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[2010] ZAGPPHC 636
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Keenan-Smith and Another v Changing Tides 17 (Pty) Limited N.O. , In Re: Changing Tides 17 (Pty) Limited N.O. v Keenan-Smith and Another (13381/2009) [2010] ZAGPPHC 636 (17 June 2010)
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
Not reportable
In the matter
between:
Richard Evan
Keenan-Smith
...............................................................................
1
st
APPLICANT
Bianca
Keenan-Smith
........................................................................................
2
nd
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
............................................................................
1
st
DEFENDANT
Bianca
Keenan-Smith
......................................................................................
2
nd
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
1
1
/z months out of time. I n 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