Changing Tides 17 (Pty) Ltd v Hattingh and Another (2213/09) [2010] ZAECPEHC 1 (19 January 2010)

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[2010] ZAECPEHC 1
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Changing Tides 17 (Pty) Ltd v Hattingh and Another (2213/09) [2010] ZAECPEHC 1 (19 January 2010)

FORM
A
FILING
SHEET FOR SOUTH EASTERN CAPE LOCAL DIVISIONJUDGMENT
PARTIES:
Changing Tides v John Gilbert Hattingh
Case Number:
2213/09
High Court:
Eastern Cape Division
DATE HEARD:
24/11/2009
DATE
DELIVERED:
19/01/2010
JUDGE(S):
Roberson J
LEGAL
REPRESENTATIVES –
Appearances:
for the Applicant(s):
Adv P Scott
for the Respondent(s):   Adv  N Mullins
Instructing
attorneys:
for
the
Applicant(s):
Jacques du Preez attorneys
for the Respondent(s):   Pierre Kitching attorneys
CASE
INFORMATION –
Nature of proceedings.
Topic:
Key Words:
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, PORT
ELIZABETH)
CASE NO.
2213/09
In the matter between
CHANGING TIDES 17
(PTY) LTD PLAINTIFF
and
JOHN GILBERT
HATTINGH FIRST DEFENDANT
MAUREEN ANN
HATTINGH SECOND DEFENDANT
DARRYM
HATTINGH THIRD DEFENDANT
SANDY-LEE
HATTINGH FOURTH DEFENDANT
JUDGMENT
ROBERSON AJ
This
was an application for summary judgment. The plaintiff is the
trustee of the South African Home Loans Guarantee Trust (‘the
Trust’). According to the particulars of claim, the first and
second defendants entered into a loan agreement with Blue Banner
Securitisation Vehicle RC1 (Pty) Ltd. (‘Blue Banner’), and the
Trust guaranteed the loan. The first and second defendants in
turn
indemnified the Trust against liability of any kind incurred by the
Trust as a result of the first and second defendants failing
to
perform their obligations under the loan. An indemnity bond was
registered over certain immovable property, in favour of the
Trust.
The first and second defendants failed to perform their obligations
under the loan and the Trust is subject to a claim by
Blue Banner.
The third and fourth defendants concluded deeds of suretyship in
terms of which they bound themselves to Blue Banner
and the Trust for
payment due by the first and second defendants. The plaintiff
instituted action for payment of the outstanding
balance of the loan
and other relief.
The
first and second defendants delivered notices of intention to defend
the action. It was agreed at the hearing of the application
for
summary judgment that the third and fourth defendants were to be
regarded as having delivered notices of intention to defend
and the
application was against all four defendants.
A
number of defences were raised on behalf of the defendants. I intend
to deal with only one, which is that the first and second
defendants
have applied for debt review in terms of s 86 of the National Credit
Act 34 of 2005 (‘the Act’), which it is common
cause applies in
this case. S 88 (3) of the Act provides,
inter alia
, that a
credit provider who has received notice in terms of s 86 (4)(b)(i) of
the Act, subject to the provisions of s 86(9) and (10),
may not
exercise or enforce by litigation any right or security under that
credit agreement. According to the first defendant’s
opposing
affidavit, he and the second defendant applied to a debt counsellor
for debt review on 11 February 2009. Notice of the
application was
given to creditors, including the Trust, in terms of s 86 (4)(b)(i)
of the Act, and the Trust responded by providing
information about
the terms of the loan agreement, the amount in arrears and the
current balance. The debt counsellor’s proposal
regarding debt
re-arrangement was forwarded to the Trust on 23 April 2009 but on 19
May 2009 the Trust gave notice in terms of s
86(10) of the Act to
terminate the review on the basis that no proposal for debt
restructure had been received. The debt counsellor
responded to this
notice of termination by informing the Trust that it had sent a
proposal but had received no reply. On 10 June
2009 the first and
second defendants applied to the Magistrate’s Court for an order
that their estate be declared over indebted
and that their debt be
re-arranged in accordance with a draft order. This application was
made on notice to the creditors, including
the Trust. On 3 August
2009 the Trust wrote to the debt counsellor acknowledging receipt of
the proposal and the offer it contained.
In that letter the Trust
asked for certain information and made a counter-proposal, in terms
of which it would consider accepting
a minimum monthly payment. The
last paragraph of the letter read as follows:
‘Please
be advised that we do not wish to oppose applications unnecessarily
and believe that the parties should try to assist one
another in
finding solutions, however if we cannot come to a solution herein
kindly set the matter down and advise us accordingly.’
It
was submitted on behalf of the plaintiff that the debt review process
had been properly terminated and that was the end of the
matter. No
court order had been made within 60 business days of the application
for review and the Trust was entitled terminate
the review in terms
of s 86 (10) of the Act. S 86 (10) of the Act provides that if a
consumer is in default under a credit agreement
that is being
reviewed, the credit provider may give notice to terminate the review
at any time at least 60 business days after the
date of the
application for debt review.
I do
not think that the matter is as simple as that. The basis of the
termination as set out in the Trust’s notice was that no
proposal
for debt restructure had been received, whereas according to the
opposing affidavit it had. The Trust thereafter appeared
by its
conduct to be participating in the review process and to have waived
the right to terminate the review process. The tone
of the letter of
3 August 2009 was one of an attempt to negotiate, and if no
settlement could be reached, to let the Magistrate’s
Court decide
the dispute. There was no mention in the letter of 3 August 2009
that the review process had been terminated. If
the review process
had not been validly terminated then the defendants could raise the
defence they did.
Put
at its lowest, the opposing affidavit has raised a legal issue
regarding the effect of the notice of termination and it would
not be
appropriate for this court to decide such issue in summary judgment
proceedings. Interpretation of sections of the Act by
the courts is
still developing, with a declaratory order regarding certain
sections, including s 86, only recently having been made
in the case
of
National Credit Regulator v Nedbank Ltd and others
2009 (6)
SA 295
GNP. It was only in that judgment that it was declared that
if a debt counsellor found a consumer to be over indebted (as
allegedly
happened in the present case) that he must refer the matter
to the Magistrate’s Court with the recommendation of
re-arrangement.
I
therefore make the following order:
Summary
judgment is refused.
The
defendants are given leave to defend.
Costs
of the application are to be costs in the cause.
J.M. ROBERSON
ACTING JUDGE OF THE
HIGH COURT
Appearances:
Plaintiff: Advocate P.
Scott instructed by Jacques du Preez Attorneys, Port Elizabeth.
Defendants: Advocate
N. Mullins, instructed by Pierre Kitching Attorneys, Port Elizabeth.
6