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[2011] ZAECPEHC 27
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FirstRand Bank Ltd t/a Wesbank v Rees (2906/2010) [2011] ZAECPEHC 27 (23 June 2011)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE – PORT ELIZABETH) CASE NO.: 2906/2010
In the matter between:
FIRSTRAND BANK LTD trading as
WESBANK Applicant
(Registration Number: 1929/001225/06)
And
DAVID
RONALD REES
Respondent
(Identity Number:)
JUDGMENT
BESHE J:
[1]
This is an application for
summary judgment. Plaintiff’s claim is based on an instalment
sale agreement (the agreement) entered
into between the parties in
this matter on or about the 28
th
of November 2006. in
terms of this agreement the plaintiff sold to the defendant a motor
vehicle described as a 2006 Ford Territory
4.01 TX A/T with engine
number JGAT5E 48449, chassis number 6FPAAAJGA5E48449 and vehicle
registration number DRS 746 EC on credit
for the total purchase price
of R449,683,40.
[2] Plaintiff claims that the
defendant has breached the terms of the agreement by failing to
maintain regular payments and as at
07 June 2010 the defendant had
fallen into arrears with payments to the sum of R125, 941, 82.
[3] This resulted in plaintiff issuing
summons against the defendant during September 2010 seeking judgment
for:
The confirmation of the cancellation
of the agreement;
A warrant of delivery authorising the
sheriff of this court to attach, seize and hand over the vehicle in
question to the plaintiff.
Damages being the difference between the
full balance owing in terms of the Agreement and the value of the
goods as at date of
possession;
Interest;
Collection commission;
Cost;
Alternatively in the event of the
goods not being found payment of the sum of R347, 455, 25.
[4] The defendant admits his
indebtedness to the plaintiff as alleged in the summons and confirmed
by Yolande Theresa Schoeman in
her affidavit verifying the cause of
action.
[5] In paragraph 2 of the affidavit
resisting summary judgment defendant states:
“
I
admit the facts contained in Yolande Theresa Schoeman, but request
the Honourable Court to declare me over-indebted and refer
the matter
to my debt counsellor to evaluate my circumstances and to make a
recommendation in terms of Section 86 (7) (C) of the
National Credit
Act 34 of 2005 (“the Act”). “
[6] Over-indebtedness of a consumer is
defined in
section 79
of the
National Credit Act:
“
79
Over-indebtedness
A
consumer is over-indebted if the preponderance of available
information at a time a determination is made indicated that the
particular consumer is or will be unable to satisfy in a timely
manner all the obligations under all the credit agreements to
which
the consumer is a party, having regard to the consumer’s-
financial
means, prospects and obligations; and
probable
propensity to satisfy in a timely manner all the obligations under
all the credit agreements to which the consumer
is a party, as
indicated by the consumer’s history of debt repayment.
When
a determination is to be made whether a consumer is over-indebted or
not, the person making that determination must apply
the criteria
set out in subsection (1) as they exist at the time the
determination is being made.
When
making a determination in terms of this section, the value of-
any
credit facility is the settlement value at that time under that
credit facility; and
any
credit guarantee is-
the
settlement value of the credit agreement that it guarantees, if the
guarantor has been called upon to honour that guarantee;
or
(ii)
the settlement value of the credit agreement that it guarantees,
discounted by a prescribed factor.”
[7] The National Credit Regulations of
2006 (the regulations), promulgated under the
National Credit Act,
provide
that a debt counsellor, when assessing the consumer’s
application for a debt review, must refer to
section 79
and further
consider the following:
(a)
A consumer is over-indebted if his/her total monthly debt payments
exceed the balance derived by deducting his/her minimum living
expenses from his/her net income.
(b)
Net income is calculated by deducting from the gross income,
statutory deductions and other deductions that are made as a
condition
of employment.
(c)
Minimum living expenses are based upon a budget provided in the
consumer. Adjusted by the debt counsellor with reference to
guidelines issued by the National Credit Regulator.
[8]
Section 85
of the
National Credit
Act provides
for declaration and relief of over-indebtedness and
provides as follows:
“
Court
may declare and relieve over-indebtedness
Despite
any provision of law or agreement to the contrary, in any court
proceedings in which a credit agreement is being considered,
if it is
alleged that the consumer under a credit agreement is over-indebted,
the court may-
refer
the matter directly to a debt counsellor with a request that the
debt counsellor evaluate the consumer’s circumstances
and make
a recommendation to the court in terms of
section 86
(7); or
declare
that the consumer is over-indebted, as determined in accordance with
this Part, and make any order contemplated in
section 87
to relieve
the consumer’s over-indebtedness.”
[9] In order for the defendant to
successfully resist an application for summary judgment he must
satisfy the court that he has
a
bona fide
defence to the
claim. In so doing the defendant must fully disclose the nature and
grounds of his defence and the material facts
upon which it is
founded. It is indeed so that the defendant has not put up a defence
to the merits of the application, but claims
that he is over-indebted
and requests that he be declared as such and for the matter to be
referred to his debt counsellor to evaluate
his circumstances and to
make a recommendation in terms of
section 86
(7) (C) of the
National
Credit Act. This
will no doubt have the effect of delaying the
payment of the debt by the defendant.
[10] It is trite law that Rule 32 of
the Uniform Rules of this court is designed to prevent the
plaintiff’s claim from being
delayed by what amounts to an
abuse of the process of the court. This is a point that was made by
Navsa J
in
Joob Joob Investments v Stocks Mavundla Zek
2009 (5) SA 1
at page 11 - G
when he said: “So too in
South Africa, the summary judgment procedure was not intended to
“shut (defendant) from defending”,
unless it was very
clear indeed that he had no case in the action. It was intended to
prevent sham defences from defeating the
rights of parties by delay,
and at the same time causing great loss to plaintiffs who were
endeavouring to enforce their rights.”
[11] I am however also mindful of the
purpose of the
National Credit Act as
set out in
section 3
as
follows:
“
Purpose
of Act
The
purposes of this Act are to promote and advance the social and
economic welfare of South Africans, promote a fair, transparent,
competitive, sustainable, responsible, efficient, effective and
accessible credit market and industry, and to protect consumers,
by-
promoting
the development of a credit market that is accessible to all South
Africans, and in particular to those who have historically
been
unable to access credit under sustainable market conditions;
ensuring
consistent treatment of different credit products and different
credit providers;
promoting
responsibility in the credit market by-
encouraging
responsibly borrowing, avoidance of over-indebtedness and
fulfilment of financial obligations by consumers; and
discouraging
reckless credit granting by credit providers and contractual
default by consumers;
promoting
equity in the credit market by balancing the respective rights and
responsibilities of credit providers and consumers;
addressing
and correcting imbalances in negotiating power between consumers and
credit providers by-
providing
consumers with education about credit and consumer rights;
providing
consumers with adequate disclosure of standardised information in
order to make informed choices; and
providing
consumers with protection from deception, and from unfair or
fraudulent conduct by credit providers and credit bureaux;
improving
consumer credit information and reporting and regulation of credit
bureaux;
addressing
and preventing over-indebtedness of consumers, and providing
mechanism for resolving over-indebtedness based on the
principle of
satisfaction by the consumer of all responsible financial
obligations;
providing
for a consistent and accessible system of consensual resolution of
disputes arising from credit agreements; and
providing
for a consistent and harmonised system of debt restructuring,
enforcement and judgment, which places priority on the
eventual
satisfaction of all responsible consumer obligations under credit
agreements.”
[12] The word “may” in
section 85 of the Act suggests that the court has a discretion to as
to whether it should refer
the matter to a debt counsellor or declare
the consumer over-indebted. It is trite that such discretion should
be exercised on
the material facts before court. In
Firstrand
Bank v Olivier
2009 (3) SA 353
at 359 SECLD A – B AR Erasmus J
said that “A court is not obliged to act simply on the
defendant’s allegation of over-indebtedness, but “may”
make an appropriate order in terms of paragraph (a) or (b). The court
will exercise this discretion judicially with due regard
to the
objective of the
National Credit Act which
, in the present regard, is
to assist the over-burdened consumer to rehabilitate his affair. In
doing so the act makes serious inroads
into the credit provider’s
common law rights of access to the courts (s 34 of the Constitution
of the Republic of South Africa
Act 108 of 1996). The court will
restrict the statutory limitation of the credit provider’s
rights to the extent that it
is reasonable and justifiable to do so
in our democratic order while promoting the objects of the
National
Credit Act.”
[13
]
Mr Gajjar
who appeared for
the plaintiff submitted that the defendant did not go far enough in
his affidavit to place enough material to
enable the court to come to
his aid.
[14] Summons were issued against the
defendant during September 2010. In his affidavit in support of the
opposition to summary judgment,
defendant alleges that:
“
4.
My wife and I applied for a debt review in 2009 with
Kobus
Kruger,
a debt
counsellor who was then involved with Debt Sense Group. Application
for debt review was duly made as alleged in the applicant’s
particulars of claim; but the matter was postponed from time to time
due to a multitude of oppositions. My wife and I were involved
in a
business with my father-in-law, Smith Trailers. That business was run
as a sole proprietorship by my father-in-law and we
were all
dependant on the income of that business. At the time the business
environment had worsened to such a state that Smith
Trailers became
financially unviable and the debt review process of my father-in-law,
his business and ours was unfortunately dealt
with as one by the said
Kobus
Kruger.
Kobus Kruger abandoned us as debt counsellor and apparently handed
the file back to the Debt Sense Group. I am not sure
when this was
and I was not informed thereof.
I
was under the impression, at all times, that the matter was still
dealt with as a debt review matter until the summons was served
on
me. My wife attended upon our attorneys of record who dealt with
previous matters of ours during the course of the debt review
and was
then informed that I should ascertain whether I am still under debt
review and to obtain the required proof.
Upon
enquiring with the Debt Sense Group about the status of our debt
review, I was informed that to their knowledge the matter
was no
longer under debt review. The aforesaid facts came to my knowledge
during the course of the last week of October 2010.
5.
I was then again registered under debt review on 1 November 2010 and
Tommy Swart of the Debt Sense Group, my debt counsellor,
is in the
process of putting together a proposal for the credit providers.
6.
I attach hereto,
marked
“DRR1”,
a copy of the Form 17.1 advising my creditors of the debt review
application and a copy, (marked “DRR2”) of the Form
17.1
informing the creditors that I was found to be over-indebted
.
My debt counsellor is currently in the process of formulating a
proposal to present to the credit providers. I attach hereto a
copy
of the Form 16 from which appears my income and expenditure as well
as my total liabilities. My debt counsellor has verified
these
figures with documents which I do not wish to burden the court record
with.
I submit that it
is very clear that I am hopelessly over-indebted
and I attach hereto marked “DRR3” a copy of the form 16
containing my personal circumstances.”
[15] As would appear from paragraph
four of defendant’s affidavit, a debt review process of his
father-in-law, the business
and that of his and his wife were dealt
with as one by the debt counsellor. It is not clear why the said
Kobus Kruger
abandoned the process and why it was not taken
over by another debt counsellor at Debt Sense Group. It would seem
that the defendant
himself abandoned the process in that he appears
to have had very little interest in what was happening regarding the
process until
such time that he was jolted into action by the service
of summons on him.
[16] In his quest to show that he is
over-indebted, defendant annexes DRR3, which is a copy of form 16
which is an application by
consumer for credit review in terms of
section 86
of the
National Credit Act 34 of 2005
.
[17] According to the particulars
appearing in this form the defendant is employed by G H
Airconditioning, his occupation is given
as “maintenance”
and has been employed for six months with a gross income of R15
000.00 per month. He owns the house
in which they stay with his
family and has been staying in that house for one month. He does not
have any insurance policies listed
and therefore no insurance
policies that he is prepared to surrender or cancel. There are no
assets that are identified as potentially
and reasonably capable of
being sold, the proceeds of which the consumer can use to reduce his
indebtedness to his credit providers.
[18] The outstanding balance to credit
providers stands at over R3 million, with aggregate monthly
instalments of some R40 000.00.
He only has available for payment to
credit providers a sum of ± R8 000.00 per month.
[19] There is no indication how the
defendant intends or proposes to rehabilitate his affairs. No
indication as to why he needs
to retain the motor vehicle in
question, whether doing so will improve his financial situation in
any way, or how he will be prejudiced
if the motor vehicle were to be
repossessed. Whether or not if it were to be attached and resold, it
will reduce his indebtedness
to the plaintiff.
[20] I am not persuaded that the
application by the defendant is
bona fide
, it appears to be a
ploy to buy more time on the defendant’s part, a mere tactic to
delay plaintiff’s claim. In the
circumstances I do not think
that it will be justifiable to limit te plaintiff’s rights to
payment of the debt owed to it
by the defendant. In the circumstances
I am of the view that the plaintiff is entitled to the relief which
it seeks.
[21] In the result the following
order is made:
Summary judgment is granted in
favour of the plaintiff against the defendant for an order for:
Confirmation of cancellation of
the agreement;
(b) A warrant of delivery
authorising the sheriff of this court to attach, seize and hand over
the 2006 Ford Territory 4.01 TX A/T
with engine number JGAT5E48449,
chassis number 6FPAAAJGAT5 48449, and vehicle registration number DRS
746 EC to the plaintiff;
(c) Damages being the difference
between the full balance owing in terms of the agreement and the
value of the goods as at date
of repossession;
(d) In the event of the goods not
being found, payment of the sum of R347, 455, 25;
(e) Interest calculated on the
aforesaid sums at the fixed rate of prime (currently 10%) less 0.758%
per annum from 8 June 2010
to date of payment;
(f) Collection commission on all
payments made calculated at the rate of 10% plus VAT on each payment,
subject to the maximum of
R1 000, 00 plus VAT payment;
(g) Costs of suit on a scale as
between attorney and client.
_____________
N G BESHE
JUDGE OF THE HIGH COURT
APPEARANCES
For Applicant ADV: G J Gajjar
Instructed by JOUBERT GALPIN SEARLE
INC.
For Respondent Mr A Curtain
Instructed by J R BESTER &
ASSOCIATES
Date Heard 30 November 2010
Date Reserved 30 November 2010
Date Delivered 23 June 2011