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[2010] ZAECPEHC 79
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Nedbank Ltd v Barnard (1142/08) [2010] ZAECPEHC 79 (13 December 2010)
Not
Reportable
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE – PORT ELIZABETH)
Case
No: 1142/08
Date Heard: 2/09/10
Date Delivered: 13/12/10
In the matter between
NEDBANK LIMITED
…...........................................................
Plaintiff
and
CLIFFORD NEIL BARNARD
…............................................
Defendant
JUDGMENT
REVELAS
J
[1] This is an application in terms
of Rule 30 of the Uniform Rules of Court, for an order declaring
certain paragraphs of the respondent’s
plea to be irregular
proceedings and to have them struck out, and to grant the respondent
leave to amend his plea, and cost of
suit.
[2] The applicant, as plaintiff,
instituted an action against the respondent, as defendant for payment
of the amount of R1 399 079.99
together with interest thereon at the
rate of 14% per annum from 15 May 2008 to date of payment, and an
order declaring certain
immovable property executable, together with
the costs of suit.
[3] For purposes of convenience in
this application, I will refer to the parties as they appear in the
pleadings.
[4] The plaintiff (a bank) and the
defendant entered into agreement of loan on 11 October 2005. The loan
advanced by the plaintiff
to the defendant was for an amount of R850
000.00, repayable in monthly instalments. The outstanding balance was
to bear interest
at the rate of 1% below the plaintiff’s
mortgage bond rate, as varied from time to time.
[5] The loan was secured by the
registration of a mortgage bond over the defendant’s property.
The loan agreement concluded
between the parties provided that in the
event of the defendant being in breach of any of the conditions of
its terms, the plaintiff
would be entitled to claim payment of all
amounts owing to it, with interest thereon.
[6] On 3 December 2007, the
plaintiff, who is also a credit provider as envisaged in the National
Credit Act 34 of 2005 (“the
Act”) addressed a notice to
the defendant, who had fallen into arrears with his November 2007 and
December 2007 instalments
(the total amount in arrears being R36
094.36), that should the arrears not be paid within 10 days, the full
amount owing, plus
interest thereon at the rate of 13% (Prime –
11%), would be payable. The full amount owing at that stage
(according to the
plaintiff) was R1 373 391.92. The interest would be
calculated on the daily balance and monthly capitalization as from 4
December
2007, to date of payment, both days inclusive.
[7] In the same notice the defendant
was advised, as envisaged by Section 129 of the Act, to refer the
matter to a debt counsellor,
alternatively a dispute resolution agent
consumer court, or a bank ombudsman, with a view to resolving any
dispute under the agreement
or developing and agreeing to a plan to
bring the payments under the agreement up to date.
[8] The defendant remained in
default. Six months later, on 4 June 2008 the Bank issued summons,
claiming of the amount of R1 399
079.99 plus interest thereon and an
order in terms whereof the bonded property be declared executable.
When the defendant entered
his appearance to defend the action, the
plaintiff brought an application for summary judgment which was
dismissed by Eksteen J
on 1 September 2009 and the defendant was
granted leave to defend the action.
[9] In his affidavit opposing the
application for summary judgment, the defendant stated that during
December 2007, realizing his
default (he received the notice on 3
December 2007), he made a payment of R24 000.00 to the plaintiff. The
next amount he paid
was R18 000.00 on 3 April 2008, and R20 000.00 on
5 May 2008 (R42 000.00 for the two months).
[10] After summons being served on
him on 5 June 2008, he said he made enquiries at the plaintiff as to
the state of his arrears
would be as at 30 June 2005. A Mr Burger of
the plaintiff’s legal department advised him that he would be
in arrears in the
amount of R54 000.00 on that date (end of June
2008). Consequently, to extinguish his arrears, he made a payment of
R70 000.00
to the plaintiff on 30 June 2008.
[11] Subsequent thereto, the
defendant stated, he made the following eight payments starting on 2
August 2009, ending on 1 July
2009:
2 August 2008 R18 000.00
17 September 2008 R20 000.00
6 December 2008 R18 500.00
2 January 2009 R18 940.00
4 February 2009 R18 000.00
17 March 2009 R13 004.00
3 June 2009 R12 800.00
1 July 2009 R12 800.00
[12] Annexed to his affidavit was a
“loan statement” issued by the plaintiff on 30 April 2009
for the month of April
2009 which reflects that no amounts were
overdue. The defended contended he had paid all overdue amounts, and
any amounts which
the Bank held him liable for, such as default
charges or enforcing the agreement.
[13] On 25 March 2009, the Bank
notified the defendant that the interest rate applicable to his loan
had been reduced from 13% to
12%. The monthly instalment has
therefore been reduced from R14 626.94 to R13 642.90.
[14] When the default judgment
application was argued, the plaintiff submitted that in terms of the
calculations based on 13% interest,
the monthly instalments would be
R146 000.00 up to 1 April 2009. Therefore, the defendant, if the
aforesaid payments (as reflected
in the annexure) remained in arrears
at all times save in September 2008, when his account would have been
in credit by an amount
of approximately R2000.00.
[15] Because the fluctuations in the
interest rate which may have eventuated between December 2007 and
April 2009 were unknown,
and because there was at least one month in
which the defendant was in credit, and further, the loan statement
reflected that in
April 2009 there were no monies due. Eksteen J
declined to dismiss the defendant’s figures and, the alleged
extent of his
indebtedness.
[16] The defendant relied on Section
129(3) of the Act, arguing that he had reinstated the loan agreement
by making payment after
receipt of the notice, to extinguish his
arrears. The plaintiff did not cancel the agreement.
[17] Section 129(3) provides that a
consumer (such as the defendant) may;
“
(a) at any
time before the credit provider has cancelled the agreement,
reinstate a credit agreement that is in default by paying
to the
credit provide all amounts that are overdue, together with the credit
providers permitted default charges and reasonable
costs of enforcing
the agreement up to the time of reinstatement”.
[18] The plaintiff argued that if a
defendant wished to rely on the aforesaid section and reinstate the
loan agreement as it was
before the entire amount owing was called up
by the bank, it must firstly approach his credit provider (the bank)
and ascertain
the exact extent of his indebtedness, default charges
and the costs associated with the enforcement of the agreement.
Secondly,
the plaintiff submitted, such a defendant must advise the
credit provider of his intention to reinstate the agreement by paying
the amounts so due.
[19] Eksteen J was not persuaded
that reinstatement of the loan had to preceded by some consultation
process not envisaged in Section
129(3) and held that on his
interpretation, a consumer may indeed unilaterally reinstate the
agreement by paying all overdue amounts,
including all charges
referred to in Section 129(3) of the Act.
In
casu,
the
plaintiff was not in a position to enumerate all the charges up to 13
June 2008. The defendant argued that those charges were
covered,
because on 30 June 2008, he paid R26 000.00 in excess of what Mr
Burger of the Bank said his arrears totalled at that
date.
[20] Section 126(3) of the Act
provides that a payment made by a consumer is applied to satisfy
amounts owing in the following order:
Firstly the interest charges
due, secondly the unpaid fees or charges and then thirdly, the
principal debt. If the payments were
applied in the aforesaid manner,
the loan statement issued by the Bank to the plaintiff in April 2009,
was an indication that no
arrears existed at that point. Eksteen J
held that if the loan statement were proved to be correct, then the
defendant, it would
appear, had not fallen into arrears again.
The Defendant’s Plea
[21] Defendant pleaded as follows:
The defendant admitted the debt in
terms of the agreement, the bond registration and also the breach of
the agreement of loan, in
that he failed to punctually pay the
instalments which he was obliged to pay on the due date.
[22] However, the defendant denied
that the certificate of balance relied on by the plaintiff,
accurately reflected his indebtedness
to the plaintiff.
[23] In paragraphs 5.1 and 5.2 of
his plea, the defendant dealt as follows with the plaintiff’s
notice to him in terms of
Section 129 of the Act (annexure “D”):
“
5.1
Save to admit that annexure “D” to the Plaintiff’s
Particulars of Claim is a notice addressed to the Defendant
in terms
of the provisions of
Section 129
of the
National Credit Act, the
Defendant denies that annexure “D” complies with the
requirements of
Section 129
of the
National Credit Act and
puts the
plaintiff to the proof thereof.
The Defendant
specifically pleads that the contents of annexure “D”
to the Plaintiff’s Particulars of Claim
is vague and
embarrassing”.
[24] The plaintiff averred in
paragraph 14 of its particulars of claim that despite the passage of
time referred to in Section 130
of the Act, the defendant has failed
to take any of the steps referred to in that section of the Act. The
defendant pleaded as
follows thereto in paragraph 7 of his plea:
“
7.1
The Defendant denies the contents hereof and puts the plaintiff to
the proof thereof.
7.2 The Defendant
specifically pleads that in response to annexure “D” the
Defendant made the following payments:
R24 000.00 on 28
December 2007.
R18 000.00 on 3
April 2008.
The aforesaid
payments were in excess of the amount due to the Plaintiff in
respect of the November 2007 and December 2007 instalments.
The Defendant further
pleads that on or about 30 June 2008. a duly authorized
representative of the Plaintiff, a certain Mr
Peet Burger, upon the
Defendant’s request advised the Defendant telephonically that
the arrear amount due by him to the
plaintiff was approximately an
amount of R54 000.00.
Upon being so
informed on 30 June 2008, the Defendant paid and amount of R70
000.00 to the Plaintiff in excess of the arrear
amount due to the
Plaintiff.
In making the payment
of R70 000.00, the Defendant specifically pleads that the agreement
concluded between the parties was
re-instated in terms of the
provisions of
Section 129(3)(a)
of the
National Credit Act.
In
the alternative,
and in the event that this Honourable Court finds that the payment
of the amount of R70 000.00 made by the
Defendant did not have the
effect of reinstating the agreement concluded as provided for in
terms of the provisions of
Section 129(3)
of the
National Credit
Act the
defendant specifically pleads that:
That the Plaintiff
is estoppel from relying on its allegations of the Defendant’s
indebtedness to it for the following
reasons:
On 30 June 2008 the
Plaintiff’s duly authorized representative, Mr Peet Burger,
telephonically informed and advised
the Defendant that the
outstanding balance due and payable to the Plaintiff was
approximately R54 000.00.
The Defendant
accepted as correct this representation and acted thereon when Mr
Burger informed the Defendant of the outstanding
balance due and
payable to the plaintiff.
In doing so, the
Defendant accepted as correct the representation made by the said
Mr Burger and, relying on it, to his
prejudice, proceeded to make
payment of the sum of R70 000.00 on 30 June 2008”.
[25] On 23 March 2010 the plaintiff
filed its notice in terms of
Rule 30
, objecting to the contents of
the defendant’s plea. The plaintiff objected to paragraph 5.1
of the defendant’s plea
in that the defendant admitted that
annexure “D” to the plaintiff’s particulars of
claim is a notice addressed
to him in terms of the provisions of
Section 129
of the
National Credit Act, but
denied that the notice
complied with Section 129 of the Act, and has failed to set forth
facts as it was obliged to do, to support
his conclusion of law.
[26] The plaintiff also objected to
the absence of facts in the defendant’s plea to support his
contention that the notice
is vague and embarrassing, (sub-paragraph
5.2) and further objected to the absence of facts to support the
averment that he acted
to his prejudice in paying the amount of R70
000.00 (sub-paragraph 7.7.1.3).
[27] The defendant, in response to
the plaintiff’s notice in terms of Rule 30(1), filed a notice
of its intention to amend
its plea. The amendment was to the effect
of adding further paragraphs to paragraph 5 of the plea. The
additional paragraphs read
as follows:
“
5.3
The
defendant specifically pleads that the Plaintiff’s Section 129
Notice dated the 3
rd
December
2007 was defective, vague and embarrassing in the following respects:
The amount of R36
094.36, being the alleged total arrears due by the Defendant does
not accord with the actual instalments
due in respect of November
and December 2007.
The Section 129
Notice did not record and bring to the Defendants attention that
his failure, if any to bring all his arrears
up to date would
expose him to the risks of future summary legal action, without
further notice for the duration of the credit.
The Plaintiff
instituted action against the Defendant on the 4
th
June
2008, approximately 6 months after addressing the Section 129
Notice of the Defendant during which period, more specifically
between 28
th
December and 5
th
March 2008,
the Defendant made payments to the Plaintiff in the sum of R62
000.00 which amount exceeded the total arrears
referred to in the
Plaintiff’s Section 129 Notice.
The Section 129
Notice does not state that it serves as a notice in perpetuity in
respect of any future possible default by
the Defendant.
Defendant pleads
further that when the action was instituted by the Plaintiff, the
total arrears reflected in the Section
129 Notice had been paid in
full by the Defendant.
The Defendant pleads
further that the action instituted herein should an adjournment in
terms of Section 130(4)(b)(ii) of the
Act that this Honourable
Court should make an appropriate order setting out the steps the
Plaintiff must take and complete
before this action may resumed as
contemplated in Section 130(4)(b)(ii) of the Act”.
Discussion
Sub-Paragraph 5.1 of the
Defendant’s Plea
[28] Section 129(1)(a) of the Act
provides that, if a consumer is in default under a credit agreement,
the credit provider may draw
the default to the notice of the
consumer (such as the defendant) in writing and propose that the
consumer refer the credit agreement
to a debt counsellor,
alternatively a dispute resolution agent, consumer court or ombud
with jurisdiction, with the intent that
the parties resolve any
dispute under the agreement or develop and agree on a plan to bring
the payments in the agreement up to
date.
[29] All the aforesaid the plaintiff
said it did in its notice dated 3 December 2007. Therefore it argues,
it is incumbent on the
defendant to specifically plead the basis upon
which he alleges tat the notice does not comply with the provisions
of Section 129
of the Act.
[30] The plaintiff submitted that
the defendant’s plea in paragraph 5.1, is essentially one of
confession and avoidance (admitting
that the notice was one in terms
of Section 129 of the Act, but denying its compliance with the Act)
and therefore, the defendant
is obliged as envisaged in Rule 22(2) of
the Uniform Rules of Court, to plead the basis of his purported
avoidance of a reliance
by the plaintiff on Section 129 of the Act,
so that it could be appraised of what case it had to meet on this
point raised. In
my view, this submission has merit in that on the
face of it, the letter in question complies with the Act.
Sub-paragraph 5.1 of
the defendant’s plea ought to be struck
out.
Sub-Paragraph 5.2 of the
defendant’s plea
[31] In this sub-paragraph the
defendant’s complaint against the notice in question is that
the amounts given as arrear amounts
are inaccurate, in that there was
strictly speaking no arrears at that time, or the figures where
inaccurate. Even if the averment
in the particulars of claim is
factually incorrect, it is not vague and embarrassing. Neither in my
view, is the absence of a warning
that if the defendant’s
arrears are not repaid, it would expose him to the risk of future
summary legal action, vague and
embarrassing.
[32] If the defendant paid an amount
in excess of the total arrears between the date of notice and the
summons being issued six
months later, that does not render the
summons vague and embarrassing either, and an inaccurate amount in
the notice does not render
it defective in terms of the Act. The
obvious plea is therefore that he was not in arrears. That creates a
factual dispute which
can only be addressed by evidence and not
purely legal argument.
[33] Sub-paragraph 5.2 ought to be
struck out as well. The fact that the figures in the notice are in
dispute does not render the
notice itself vague and embarrassing
particularly in the absence of specific references as to which part
of the notice falls within
the description of vague and embarrassing.
Sub-Paragraph 7.7.1.3 of the
defendant’s plea
[34] In pleading that he suffered
prejudice in making payment of the sum of R70 000.00 in the
circumstances referred to in sub-paragraph
7.7, the defendant once
again fell foul of Rules 18(4) and Rule 22(2) of the rules of Court,
because he does not put forward the
material facts upon which he
relies and which would enable the plaintiff to understand the issues
as defined and identified in
the pleadings.
[35] The bald allegation by the
defendant that he suffered prejudice also requires amplification.
This is not a case where there
is an obvious prejudice. The defendant
owes the plaintiff bank money. If he makes a payment, albeit in
excess of his usual monthly
instalment, or enough to lift him out of
his arrears with a bit extra for the future, more particularity is
required to appreciate
the prejudice he alleges.
The Amendment to the Plea
[36] The following is an exercise in
establishing whether the amendments to the plea removed the
plaintiff’s complaints.
[37] The defendant contended that
R36 094.36, the alleged amount of his arrears as stated in annexure
“D” (the Section
129 notice) does not accord with the
actual instalments due in respect of November and December 2007
(sub-paragraph 5.3.2).
[38] Mention has already been made
that inaccurate figures in a notice issued in terms of Section 129(3)
of the Act does not render
it vague and embarrassing. Section 129 of
the Act in any event does not require a credit provider to specify
the amount of any
default, but merely to draw it to the attention of
the consumer (debtor).
[39] The fact that the Section 129
notice did not record and bring to the defendant’s attention
that his failure to bring
his arrears up to date would expose him to
the risk of future summary action (sub-paragraph 5.3.2) could never
render the notice
vague and embarrassing. It is not even a
requirement of Section 129 that such information be included in such
a notice.
[40] The defendant’s
allegation that he made payments for six months after the notice in
question was served on him, which
payments in total exceeded his
total arrears (5.3.3) has no bearing on the notice itself and
furthermore does not render the notice
vague and embarrassing .
[41] The omission in the notice to
mention that the notice was one for perpetuity is not required by
Section 129 of the Act. By
contending that its omission renders the
notice “vague and embarrassing” (sub-paragraph 5.3.4) is
rather opportunistic.
[42] In my view, the amendments did
not cure the defects in the plea as set out above.
[43] The defendant relying on
inter
alia, Erasmus Superior Court
Practice
(
B 1-191 [service
34, 2009], and Eniram (Pty) Ltd v New
Woodholme Hotel (Pty)
1967(2) 491 (E)
)
,
submitted that Rule 30 is applicable
only to irregularities of form and not substance. The defendant
further submitted that the
plaintiff ought to have raised an
exception, instead of objecting in terms of Rule 30, as its objection
are of substance and not
of form. Alternatively, it should have
applied to strike out the offending paragraphs. The plaintiff indeed
sought an order to
strike out these paragraphs from the defendant’s
plea.
[44] In support of its opposition to
the plaintiff’s application in terms of Rule 30, the defendant
referred me to a passage
in
Beck’s Theory and Principles of
Pleading in Civil Action
Sixth Edition at page 139:
“
Where
the legal validity of a defence raised in a plea is challenged, the
proper way of doing so is by way of exception in terms
of Rule 23(1),
[as
opposed to use of Rule 30] and a motion
to
strike out is misconceived”.
[45] This passage does not assist me
much in my determination of the issues raised with regard to the
defendant’s plea in
the present matter. The objections raised
in the plea (non-compliance with legislation and estoppel by
misrepresentation), are
of a legal nature, whereas the determination
of most of the questions depend on the determination of facts such as
what amounts
were owing at certain times.
[46]
Harms
, in his work
Civil
Procedure in the Supreme Court
[issue 24] at B30.3 (B-195),
points out that Rule 18(12) and 22(5) deem a failure to comply with
the provisions relating to pleadings,
to be irregular step within the
meaning of Rule 30(1), and remarked that “the fact that the
pleading is also excipiable does
not disentitle a party from relying
on Rule 30, either solely, or in the alternative”.
[47] Accordingly, the plaintiff is
entitled to relief in terms of Rule 30 of the Uniform Rules of Court,
even though the defendant’s
plea may be excipiable as well.
Striking out the offending paragraphs is the proper relief to be
granted.
[48] No case has been made out for a
punitive costs order against the defendant.
[49] I make the following order:
Paragraphs 5.1, 5.2 and 7.7.1.3 are
hereby struck out.
The defendant is granted leave to
amend his pleadings within fifteen days of this notice being served
on his attorney of record.
The defendant is to pay the costs
of this application on a scale as between party and party.
__________________
E REVELAS
Judge of the High Court
Counsel for Plaintiff: Adv P Scott
Instructed by: Boqwana Loon &
Connellan Inc
Counsel for Defendant: Adv Gajjar
Instructed by: Lisbon, Brewis &
Co
Date Heard: 2 September 2010
Date Delivered: 14 December 2010