review. On the facts of this case that is not
what happened: The
second application for debt review was made nearly two months before
the respondent sought to cancel the first
debt review. It is true, as
was submitted, that the applicants should have withdrawn the first
application before they made the
second. The fact that there may have
been two applications pending at the same time did not, however,
entitle the respondent simply
to disregard the second application.
The court also cannot ignore the second application. It is pending
and has not been terminated.
Moreover, the applicants, while they did
not formally withdraw it, clearly abandoned the first application and
there is no basis
for holding that the second is not a bona fide
application based on new facts.
The
application for rescission must therefore succeed. As to costs, the
applicants are seeking an indulgence. They did not in their
founding
papers inform the court of the first application. While I do not hold
that they did so in bad faith, they should have
given the full
picture in the founding papers. On the other hand, the respond, fully
aware of the second application, proceeded
to obtain judgment on the
basis that it had terminated the first debt review. The respondent
should have disclosed in the summons
that there is a second debt
review pending. If it had been advised that, for some reason or
another the second application did
not preclude it from proceeding
against the applicants, allegations to that effect should have been
made in the summons. In the
circumstances the fair order as to costs
to me seems to be to order that costs of this application be costs in
the cause.
In
the result the following order is made: 1. The judgment that was
granted by this court on 17 June 2009 in case number 13381/2009
is
rescinded.
2.
The costs of this application shall be costs in the action under case
number 13381/2009.
B.R.
du Plessis
Judge
of the High Court
On
behalf of the applicant: Stadler Attorneys
C/O
Christo Coetzee Attorneys 1009 Church Street Hatfield Pretoria
Adv:
R. Raubenheimer
On
behalf of the Respondent: Edelstein - Bosman Attorneys
220/2
Lange Street New Muckleneuk Pretoria
Adv:
D. Prinsloo