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[2010] ZAECPEHC 50
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First Rand Bank Ltd v Fillis and Another (1796/10) [2010] ZAECPEHC 50; 2010 (6) SA 565 (ECP) (17 August 2010)
IN THE HIGH COURT OF SOUTH AFRICA NOT
REPORTABLE
EASTERN CAPE, PORT ELIZABETH
Case No.:
1796/10
Date
Heard: 3 August 2010
Date
Delivered:17 August 2010
In
the matter between:
FIRSTRAND
BANK LIMITED
Plaintiff
and
ANDR
é
ALROY FILLIS
First Defendant
MARILYN ELSA
FILLIS
Second Defendant
JUDGMENT
EKSTEEN
J:
[1]
The
plaintiff seeks summary judgment against the defendants, who are
married to one another in community of property, in the sum
of R101
508,58, together with interest thereon. The debt arises from a
credit agreement, as defined in the National Credit Act,
34 of 2005
(herein “the Act”) and is secured by a mortgage bond
registered over certain immovable property situated
at Newton Park,
in Port Elizabeth. The plaintiff accordingly seeks a further order
declaring the property to be executable.
[2]
Neither
the existence nor the extent of the debt is in dispute. It is common
cause that at some stage during 2009 the defendants
fell upon bad
economic times. They approached a debt counsellor and made
application for debt review in terms of the provisions
of section 86
of the Act. The process took its course and on 21 October 2009 the
magistrate for Port Elizabeth made an order restructuring
the
defendants’ debts (“the re-arrangement order”)
pursuant to a proposal of the debt counsellor in terms of
section
86(7)(c) of the Act. The order which the magistrate made was “that
the consumer pay, with effect from 30/11/09 the
amount of R2 850.00
(per month)”.
[3] I
pause
to mention that although the order that the magistrate made enjoins
the defendants to pay such amounts with effect from 30
November 2009
the defendants had in fact reduced their payments prior to the
re-arrangement order and made payment through the
Distribution Agent
on the strength of the proposal of the debt counsellor.
[4]
In
its summons the plaintiff alleges that the defendants are both in
default of the credit agreement and have defaulted on the
re-arrangement order. In this regard I was advised from the Bar that
the parties are agreed that over the period from the date
of the
granting of the re-arrangement order to the issue of summons on 23
June 2010 the defendants have paid R3 550,00 less, in
total, than the
amount stipulated in the re-arrangement order. The plaintiff
accordingly alleges that the defendants are in default
of the order
and that it is entitled to exercise or enforce, by litigation, its
rights and security under the credit agreement
by virtue of the
provisions of section 88(3) of the Act. I shall revert to this
section below.
[5]
The
defendants raise three defences to the application for summary
judgment. The first is essentially a point
in
limine.
The defendants allege that Mr Freeborough, who attested to the
affidavit filed in support of the application for summary judgment
in
terms of the provisions of rule 32(2), has not established that he is
authorised to depose to the affidavit. On this basis
it is argued
that the application is not properly before me.
[6]
The
second defence raised relates to the interpretation of the Act. It
is contended that once an order is made to re-arrange the
defendants’
debt no legal action may be taken by the credit provider to enforce a
credit agreement which is subject to the
order unless and until the
re-arrangement order has been rescinded in terms of the provisions of
section 36 of the Magistrates’
Court Act, 32 of 1944,
irrespective of the fact that the defendants are in breach of the
provisions of the re-arrangement order.
[7] Finally, it was
argued that, notwithstanding that the defendants have failed to meet
the required payments stipulated in the
re-arrangement order, they
should nevertheless not held to be in default.
[
8] I
consider first the point
in
limine
.
A simple summons was issued in this matter by Attorneys Spilkins in
which they describe themselves as “attorneys for the
plaintiff”. The summons directs the sheriff to inform the
defendants that “
FIRSTRAND
BANK LIMITED
...
institutes action against the Defendants.” Upon receipt of
the notice of appearance to defend the action Attorneys
Spilkins
launched the application for summary judgment. The affidavit as
required in terms of rule 32(2) was attested to by one
Freeborough.
Mr Freeborough states that he is employed by the plaintiff as
“Operations Manager Arrears – Legal”
and that he is
duly authorised to depose to said affidavit.
[
9] In
response to this averment the first defendant states as follows:
“
I have no knowledge of the
facts contained in this paragraph and I am as a consequence unable to
admit same. I put the Applicant
to the proof hereof.
However, I am
advised that any person acting on behalf of a legal person must be
authorised to do so either by pre-incorporation
charter or by way of
a specific resolution of that company. In the instance no such basis
of authority is attached. I submit
that under the circumstances the
deponent has no
locus
standi
to depose to this affidavit.”
[
10] Mr
Curtain
,
who appears on behalf of the defendants, supports this contention in
argument and relies upon the judgment in the matter of
Pretoria
City Council v Meerlust Investments (Pty) Limited
1962 (1) SA 321
as authority. That case concerned a petition for
leave to appeal. At p. 325 Ogilvie Thompson JA stated as follows at
C-F:
“
The question of authority
having been raised, the
onus
is on the petitioner to
show that the prosecution of the appeal in this Court has been duly
authorised by the Council; that it is
the Council which is
prosecuting the appeal, and not some unauthorised person on its
behalf (cf.
Mall (Cape)
(Pty.)
Ltd
v Merino Ko-operasie Bpk.
,
1957
(2) SA 347
(C)
at
pp. 351-2).
As was
pointed out in that case, since an artificial person, unlike an
individual, can only function through its agents, and can
only take
decisions by the passing of resolutions in the manner prescribed by
its constitution, less reason exists to assume, from
the mere fact
that proceedings have been brought in its name, that those
proceedings have in fact been authorised by the artificial
person
concerned. In order to discharge the abovementioned
onus
,
the petitioner ought to have placed before this Court an
appropriately worded resolution of the Council. … This the
petitioner
has failed to do so.”
[11] What was in issue in that matter
was the authority to lodge the petition, not the authority to depose
to an affidavit. It
is important to recognise that the
Pretoria
City Council
matter
concerned a petition to the Supreme Court Appeal which was decided
in1962 in accordance with the Rules of Court which applied
at the
time. The authority to prosecute any action in the High Court is
governed by rule 7 of the Uniform Rules of Court. Prior
to 1987 the
rule required the attorney acting on behalf of a plaintiff to file a
power of attorney with the registrar before the
issue of summons.
The extent of the mandate of the attorney was to be set out in this
document. Where the power of attorney was
signed on behalf of the
party giving it proof of the authority to sign on behalf of such
party had to be produced to the registrar
who then noted it.
[12] In 1987 the Uniform Rule of this
Court were considerably revised. In terms of the revised rule 7 of
the Uniform Rules of Court
a power of attorney establishing the
authority to act on behalf of a litigant need no longer be filed as a
matter of course. If,
however, an attorney’s authority to act
on behalf of a party is challenged, then in terms of rule 7 of the
Uniform Rules
of Court, the attorney is required to satisfy the Court
that he is properly authorised to act on behalf of the litigant.
Until
he has done so he is precluded from acting further. In order
to do so he is required to produce proof of his mandate, usually a
power of attorney, and, where necessary, an appropriate resolution
authorising the signature of the power of attorney.
[13] The obligation to establish this
authority only arises when the authority to prosecute the process is
challenged. In the present
matter Attorneys Spilkins authority to
prosecute the action and the application for summary judgment has not
been challenged and
is accordingly not in issue. What is contested
is the authority of the deponent Freeborough to depose to an
affidavit. Accordingly
the reasoning in the
Pretoria
City Council
matter
finds no application in this matter. The challenge to the authority
to depose to an affidavit is, in my view, entirely
misconceived.
The same point was raised in the matter of
Ganes
and Another v Telecom Namibia Ltd
2004
(3) SA 615
(SCA)
.
In that matter
Streicher JA disposed succinctly of this argument at 624F-H where he
said.
“
There is no merit in the
contention that Oosthuizen AJ erred in finding that the proceedings
were duly authorised. In the founding
affidavit filed on behalf of
the respondent Hanke said that he was duly authorised to depose to
the affidavit. In his answering
affidavit the first appellant stated
that he had no knowledge as to whether Hanke was duly authorised to
depose to the founding
affidavit on behalf of the respondent, that he
did not admit that Hanke was so authorised and that he put the
respondent to the
proof thereof. In my view, it is irrelevant
whether Hanke had been authorised to depose to the founding
affidavit. The deponent
to an affidavit in motion proceedings need
not be authorised by the party concerned to depose to the affidavit.
It is the institution
of the proceedings and the prosecution thereof
which must be authorised.”
This reasoning is equally applicable
to summary judgment proceedings.
[14] The second argument raised is, in
my view, equally lacking in merit. The Act provides very extensive
protection to a consumer
who has become over-indebted, whether it be
of his or her own making or through circumstances beyond his or her
control. Not only
does a re-arrangement afford him or her
alleviation from the onerous monthly obligations that he or she has
in all seriousness
undertaken to his or her credit providers, but he
or she also enjoys the protection of section 103(5) against the
ravaging effect
of escalating interest whilst he or she remains in
default under the credit arrangement. If, however, he or she fails
to embrace
this opportunity, or he or she is, notwithstanding this
very considerable assistance, unable to comply with his or her
restructured
debt commitment, the Act permits the common law to run
its course.
[15] Thus, once the credit review
process has commenced section 88(3) of the Act prevents a credit
provider from exercising or enforcing,
by litigation or other
judicial process, any right or security under any 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
subsection (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 a court or the
Tribunal.”
[16] It follows, in my view, as a
matter of interpretation, that once the jurisdictional requirement
set out in section 88(3)(a)
coexists with any one of the
jurisdictional requirements set out in section 88(3)(b), the credit
provider is at liberty to proceed
and to exercise and enforce, by
litigation or other judicial process, any right or security under his
credit agreement without
further notice.
[17] On behalf of the defendants it is
argued that because the application for a re-arrangement order in
terms of section 86(7)(c)
is an application governed by the Rules of
the Magistrates’ Court a credit provider cannot proceed to
enforce its rights
until it has first moved to rescind the
re-arrangement order in accordance with the provisions of section 36
of the Magistrates’
Court Act. The provisions of section
88(3), so it is argued, simply give the plaintiff the right to now
apply for a rescission
of the re-arrangement order. This, it is
contended, is so because orders of Court do not automatically fall
away unless specifically
authorised by an Act.
[18] In my view the restraint placed
upon a credit provider in consequence of a credit review process and
a re-arrangement order
does, in this instance, fall away on the
express authority of section 88(3). This interpretation accords too
with the provisions
of section 129(2) of the Act.
[19] For the third argument raised it
is contended that once the debt review process commences in terms of
section 86 of the Act
a consumer is not required to make any payment
at all in respect of his liability under a credit agreement until
such time as a
re-arrangement order is granted or the application for
credit review is rejected. Accordingly, so it is argued, any
payments made
prior to the grant of the re-arrangement order should
in effect, be set off against the obligations which arise subsequent
to the
granting of the order.
[20] In the present instance, it is
argued, payments were made in accordance with the proposal of the
debit counsellor prior to
the re-arrangement order. These, so it is
argued, were not due and if these sums are added to those paid
pursuant to the re-arrangement
order then the defendants are not in
default. Distribution certificates commencing prior to the
re-arrangement order are annexed
in support of this contention. Mr
Curtain
,
in the course of argument, appreciated the difficulty associated with
this reasoning and conceded, correctly in my view, that
it cannot
succeed.
[21] Whatever the obligations of the
consumer may have been during the debt review process, and I express
no view in that regard,
the magistrate hearing the application for a
re-arrangement order is required to investigate the position of the
consumer as it
is at that time. The magistrate is then required to
make a re-arrangement order which finds application from the time the
order
is made, unless otherwise ordered. In this instance the
magistrate ordered that the defendants were to make monthly payments
of
R2 850, “with effect from 30 November 2009”.
This the defendants have failed to do. The defendants are
accordingly
in default of the re-arrangement order.
[22] It follows that I consider that
the defendants have not made out any defence to the plaintiff’s
case. The plaintiff
seeks, however, a further order declaring
certain immovable property executable. In the summons the attention
of the defendants
was specifically drawn, in bold letters, to the
provisions of section 26(1) of the Constitution of the Republic of
South Africa.
The defendants were advised that should they “claim
that the order for execution will infringe“ their right to
housing
it was incumbent upon them to place information supporting
such claim before court. This invitation elicited no response and
the
opposing affidavit is silent in respect of the immovable
property. The court is not informed whether the property is vacant
or
developed. To the extent that it may be developed I am not told
whether it is residential or commercial in nature. If I were to
assume that it is developed as a residential property I am not told
whether it is used as a primary residence or held as a commercial
asset.
[23] In all the circumstances the
defendants have made out no defence to the plaintiff’s claims.
They have set out no facts
upon which I could exercise a discretion
in their favour, whether in respect of the summary judgment or in
respect of the order
declaring the property executable.
[24] I accordingly make the following
order:
The defendants are order to pay to
the plaintiff the sum of R101 508,58.
Defendants are to pay interest on the
amount of R101 508,58 at a rate of 10% per annum calculated and
compounded monthly, from
30 May 2010 to the date of payment.
The property being Erf 2224, Newton
Park, in the Nelson Mandela Bay Metropolitan Municipality and
Division of Port Elizabeth,
Province of the Eastern Cape is declared
executable.
The defendants are ordered to pay the
costs of suit on a scale as between attorney and client.
_________________________
J W EKSTEEN
JUDGE OF THE HIGH COURT
Appearances:
For Plaintiff:
Adv
N Mullins instructed by Spilkins, Port Elizabeth
For Defendants:
Mr
Curtain instructed by J R Bester & Associates, Port Elizabeth