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[2010] ZAGPPHC 105
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African Bank Limited v Additional Magistrate Myambo NO and Others (34793/2008) [2010] ZAGPPHC 105 (9 September 2010)
IN
THE HIGH COURT OF SOUTH AFRICA /ES
(NORTH
GAUTENG HIGH COURT, PRETORIA)
CASE
NO: 34793/2008
DATE:09/09/2010
IN
THE MATTER BETWEEN
AFRICAN
BANK LIMITED APPLICANT
AND
ADDITIONAL
MAGISTRATE MYAMBO N.O. 1st RESPONDENT
KHUMISO
ABEDNEGO SEKETEMA 2nd RESPONDENT
THE
NATIONAL CREDIT REGULATOR 3rd RESPONDENT
JUDGMENT
POSWA,
J
[1]
This is a minority judgment, the majority judgment having been
written by my brother, DU PLESSIS, J, with which judgment my
brother
MA KG OKA, J concurs. Having been partially responsible for a large
number of changes made by DU PLESSIS, J to his original
draft, I find
myself in agreement with much of what appears in his judgment. The
extent to which I disagree with his judgment is
set out in my
comments, which follow hereafter.
Comments
[2]
My first comment is with regard to what has become a minor issue,
viz., DU PLESSIS, J's reference to "some doubt as to
whether
this court has the jurisdiction to entertain the applicant's proposed
declaratory relief. The need to discuss this aspect
was obviated by
the third respondent's counter-claim. I, otherwise, had and still
remain with an open mind as to whether or not
the court has
jurisdiction in such circumstances.
[3]
The Act, in s 3, clearly outlines three purposes, viz., as 1
prefer to number them:
(a)
"to promote and advance the social and economic welfare of South
Africans";
(b)
"to promote a fair, transparent, competitive, sustainable,
responsible, efficient, effective and accessible credit market
and
industry" (emphasis added); and
(c)
"To protect consumers" (emphasis added).
Mindful
as 1 am that the three purposes are of equal status, as they are set
out in the Act, I have deliberately emphasised the
words in
subparagraphs (b) and (c), respectively. I lay great emphasis in the
fairness and transparency of the credit market industry
and the
protection of consumers.
[4]
It is, in my view, not altogether without some justification that the
learned magistrate concluded that the section 58-procedure
(of the
Magistrates' Courts' Act) is contrary to the purposes of the NCA.
This procedure permits the creditor to come before the
clerk of the
court, with a consent document prepared between the creditor and the
debtor, which debtor is not present before the
clerk of the court.
The clerk of the court has to assume that all went well before the
consent document was arrived at. Without
the set of orders made in
the majority judgment, the consumer was, in my view, unprotected from
potential abuse of the section
58 procedure. It should be borne in
mind that the interests of the creditors, on the one hand, and those
of consumers/debtors,
on the other hand, are potentially in conflict.
Due to, in particular, the creditors' financial power and their
capacity to come
together and discuss a general approach with regard
to their interests and status, they are in a position to ensure that
they,
to the exclusion of the consumers, are the beneficiaries of the
section 58 procedure. Consequently, procedures such as the letter
to
be written in terms of the provisions of sections 129 and 130 of the
Act, should be strictly monitored to ensure that they do
not become
subversive of two of the purposes of the NCA, the ones I categorised
as (b) and (c), respectively.
[5]
Clerks of the court and magistrates who do receive consent
applications, being referred to them by clerks of the court, should
not, in my view, assume, from the fact that there is already in
existence an agreement preceding a sectionl29-letter, that the
agreement itself was arrived at fairly. As I have already pointed
out, the majority judgment has, in my view, placed a number of
safeguards in this regard, with which I am in agreement. As I shall
later endeavour to demonstrate, when dealing with some orders
made in
the majority judgment, there are respects in which, in my view, the
safeguards are inadequate.
Orders
[6]
Seeing that 1 am in agreement with most of the orders made in the
majority judgment, I shall confine my comments to those aspects
which
I think ought to be added or in respect whereof I am in disagreement.
It is a matter of great concern to me that the
intervention
of the magistrate depends entirely on the decision of the clerk of
the court, in the sense that it is only after the
clerk of the court
has deemed it fit to refer the application for consent judgment to
him or her that a magistrate can intervene.
[7]
In referring to the "threefold discretion" that a clerk of
the court has in respect of the section 58 procedure, the
majority
judgment states, at pl6:
"If
the papers are formally in order but the clerk of the court has
reason to question the plaintiff's entitlement to judgment,
the clerk
of the court must refer the matter to the court in terms of rule
12(7).
This
interpretation of section 58 ensures that the court retains a measure
of oversight over a procedure whereby clerks of the court
grant
judgments so to speak in the court's name." Whilst I agree with
the sentiment, further significance in this interpretation
lies, in
my view, in the fact that clerks of the court shall not be
constrained to grant judgment where the papers are formally
in order
and that the court will, thus, not be easily by- passed and thus
denied a measure of control, which ought to include ascertaining
that
the protection afforded the consumer, by the Act, the Act is not
compromised
[8]
i am concerned that a number of clerks of the court may not refer
matters to the magistrate simply because they are overwhelmed
by the
process, or too busy to give it the attention it requires or, as
unfortunately sometimes happens, are not mindful of how
significant a
part they play in ensuring that the provisions of the Act, especially
with regard to the element of fairness and
protection of the
consumer/debtor, are complied with by the creditors.
[9]
In the circumstances, I would qualify the sentence in the majority
judgment: "they can grant judgment if the papers are
formally in
order" (emphasis added), by adding the phrase, after "in
order": "and the clerks of the court have
no reason to
question the plaintiff's entitlement to the judgment". The
addition of this phrase would, in my view, highlight,
in the mind of
the clerk of the court, that formal qualification of the application
for consent judgment is no deterrent to the
clerk of the court's
referral to the magistrate.
[10]
In this regard, what the majority judgment views as a mere "note
of caution" (on page 18) is, in my view, likely
to heighten
scepticism on the part of clerks of the court and to cause them to be
slow to refer to magistrates, even where they
ought to, for fear that
such referrals may be seen as not being "a balance approach".
[11]
The full excerpt from the majority judgment, in this regard reads
as follows:
"A
note of caution is necessary: Clerks of the court must follow a
balance approach and they should not simply refer all requests
for
judgment based on credit agreements to the court. Consumers and
credit providers are entitled to the use of the cost effective
section 58-procedure." Whilst there is nothing wrong with the
words contained in the excerpt, I am, as I have already stated,
apprehensive that this warning may create consequences intended by
the majority judgment, in the manner I have already stated.
There is
no risk, in my view, of a high scale referral of applications for
consent judgment, by clerks of the court, to magistrates,
if
suggestions made in this minority judgment were adopted.
[12]
In prayer 1.4, the third respondent requests the following
order:
"Clerks
of the court may refer the request for judgments in terms of section
58 of the court in terms of rule 12(7) of the
Magistrates' Courts'
Rules." In view of the number of instances provided in the
majority judgment, in respect whereof the
clerk of the court must
refer the request for judgment by consent to the magistrate, I am of
the view that it would be inappropriate
to merely order that clerks
of the court "may" refer the request for judgments to the
magistrates. There are instances
where the clerks of the court must
refer the request to the magistrates. In the circumstances, the
following order should, in my
view, be made in respect of prayer 1.4:
"Clerks of the court may, and in certain circumstances must,
refer a request for judgment
in terms of section 58 to the court, in
accordance with the provisions of Rule 12(7) of the Magistrates'
Courts' Rules."
[13]
The majority judgment appropriately sums up the third
respondent's prayer, in 1.3, as follows:
"In
order to obtain judgment in terms of section 58, where the cause of
action arose from a credit agreement in terms of the
NCA, the
plaintiff must:
a.
comply with the provisions of section 58 (prayer 1.3.1);
b.
allege in the request for judgment that the requirements of s 129 and
130 of the NCA have been met (prayer 1.3.3);
c.
attach a copy of the section 129 letter of demand to the application.
(Prayer 1.3.2)"
The
majority judgment sets out, in full, the provisions of s 130(3) of
the NCA. Save for s 130(3) (a), it is not necessary to repeat
those
provisions in this judgment.
[14]
Subsection 130(3) (a) reads as follows:
"(3)
Despite any provisions 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."
Referring
to all the subsections of section 130(3), the majority judgment
states, inter alia, the following:
"It
follows that a credit provider must allege in the summons or in the
letter of demand that each one of the requirements
of section 130(3)
have (sic) been met. In order for the consent to be informed, a
blanket allegation that 'each requirement of
section 130(3) has been
met' will be insufficient. In the particulars of claim each
requirement must be dealt with separately.
If that is not done, the
consumer cannot be taken to have admitted the facts."
[15]
Save to the extent that this refers to s 130(3) (a) of the NCA,
I am in full agreement with the sentiments expressed in
the majority
judgment in this regard. Concerning the latter subsection, I am of
the view that what the plaintiff needs to do is
to state, where that
is the case, that the provisions of sections 127,129 and 131 do not
apply and, briefly, state why that is
the case. If the plaintiff does
not state why the provisions of one or more of these sections do not
apply, the clerk of the court
must refer the application to the
magistrate.
[16]
In the circumstances, I would modify the order made in the majority
judgment, in respect of prayers 1.3.1, 1.3.3 and 1.3.2,
respectively,
on p27 of that judgment, as follows:
"It
is declared that, in order to obtain judgment in terms of section 58
of the Magistrates' Courts' Act, where the original
cause of action
was a credit agreement under the National Credit Act, a plaintiff
must comply with the provisions of section 58
of the Magistrates'
Courts' Act and attach to the request for judgment (Form 5B) a true
copy of the section 129-notice contemplated
in the National Credit
Act and allege in the summons or letter of demand, as the case may
be, that each one of sections 127,129
or 131 of the National Credit
Act has been complied with. Except in the case of section 130(3)(a),
it is not sufficient to make
a general allegation that 'sections 127,
129 and 130 of the National Credit Act have been complied with'. In
instances where the
provisions of sections 127, 129 or 131 do not
apply, the plaintiff should state so in the summons or letter of
demand, as the case
may be, and briefly state why the said provisions
do not apply."
I
deal later in the judgment, with the contents of a section-129
notice, when discussing
prayer
1.5.2.2.6.
[17]
The third respondent prays, in paragraph 1.5.2.2.4 as follows:
"Clerks
of the court and magistrates may interrogate the application for
judgment as to the computation of the admitted debt."
In this
regard, I am of the view that the following order should be made:
"A
clerk of the court who, on the information before him or her, has
reason to believe that the outstanding debt under a credit
agreement
has, despite the consumer's consent to the judgment, not been
computed in accordance with the National Credit Act, must
refer the
application for consent judgment to the court, whereafter the
magistrate may interrogate the application with regard
to computation
of the admitted debt."
[18]
In paragraph 1.5.2.2,5, the third respondent seeks the following
order:
"Clerks
of the court and magistrates may interrogate the application for
judgment so as to establish that affordability calculations
had been
performed before the loan agreement had been entered into." In
respect of this prayer, the majority judgment states
the following:
"
I
have already dealt with reckless credit and over-indebtedness.
In my view a further order in that regard will be confusing and it
is
unnecessary." (p38)
[19]
Whilst I agree with the sentiments expressed in the majority
judgment, with regard to prayer 1.5.2.2.1 (concerning clerks of
the
court and magistrates, as the case may be, being entitled to
interrogate the application for judgment in order to determine
whether or not the credit in question is not an instance of the
granting of reckless credit), it does not appear to me that the
majority judgment makes a clear order in
respect
of that prayer. (pp29-32) There would, therefore, in my view, be no
confusion caused if an order were to be made in respect
of prayer
1.5.2.2.5.
[20]
In any event, I am of the view that this is an important order to
make. In many instances where applications for summary judgment
and
applications for default judgment are made, it often appears that the
credits in question are instances of the granting of
reckless credit.
If clerks of the court are ordered to refer to the court all
applications for consent judgment in respect whereof,
on the
information before the clerk of the court, there is no indication
that affordability calculations were performed by the
court, credit
providers will, in my view, act cautiously, in an endeavour to avoid
delays in their applications, by providing sufficient
information to
indicate that affordability calculations have been performed.
[21]
It is appropriate, in my view, to make the following order in
this regard:
"A
clerk of the court to whom, on the information before him or her, it
does not appear that affordability calculations had
been performed
before the loan agreement was entered into, must refer the
application for consent judgment to the court, which
may interrogate
the application in that regard."
[22]
In prayer 1.5.2.2.6, the third respondent seeks the following
order:
"Clerks
of the court and magistrates may interrogate the application for
judgment so as to establish that the debtor failed
to respond to the
plaintiff's letter of demand issued in terms of section 129 of the
National Credit Act or that the debtor rejected
a proposal made
therein."
[23]
With regard to this prayer (1.5.2.2.6), the majority judgment
states the following, in three paragraphs on page 39 thereof:
"
If
a consumer who has seen
the allegations in the summons or the letter of demand and who has
received meaningful section 129-notice
consents to judgment, he or
she is, ordinarily, taken to have admitted the allegations. In such
cases the clerk of the court will
ordinarily grant judgment if the
request is in order.
There
may be cases in which the clerk of the court, despite compliance with
the above requirements, has reason to believe that,
for instance, the
consumer did not fully understand his or her rights, in such cases
the clerk of the court cannot refuse judgment
because the application
will on the face of it be in order. The clerk of the court with such
reasonable doubt must refer the application
to the court. The court
can then interrogate the application.
Credit
providers could avoid unnecessary referrals to the court by
presenting to the consumer for signature a consent that contains
a
paragraph that addresses the provisions of section 129(l)(a) and
section 130(1). What I have in mind is the paragraph along the
following lines:
7
have received the attached notice in terms of section 129(l)(a) of
the National Credit Act. I understand the credit providers'
proposals
but I prefer to consent to judgment as set out herein."
[24]
In referring to the fact that s 64(1) (b) of the NCA states that the
s 129 notice must be in "plain language", the
majority
judgment states the following:
"Whether
the [section-129] notice is in plain language is, having regard to
section 64(2), a question of fact that depends
on the circumstances
of each case, including the 'class of persons' that the consumer is
part of In a nutshell, the notice must
be meaningful, understandable
and in plain language."
[25]
Although I am in full agreement with the sentiments expressed in the
above excerpt, I am of the view that the "class of
persons"
referred to in the section includes the official languages provided
in the Constitution of the Republic of South
Africa ("the
Constitution"). It is common knowledge that credit agreements
are reached in only one or the other of two
official languages,
English and Afrikaans. The "average literacy skills"
referred to in s 64(2) of the Act, are, for
many if not most of the
people involved with credit agreements, "literacy skills"
in only one or the other of the remaining
(African) official
languages. No matter what "plain language", other than his
or her official language or an official
language of his or her
choice, is used, such debtor cannot, in my view, "be expected to
understand the content, significance,
and importance of the document
without undue effort", in the manner contemplated in s 64(2) of
the Act.
[26]
It follows, therefore, that it is essential, in order to comply with
the requirement in s 64(1) of the Act - viz., that a "plain
language" be used - that, in respect of a person whose official
language is other than English or Afrikaans, such person be
offered a
section 129-notice in the official language of such person's choice.
[27]
The clerk of the court's task, in these circumstances, would be made
easier, in my view, where there is a requirement that
the section
129-notice be in an official language of the debtor's choice and that
it be indicated in the notice itself that the
debtor was offered the
opportunity of reading the notice in an official language of
his/her/its own choice. Absence of such an
indication in the section
129-notice will automatically entitle the clerk of the court to refer
the application to the court. I
would, therefore, suggest that the
letter that the majority judgment has in mind be varied as follows:
"I
have received the attached notice in terms of section 129(l)(a) of
the National Credit Act, in an official language of my
choice. I
understand the credit provider's proposals but I prefer to consent to
judgment as set out herein." The words in
bold are the ones
added to the majority judgment's suggested letter.
[28]
I would, therefore, make the following order, in respect of
prayer 1.5.2.2.6:
"Clerks
of the court and magistrates may interrogate the application for
judgment so as to establish that the debtor, having
been offered
opportunity to read the section 129-notice or to have it read to him,
her or it, in the language of his, her or its
own choice, failed to
respond to the plaintiff's letter of demand issued in terms of
section 129 of the National Credit Act or
that the debtor rejected a
proposal made therein."
CONCLUSION
[29]
Save to the extent that there is conflict between it and what has
been set out in my judgment, I am, in general, in agreement
with the
sentiments expressed in the "Summary" contained in the
majority judgment.
For
J N M POSWA
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Attorneys
for the applicant: SMITH-SMITH ATTORNEYS
Dirma
Building
26
Long Street
KEMPTON
PARK
1620
Counsel
for Applicant: ADV P F LOUW SC
Attorney
for first and second respondents: No appearance
Attorney
for third respondent: MOTHLE JOOMA SABDIA INC
First
floor, Duncan Manor
Cnr
Duncan and Brooks Streets
Brooklyn
PRETORIA
Counsel
for third respondent: ADV P G ROBINSION SC