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[2010] ZAECPEHC 20
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Stow v Firstrand Bank Ltd (Formerly First National Bank of Southern Africa Ltd) and Another (536/2010) [2010] ZAECPEHC 20 (25 May 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE – PORT ELIZABETH)
Case
No.: 536/2010
Date
heard: 20 May 2010
Date
delivered: 25 May 2010
In the matter between:
ANNA
MAGDALENA STOW
Applicant
and
FIRSTRAND BANK
LIMITED
(formerly FIRST
NATIONAL BANK OF
SOUTHERN AFRICA
LIMITED)
First
Respondent
SHERIFF OF THE HIGH
COURT,
PORT
ELIZABETH
Second
Respondent
J U D G M E N T
DAMBUZA,
J
:
This is an application for
rescission of a default judgment granted by this Court against the
applicant in favour of the first
respondent during October 2009. The
debt relates to a loan agreement in terms of which the first
respondent lent money to the
applicant. The loan is secured by a
mortgage bond registered over an immovable property owned by the
applicant. The application
is opposed.
The
application is founded on the ground that the judgment was
erroneously sought by the applicant and erroneously granted by
this
Court
as envisaged in Rule 42 (1) of the Rules of this Court.
The
factual background against which the application is brought is that
during October 2008 the applicant applied to be placed
under debt
review in terms of the provisions of the National Credit Act, Act No
34 of 2005 (
“the
Act”). On 27 February 2009 the first respondent notified the
applicant that it was terminating the debt review
as provided in
section 86 (10) of the Act. During July 2009 the first respondent
served summons on the applicant for recovery
of the debt. It is
common cause that the applicant’s debt review was cancelled in
August 2009. On 15 October 2009 the first
respondent obtained the
judgment which is the subject of this application. On 12 February
2010 the applicant obtained an order
in the magistrate’s court
in the following terms:
“
That
the first and second applicants (the applicant being the second
applicant in that application) debt review be ordered to resume
in
terms of
section 86
(11) of the
National Credit Act
2005
,
as
if uninterrupted
.”
(my emphasis)
The applicant now contends
that the effect of the order of the magistrate was to place the
application for default judgment in
this Court within the ambit of
section 88(3) of the Act, effectively prohibiting the granting of
the judgment.
Section 88(3) of the Act
reads:
“
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 that credit
agreement until:
The
consumer is in default under the credit agreement; and
one
of the following has occurred:
an
event contemplated in subsection (1)(a) through (c); or
the
consumer defaults on any obligation in terms of a re-arrangement
agreed between the consumer and credit providers, or
ordered by a
court or the tribunal.”
Firstly
section 88(3) deals with reckless trading. Further no case has
been made that the first respondent received a notice
of court
proceedings contemplated in sections 83 and/or 85 as provided for in
section 88(3). I therefore agree with the submission
on behalf of
the first respondent that section 88(3) has no application in this
matter.
Section 86 (11) of the Act
reads:
“
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 Magistrate’s court hearing
the matter may order that the debt review resume on any conditions
the court considers to be just in the circumstances.”
1
In
these proceedings the applicant’s case is that the order
granted by the magistrate, re-instating the debt review process
applies retrospectively. Consequently, so the argument goes, when
judgment was granted by this court on 15 October 2009 the applicant
was under debt review and the judgment, having been granted in
error, falls to be rescinded so that the debt to which it relates
can be included in the debt review.
Mr
Moorhouse
who appeared on behalf of the applicant submitted that the effect of
the Magistrate’s court order is that the applicant’s
debt review process is to be treated as if it never lapsed and that
it must be deemed that the debt review process was still
ongoing
when the summons was issued and when judgment was granted.
I do
not agree. It is not in dispute that prior to the grant
ed
of judgment and in particular, from August 2009, to when judgment
was granted, the applicant was not under debt review. It
is not the
applicant’s case that the credit agreement could not, for some
reason, be validly enforced when the judgment
was granted. The
judgment was therefore not granted in error. The applicant’s
contention that on re-instatement, the debt
review process became
applicable to the judgment granted almost four months prior to the
order of re-instatement can simply not
stand. Her reliance on the
words “
as
if uninterrupted
”
in the order of the magistrates court does not assist her. The
agreement has now been enforced. As it was submitted
on behalf of
the first respondent the Act under which the applicant claims
protection applies only to credit agreements (with
certain
exemptions) rather than judgments of courts.
2
I do
not think that it was the intention of the Legislature that
re-instatement of debt review under section 86 (11) of the Act
should nullify or create a fiction which renders valid judgments
granted prior to such re-instatement, ineffective as it was
submitted on behalf of the applicant. Such a process would, in my
view, lead to wanton abuse of the procedures provided for under
section 86 and to chaos. This matter is, in my view, comparable to
Theodore
Peter Damon and Another v Nedcor Bank Limited
an
unreported decision of the
Western
Cape Division, Case No.: 3970/2004
3
in which the applicants sought rescission of a judgment that had
been granted against them in default in respect of a loan secured
by
a mortgage bond registered against immovable property owned by them.
When default judgment was sought the applicants had not
opposed the
application as they had no valid defence. The application for
rescission was now brought in order to “amend
credit records”.
Binns-Ward AJ, as he then was, held that the court had no power
to rescind the judgment and added that
even if it did have such
powers it would not have been proper to give relief which would have
the effect of falsifying credit
record by allowing an impression to
be created that default judgment had never been properly given
against the applicants. Although
the issues are not exactly the same
in this case, in my view the applicant seeks the rescission of
judgement on a similar basis;
namely that a false impression be
created that the judgment against her had been granted improperly so
that she is legible for
the procedure provided for in section 86 of
the Act and in particular that the debt to which the judgment
relates can be included
in the debt review process. That, in my view
is not a proper basis for which this court should order rescission
of the judgment.
The application can therefore not succeed.
Consequently:
The application is
dismissed with costs.
_________________________
N. DAMBUZA
JUDGE OF THE HIGH COURT
Appearances
:
For the
applicant: Adv. A.C. Moorhouse instructed by Pierre Kitching
Attorneys.
For the
respondent:
Adv.
J. Nepgen instructed by Pagdens Attorneys.
1
Part
C of Chapter 6 of the Act relates to debt enforcement by
repossession or judgment
2
See
section 4(1)
3
Also
[2007] JOL 19310
(C)