Changing Tides 17 (Pty) Ltd v Scholtz and Another (2975/09) [2010] ZAECPEHC 3 (2 February 2010)

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[2010] ZAECPEHC 3
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Changing Tides 17 (Pty) Ltd v Scholtz and Another (2975/09) [2010] ZAECPEHC 3 (2 February 2010)

FORM A
FILING SHEET FOR EASTERN CAPE,
PORT ELIZABETH
PARTIES
:
CHANGING TIDES 17 (PTY) LTD V D R SCHOLTZ + 1
Case
Number:
2975/09
High
Court:
PORT
ELIZABETH
DATE
HEARD:
19
JANUARY 2010
DATE
DELIVERED:
2
FEBRUARY 2010
JUDGE(S):
EKSTEEN
J
LEGAL
REPRESENTATIVES –
Appearances:
for
the Plaintiff(s):
ADV
P SCOTT
for
the Defendant(s):
MR
CURTAIN
Instructing
attorneys:
Plaintiff(s):
JACQUES
DU PREEZ
Defendant(s):
J
R BESTER & ASSOCIATES
CASE
INFORMATION -
Nature
of proceedings
:
Key
Words
:
Summary:
IN
THE HIGH COURT OF SOUTH AFRICA
NOT
REPORTABLE
EASTERN
CAPE, PORT ELIZABETH
Case
No. 2975/09
Date
delivered: 2 February 2010
In
the matter between:
CHANGING
TIDES 17 (PROPRIETARY) LIMITED N.O.
Plaintiff
a
nd
DEON
RIAAN SCHOLTZ
First Defendant
MARIANA
SCHOLTZ
Second Defendant
JUDGMENT
EKSTEEN,
J:
[
1] This
is an application for summary judgment in which the plaintiff seeks
judgment in the amount of R459 648.98, together with interest
thereon, calculated at a rate of 9,8% from 1 September 2009 to the
date of payment and an order declaring certain immovable property
executable.
[2] The debt arises
from a loan advanced to the defendants on 22 June 2007. A certain
immovable property known as Erf 1438 Algoa
Park in the Nelson Mandela
Metropolitan Municipality was duly hypothecated as security for the
loan. The defendants have failed
to timeously and punctually perform
their obligations in terms of the loan. It is not apparent from the
papers to what extent the
defendants have fallen into arrears.
[3] The defendants
admit their liability to the plaintiff in the amount claimed but they
allege that the sum is not yet due and payable.
The defendants state
that they applied for debt review in terms of the provisions of
section 86 of the National Credit Act, 34 of
2005 (herein referred to
as “the Act”) on 29 May 2009. On the same day, 29 May 2009, the
debt counsellor gave notice to all
credit providers as required in
section 86(4)(b) of the Act. The defendants further allege that on
the same day the debt counsellor
found them to be over-indebted and
notified all credit providers, including the plaintiff, of this fact.
On 31 August 2009 the plaintiff
gave notice in terms of section
86(10) of the Act terminating the debt review process. In its notice
it confirmed that the defendants
were in arrears with their loan
repayments and recorded that no payments at all had been allocated to
it via the public distribution
agent in respect of the loan nor had
the defendants maintained the loan repayments. On 20 October 2009
the plaintiff issued summons
in this matter.
[4] The defendants
admit receipt of the notice in terms of section 86(10) of the Act and
the summons, however, they state that they
are lay persons at law and
did not understand the import thereof. In these circumstances they
took these documents to their debt
counsellor who advised that they
should not be concerned as all was under control.
[5] On 23 September
2009, after receipt of the notice in terms of section 86(10) of the
Act, the debt counsellor issued an application
in the Magistrates’
Court of Port Elizabeth proposing that the defendants be declared to
be over-indebted and seeking an appropriate
order in terms of section
87(7)(c) of the Act. It appears from the papers that the matter is
currently pending before the Magistrates’
Court and no order has
been made in terms of the provisions of section 86(7).
[6] Against this
background the defendants state that they are advised that they have
at their disposal two remedies which constitute
bona
fide
defences to the plaintiff’s claim. These defences are set out in
paragraph 14 of the opposing affidavit in the following terms:
“14.1 Section 86(11) of the NCA
provides that ,should a credit provider give notice to terminate a
review and proceed to enforce
an agreement the Court hearing the
matter may order that the debt review process resume. I submit
that under the circumstances
where our debt review application
was brought before the Magistrate outside of the time limits due
to no fault of our own the
Honourable Court may order such debt
review process to proceed;
14.2 Section
129(1)(b) of the NCA provides that the credit provider may commence
legal proceedings to enforce a credit agreement
only once a notice
in terms of Section 129(1)(a) or Section 86(10) of the NCA was
given. However, in subsection 129(2) of the
NCA it is provided
that subsection 129(1) is not applicable to a credit agreement when
there are proceedings regarding that credit
agreement in a Court
that may result in a debt restructuring order. I submit that, when
summons was issued herein and prior
to the notice in terms of
Section 86(1) being received by my husband and I there were
proceedings I Court that may result in a
debt restructuring order
and which proceedings are still underway.”
[7] At the hearing
of the application for summary judgment, Mr
Curtain
,
who appears for the defendants, correctly in my view, acknowledged
that the interpretation of section 129 relied upon in the latter
defence raised is flawed. He abandoned any reliance on this
defence.
[8] In respect of
the former defence, it was not in dispute during argument before me
that the debt review process was validly and
effectively terminated
by the plaintiff’s notice in terms of section 86(10). It is
argued, however, that the High Court may, and
should in the
circumstances, order, in terms of section 86(11) that the debt review
process should resume.
[9] In considering
this argument it is necessary to have regard to the nature of the
debt review process. A consumer who believes
that he is
over-indebted may apply to a debt counsellor to have himself declared
to be over-indebted. Such an application is to
be made in the
prescribed manner and form. (Section 86(1))
[10] The manner is
prescribed in Regulation 24 published in Government Notice 489 of 31
May 2006. The consumer is required in such
an application to
disclose to the debt counsellor all his income, whether from
employment or other sources, all his monthly expenses,
a list of all
debts, disclosing the monthly commitment, the total balance
outstanding, the original amount of the debt, and the
amount in
arrears and all his reasonable living expenses.
[11] The debt
counsellor is then required to evaluate the consumer’s state of
indebtedness and the prospects for responsible debt
rearrangement
(section 86(5)(a)). Any credit provider referred to by such consumer
in his application is required to participate,
in good faith, in the
debt review process and any negotiation designed to result in the
responsible debt rearrangement (section 86(5)(b)).
[12] On the
completion of this process the debt counsellor is required to reach a
conclusion in terms of section 87(7)(a) or (b) or
(c). If he
concludes, as he did in this case, that the consumer is
over-indebted, then, in terms of section 87(7)(c), he must formulate
a proposal recommending that the Magistrates’ Court make one or
both of the orders contemplated in section 87(7)(c)(i) and (ii).
[13] It follows
from the provisions of section 87(7) that the matter is referred by
the debt counsellor to the Magistrates’ Court
to consider the
evaluation and the proposal of the debt counsellor. To this end the
Magistrates’ Court must hold a hearing in
the matter which comes
before it in the form of an application brought by the debt
counsellor in terms of the Rules of the Magistrates’
Court. (See
National
Credit Regulator v Nedbank Limited and Others
2009 (6) 295 (NG) at 304I-305B and 310B-D.) The purpose of this
entire process is for the Magistrates’ Court to provide for
judicial
oversight of the debt review process (see
National
Creditor v Nedcor Limited and Others
(supra)
at
305A-B).
[14] Where a
consumer is in default under a credit agreement which is being
reviewed in terms of the aforestated process, the credit
provider is
entitled to give notice in the prescribed manner to terminate the
review process provided that at least sixty days have
lapsed from the
time that the consumer applied for his debt review. That has
occurred in this case.
[15] Section 86(11) then provides as
follows:
“
(11) If a credit provider who has
given notice to terminate a review as contemplated in subsection (10)
proceeds to enforce that agreement
in terms of part c of Chapter 6,
the Magistrates’ Court hearing the matter may order that the debt
review resume on any conditions
that the court considers to be just
in the circumstances.”
[16] The section
appears to me to make it plain that it is only the Magistrates’
Court hearing the matter which may make such an
order. The reference
to the “Magistrates’ Court hearing the matter” is, in my view,
reference to the Magistrates’ Court
which provides the judicial
oversight over the debt review process. Section 86(11) requires of
the magistrate presiding to exercise
a discretion both in respect of
whether to order the resumption of the process and in respect of the
conditions to be attached to
such further process. In my view it is
only the Magistrates’ Court providing the judicial oversight to the
process that would
have before it all the information which the
consumer was required to provide in terms of Regulation 24 and which
is required in
order to exercise such discretion.
[17] In the
circumstances I do not consider that the High Court hearing an action
under the Credit Agreement is clothed with the authority
conferred
upon the Magistrates’ Court by section 86(11). Section 86(11) does
not provide a defence valid in law to the plaintiff’s
claim where
the process has been validly terminated by a notice in terms of
section 86(10). If relief were to be sought under section
86(11) the
defendants’ would have to apply to the Magistrates’ Court hearing
the debt review process for such an order. This
is has not
occurred.
[18] Notwithstanding
my finding that the applicant has not shown a
bona
fide
defence to the plaintiff’s claim it is trite that the court retains
a discretion in an appropriate case to refuse summary judgment
even
where no defence has been made out.
[19] It has been
held that this discretion should be exercised, not capriciously or on
the basis of mere conjecture or speculation
so as to deprive the
plaintiff of the remedy of summary judgment when entitled to it, but
upon material before the court from which
it appears that the
reasonable possibly exists that an injustice may be done if judgment
is so granted.
See
Breytenbach
v Fiat SA (Edms) Bpk
1976 (2) SA 226
(T) at 229.
[20] It seems to
me, therefore, that a defendant who wishes to ask the court to
exercise its discretion in his or her favour
,
on the basis that the Magistrates’ Court hearing the debt review
application may order that the debt review process resume, must
at
least place sufficient information before the Court to enable it to
assess whether a reasonable prospect exists that the Magistrates’
Court may make such a finding.
[21] In the present
matter no such information has been placed before me. Information
which would clearly be important to the exercise
of my discretion
would include information relating to the total liabilities of the
defendants; the current monthly commitments
of the defendants in
respect of such liabilities; the defendants’ income, if any;
the required living expenses of the defendants;
whether the
property hypothecated is the primary residence of the defendants or
an investment asset; what the extent of the arrears
is; and the
proposal which the debt counsellor has made in respect of the
rearrangement of debts. None of this information has
been placed
before this court. In the circumstances there is nothing before the
court which could lead me to conclude that there
is any reasonable
prospect that a Magistrates’ Court may order the debt review to be
resumed.
[22] In addition to
the claim sounding in money the plaintiff seeks an order declaring
the property hypothecated to secure the loan
to be executable. In
the matter of
Jafta
v Schoeman and Others; Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC), Mokgoro J concluded that in order to ensure the
prevention of unjustified execution against immovable property,
judicial oversight
prior to such execution was appropriate. I
consider accordingly whether this is justified on the papers.
[23] I have already
stated that in this matter there is no evidence to show whether the
immovable property is a primary residence
or an investment asset.
The defendants’, who are represented in this court, have not placed
any information before me to indicate
any other possible means
whereby the debt may be paid. They have not placed before me the
proposal recommended to the Magistrates’
Court by the debt
counsellor or put forward any other proposal which may result in the
repayment of the loan. The debt which the
plaintiff seeks to recover
is not insignificant and it appears from the plaintiff’s notice
given in terms of section 86(10) of
the Act that no payments have
been received by the plaintiff in respect of this debt since the
defendants made application for debt
review in May 2009.
[24] In the
defendants’ favour there is the established fact that a debt
counsellor did in fact consider that the defendants are
over-indebted
as envisaged in section 79 of the Act. Sadly, the unseemly haste
with which he came to this conclusion serves to detract
from the
weight which one might otherwise have afforded this fact. As I have
stated earlier the application was made on 29 May 2009.
On the same
day the debt counsellor concluded that the defendants were in fact
over-indebted. In these circumstances I am driven
to question
whether the process set out in the Act was followed at all. Section
86(5) requires that each credit provider which is
listed in the
application must participate, in good faith, in the review process.
Regulation 24 requires a process of verification
of the information
provided prior to the conclusion being reached. For this process of
assessment the regulations provide that a
debt counsellor has thirty
days to do his evaluation. In the present instance the conclusion
was arrived at on the same day that
the application was received. It
is difficult to imagine how any creditor provider could have
participated in this process. Added
to this the alleged proposal
made to the Magistrates’ Court is not disclosed to this court. On
a consideration of all the evidence
placed before me I am of the view
that this is a case where summary judgment is justified.
[25] In the result:
1. There will be
summary judgment against the defendants jointly and severally, the
one paying the other to be absolved, in the
amount of R459 648.98.
2. The defendants
are ordered to pay interest on the aforestated amount at a rate of
9,8% per annum, compounded monthly in arrears
from 1 September 2009
to date of payment.
3. Erf 1438 Algoa
Park, in the Nelson Mandela Metropolitan Municipality, Division of
Port Elizabeth, Eastern Cape Provision,
in extent 49 square metres,
held by deed of transfer no. T56453/2004 is declared to be
specially executable.
4. Defendants are
ordered to pay the plaintiff’s costs on a scale as between
attorney and client.
_________________________
J W EKSTEEN
JUDGE OF THE HIGH COURT