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[2010] ZAGPPHC 119
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Pelzer v Nedbank Limited (2011 (4) SA 388 (GNP)) [2010] ZAGPPHC 119; 14160/09 (17 September 2010)
IN THE NORTH GAUTENG
HIGH COURT,
PRETORIA (REPUBLIC
OF SOUTH AFRICA)
CASE NO.
14160/09
DATE:
17/09/2010
In the matter
between:
SCHALK
PELZER
..............................................................................................
Applicant
and
NEDBANK
LIMITED
.......................................................................................
Respondent
JUDGMENT
GOODEY AJ:
[1]
INTRODUCTION:
1.1 This application
deals with section 88(3) of the NATIONAL CREDIT ACT, 34 OF 2005
("NCA").
1.2 More
specifically, since there is no provision in terms of the National
Credit Regulations that states that a debt review procedure
lapses
because of non-compliance with the time periods, the question is
whether a debt review procedure can carry on indefinitely
or whether
it should lapse once a reasonable time has expired.
1.3 In casu, the
Applicant applies for the rescission of a judgment that was granted
against him in favour of the Respondent on
21 April 2009.
[2] BACKGROUND:
2.1 The Applicant is
indebted to the Respondent in terms of various credit agreements,
which credit agreements are governed by the
provisions of the
National Credit Act, 34 of 2005 ("the Act").
2.2 On 12 July 2008,
the Applicant applied for debt review, utilising Form 16 in terms of
the Act.
2.3 On the same day,
12 July 2008, the Applicant's debt counsellor, one Weideman notified
the Respondent by way of Form 17.1 that
the Applicant had applied for
debt review.
2.4 On 14 September
2008, Weideman found the Applicant to be over-indebted and informed
all his creditors, among them the Respondent,
of his finding.
2.5 On 13 March
2009, the Respondent issued summons against the Applicant and
thereafter, in absence of the Applicant's intention
to defend,
proceeded to obtain default judgment against the Applicant.
2.6 The Applicant
now applies for rescission of the aforesaid default judgment.
[3] THE GIST OF
APPLICANT'S DEFENCE (DEFENDANT IN THE MAIN ACTION):
3.1 The
Applicant's defence is that he had applied for debt review on 12 July
2008, being a date prior to the institution
of action by the
Respondent, and had been found to be over-indebted, the Respondent
was precluded in terms of
Section 88(3)
of the
National Credit Act,
34 of 2005
from instituting action, as it did, in March 2009.
3.2 The
Respondent's answer to the aforesaid is that the debt review
procedure that had been initiated, had lapsed.
[4] APPLICANT'S
ARGUMENT:
4.1 The Applicant
briefly submitted the following argument:
"It is the
Applicant's contention that the Respondent was barred from issuing
summons in terms of section 88(3) of the Act.
The Respondent's
opposition to the Applicant's application is based on its contention
that the Applicant's debt review procedure
had lapsed.
The Respondent
contends that the Applicant's debt review had lapsed because Weideman
did not deliver a completed Form 17.1 to all
credit providers within
five days after receiving an application for debt review (12 July
2008).
On the Respondent's
own version the creditors were informed of the Applicant's
application for debt review by way of Form 17.1 not
on 12 July 2008,
as stated by the Applicant, but on 16 July 2008, still within five
days of the Applicant's application for debt
review.
There is a further
document that was transmitted by Weideman to the Respondent, with the
heading "URGENT REQUEST FOR COB's",
which was transmitted
to the Respondent on 15 August 2008, which also has 'Form 17.1'
appearing on it."
4.2 The
Applicant further argues that the Respondent is mistakenly under the
impression that the last mentioned document
was the form 17.1 notice,
whilst it was merely a request for a certificate of balance.
4.3 The Applicant
also argues that since no provision is made in the NCA Regulations
(or the act) that a debt review procedure lapses
because of
non-compliance with the time limits, no such lapse in casu occurred.
[5] THE
RESPONDENT'S ARGUMENT:
5.1 The
Respondent on the other hand, argue as follows:
"In terms of
Regulation 24(2), part D to the NCA, the debt counsellor for the
Applicant was obliged to deliver a completed
Form 17.1 to all credit
providers that are listed in the application and every registered
credit bureau within five business days
after receiving an
application for debt review in terms of Section 86(1) of the NCA.
The application was
delivered outside the stipulated period of five business days, as the
Applicant had made the application for
review on 12 July 2008 but the
application was only delivered to the Respondent on 17 September
2008.
The Respondent
accordingly advised the Applicant's debt counsellor to withdraw the
(late) application and to resubmit the Form 17.1
application within
the prescribed time period. The Respondent also advised the debt
counsellor that the notification was regarded
as invalid and of no
force and effect with regards to the credit agreements concluded with
the Respondent.
The Respondent
and/or his debt counsellor did not withdraw the application.
In addition, the
debt counsellor failed to make a determination whether the Applicant
is over-indebted within thirty days as prescribed
by Regulation
24(6). According to the Applicant's founding affidavit, the
determination was made on 14 September 2008 which is
45 days from
the date of the Applicant's application for debt review." (My
underlining)
5.2 The Respondent
further argues that the debt counsellor only issued the application
for the arrangement of the Applicant's debts,
as contemplated in
Section 86(7)(c) of the NCA in the Magistrate's Court, during March
2009. Under the circumstances the Respondent
submits, the time taken,
does not constitute a reasonable time.
[6] THE NCA:
6.1 The preamble to
the NCA states that the purpose of the NCA is:
"To promote a
fair and non-discriminatory market place for access to consumer
credit and for that purpose to provide for the
general regulation of
consumer credit and improved standards of consumer information; to
promote black economic empowerment and
ownership within the consumer
credit industry; to prohibit certain unfair credit and
credit-marketing practices; to promote responsible
credit granting
and use and for that purpose to prohibit reckless credit granting; to
provide for debt reorganisation in cases
of over-indebtedness. .."(My
underlining)
6.2 The
purpose of the Act is to be found in Section 3 which, inter alia,
reads as follows:
"The purposes
of this Act are to promote and advance the social and economic
welfare of South Africans, promote a fair, transparent,
competitive,
sustainable, responsible, efficient, effective and accessible credit
marketing industry, and to protect customers,
by -
(a) promoting the
development of a credit market that is accessible to all South
Africans, and in particular to those that have
historically been
unable to access credit under sustainable market conditions;
(b) ...
(c) promoting
responsibility in a credit market by:
(i) encouraging
responsible borrowing, avoidance of over-indebtedness and fulfilment
of financial obligations by consumers; and
(ii) discouraging
reckless credit granting by credit providers and contractual default
by consumers;
(d) promoting equity
in the credit market by balancing the respective rights and
responsibilities of credit providers and consumers;
(e)
(f) ..."
(g) Addressing and
preventing over-indebtedness of customers, and providing mechanisms
for resolving over-indebtedness based on
the principle of
satisfaction by the consumer of all responsible financial
obligations;
(h) Providing for a
consistent and harmonised system of debt restructuring, enforcement
and judgment, which places priority on the
eventual satisfaction of
all responsible consumer obligations under credit agreements."
(My underlining)
6.3 In my opinion it
is clear from the purpose of the act that a consumer who is
over-indebted is granted a "moratorium"
and is assisted to
get his "house in order". But his liability to repay does
not disappear, neither is he entitled to
hang on to the goods which
are the subject matter of the agreement, whilst not paying. On the
contrary, the goods must be sold
to reduce his debt. At the heart of
it all lies that this has to be done (where no time limits are
prescribed) within a reasonable
time. It could never have been the
intention of the legislature that the process can drag on forever and
thus be abused.
6.4 LEVENBERG AJ in:
6.4.1 CASE NO:
51330/09
In the matter
between:
SA TAXI
SECURITASATION (PTY) LTD Plaintiff
and
MBATHA, BHEKITHEMBA
MISCHACK Defendant;
and
6.4.2 CASE NO:
52948/09
In the matter
between:
SA TAXI
SECURITASATION (PTY) LTD Plaintiff and
MOLETE, CHRISTOPHER
QENEHELO Defendant;
6.4.3 CASE
NO:53080/09
In the matter
between:
SA TAXI
SECURITASATION (PTY) LTD Plaintiff
and
MAKHOBA, AARON
VELAPHI Defendant;
(IN THE SOUTH
GAUTENG HIGH COURT, JOHANNESBURG)
(as yet unreported)
says the following (parr 32 - 35):
"[327 The
purpose of the NCA is to provide a more efficient and equitable
credit system by balancing the rights of credit providers
and
consumers. The intention of the legislature was not to shift the
balance of power so much that all power in the credit relationship
would amass into the hands of the consumer.
[33] The NCA is also
structured in such a way as to prevent 'over-indebtedness' and to
provide for more efficient discharge of consumer
debts. If, as the
Defendants maintain, the purpose of the Act was to enable an
over-indebted consumer to retain a lender's depreciating
security
while at the same time not making debt payments, the NCA would make
it significantly more unlikely that over-indebted
consumers would
ever discharge their indebtedness. The restoration of a lender's
security to the lender while it still has value
facilitates the
efficient reduction and discharge of indebtedness. The retention of
deteriorating security has the opposite effect.
[34] A major purpose
of the Act is to assist over-indebted consumers to pay off their
indebtedness. In certain limited circumstances,
the NCA affords them
a moratorium on the repayment of the indebtedness in order to enable
them to get back on their feet. The Act
may also allow consumers to
be relieved of indebtedness that was incurred as a result of reckless
credit.
[35] I stress that
all of these objectives are directed at the consumer's indebtedness -
i.e. the claim for the outstanding deficiency
after realisation of
the lender's securities ("the deficiency claim"). The
intention is not to unfairly deprive lenders
of their security."
(My underlining)
6.5 The
following statements of Masipa J in Standard Bank of South Africa
Limited v Panayotts 2009(3) SA 363 (W) 370 should
also be referred
to:
"[77] In any
event, my view that the NCA does not envisage that a consumer may
claim to be over-indebted whilst at the same
time retaining
possession of the poods which form the subject-matter of the
agreement. Such goods should be sold to reduce the
Defendant's
indebtedness.
[81] The purpose of
the NCA is, inter alia, to provide of the debt re-organisation of a
consumer who is over-indebted, thereby affording
such consumer the
opportunity to survive the immediate consequences of his financial
distress and to achieve a manageable financial
position..." (My
underlining)
6.6 See also
Firstrand Bank Limited v Olivier 2009(3) SA 353 (SECLD).
6.7 HCJ FLEMMING
"FLEMMINGS
NATIONAL CREDIT ACT" (2
nd
Edition) on pages
152 and 153 says the following:
"NOTE:
Firstrand Bank v
Smith, case 24206/08 (WLD) (5.12.2008), decided that a notice to a
credit provider informing him that an application
for
debt-arrangement has commenced, loses its value to prevent the credit
provider from exercising (or enforcing) a right or his
security
(s88
-
3
) if the
s86
process is not followed through to a result at the
s86
-
7
stage within a reasonable time. The basic correctness of the
judgment is not doubted, but it shields only one corner from abuse
by
debtors. (The NCA does not act explicitly against inactivity by debt
counsellors or delays caused by ineffective courts). The
court held
that because no time was prescribed, the lapsing takes place when a
reasonable time has expired. In fact
regulation 24
-
6
requires a
decision under
s86
-
6
within 30 business days after receiving the
application. The 29 business days includes the period from
'receiving' the application
to the decision to take the application
on.
S86
-
6
implies a choice to accept or not to accept the
application. 'Accept' is different from 'receive'. That, read with
r24-2, implies
that the debt counsellor must in effect expeditiously
decide about accepting. That is in line with avoiding opportunity for
debtors
(and for cooperating debt counsellors) merely to cause delay
for creditors. Cf.
S86
-
2
.
The Defendant also
relied on
s130
-
3
-c-l contending that the Plaintiff was prevented from
approaching court because the application was before a debt
counsellor. It
was held that that specific section ceases to apply
once a debt counsellor has given the notice to creditors that is
required by
s86
-
8
(perhaps s
86
-
4
-b was intended). From that time
onwards it is
s88
-
3
that governs the situation. #29 of the judgment."
(My underlining)
6.8 I respectfully
agree with the aforesaid, namely that where no time / time limit is
prescribed, the reasonable time principle
should be applied. [The
reasonable time principle is in any event well-established in our
law].
[7]
SECTION
88(3)
OF THE NCA:
7.1
Section 88(3)
of
the act provides:
"Subject to
Section 86(9)
and (10) , a credit provider who receives notice of
Court proceedings contemplated in
section 83
or
85
, or notice in
terms of
section 86(4)(b)(i)
, may not exercise or enforce by
litigation or other judicial process any right or security under the
credit agreement until:
(a) the consumer is
in default under the credit agreement; and
(b) one of the
following has occurred:
(i) An event
contemplated in sub-section 88(1 )(a) through (c); or
(ii) The consumer
defaults on any obligation in terms of a re-arrangement agreed
between the consumer and credit providers, or ordered
by court of the
Tribunal."
7.2 In view of
paragraph 6 above, I am of the opinion that although no provision in
terms of the National Credit Regulations can
be found that states
that a debt review procedure lapses because of non-compliance with
the time periods, it does however lapse
when a reasonable time has
expired. To my mind this approach is the only way to give effect to
the intention of the legislature,
despite the fact that a lacuna
apparently exists in this regard.
[8] CONCLUSION:
8.1 I have come to
the conclusion that a debt review procedure lapses when a reasonable
time has expired if there was no compliance
with the time periods.
8.2 In casu I have
not been convinced by the Applicant that:
8.2.1 there was
compliance within the prescribed time limits;
8.2.2 a
reasonable time has not expired neither that good cause has been
shown.
8.3 I have therefore
come to the conclusion that the application for rescission should
fail.
8.4 Consequently I
make the following order:
"The
application for rescission of the default judgment is dismissed with
costs".
STADLER ATTORNEYS
Attorneys for
Applicant
C/o Christo Coetzee
Attorneys
1009 Church Street
Hatfield, Pretoria
Ref: C
Coetzee/RVS/SP0008
Ronel van
Rooyen/to/N87151
Attorneys for
Respondent WE AVI ND & WE AVI ND INC.
Weavind Forum 573
Fehrsen Street
New Muckleneuk
Pretoria
Adv for Applicant: R
Raubenheimer
Adv for Respondent:
H R Fourie