About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Port Elizabeth
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Port Elizabeth
>>
2012
>>
[2012] ZAECPEHC 8
|

|

ABSA Bank Ltd v Brown and Another, ABSA Bank Ltd v Van Deventer and Another (2672/2011) [2012] ZAECPEHC 8 (7 February 2012)

IN
THE HIGH COURT OF SOUTH AFRICA NOT REPORTABLE
EASTERN
CAPE, PORT ELIZABETH
Case
No.: 2672/2011
Date
Heard: 17 January 2012
Date
Delivered: 7 February 2012
In
the matters between:
ABSA
BANK LIMITED
…............................................................
Plaintiff
and
KENNETH
CHARLES BROWN
…......................................
First
Defendant
LILIAN
HESTER BROWN
….........................................
Second
Defendant
AND
Case
No.: 2801/2011
ABSA
BANK LIMITED
…............................................................
Plaintiff
and
LUCINDA
VAN DEVENTER
…..........................................
First
Defendant
RALPH
HUMAN
…......................................................
Second
Defendant
JUDGMENT
EKSTEEN J:
[1] In each of these matters the
plaintiff seeks judgment by default in respect of “the balance
of the principal debt together
with finance charges thereon, now due
and payable … in respect of monies loaned and advanced by the
Plaintiff to the Defendant(s)
…” which monies were
secured in each case under a mortgage bond (“the bonds”).
In addition the plaintiff
seeks an order that the immovable property
so bonded be declared executable. In case 2801/2011 the second
defendant is cited as
a surety in respect of part of the debt in the
sum of R15 000.00.
[2] The said loan agreements are in
each case subject to the provisions of the National Credit Act, 34 of
2005 (herein referred
to “NCA”). In each case a simple
summons was issued in which each defendant was cited as an adult
person “who
has chosen
domicilium citandi et executandi
for the purposes of this action” at the address stipulated in
the citation.
[3] In case number 2672/2011 it is
alleged that the defendant applied to be placed under debt review in
terms of the NCA which debt
review process was terminated by the
plaintiff by giving notice in terms of section 86(10). In seeking to
satisfy the requirements
of the NCA the plaintiff has alleged as
follows:
‘
(a)
The Defendant applied to be under Debt Review in terms of the
National Credit Act
(“NCA”) which Debt Review process was
terminated by the Plaintiff by giving notice in terms of
Section
86(10)
of the NCA to the Defendant, the Defendant’s Debt
Counsellor and the National Credit Regulator by Registered Post.
Copies
of the aforesaid Notices are attached hereto marked “C”,
“D” and “E”.
(b)
In terms of the
Section 86(10)
notice the Defendant, Debt Counsellor
and National Credit Regulator were advised that:
He/she
was in arrears with payment in respect of the agreement for a period
of more than 60 (sixty) business days.
The
Debt Review process has been terminated.
He/she
had the opportunity to contact the Plaintiff within 10 business days
should he/she wish to raise a dispute.
(c)
...
(d)
The Plaintiff’s claim is not pending before a debt counsellor,
alternative Dispute Resolution Agent, Consumer Court or
Ombud with
jurisdiction as envisaged in
Section 130
of the
National Credit Act
and
the Plaintiff is not aware of any debt review proceedings in
regard to the Defendant’s indebtedness, as envisaged in
section
86
of the aforesaid Act.
’
[4] In case number 2801/2011 the
first defendant did not apply to be placed under debt review. In
seeking to satisfy the requirements
of the NCA the plaintiff alleges
as follows:
‘
4.
Prior
to commencing these proceedings
and after the Defendant(s) had been in default of his/her/their
obligations arising from the aforementioned agreement for a period

exceeding twenty (20) business days the Plaintiff complied with the
provisions of
Section 129
and
130
of the
National Credit Act
subsequent
to which the period referred to in
Section 130(1)(a)
elapsed without the Defendant(s) responding to the notice given to
him/her/them as contemplated in the aforesaid Sections of the
Act or
surrendering the mortgaged property to the Plaintiff. Copies of the
Notices aforesaid are attached hereto marked “D”
and
“E”.’
[5] In each case the notices annexed
were sent per registered post to the addresses which are alleged in
the summons to have been
chosen in the bonds as the
domicilium
citandi et executandi
(herein referred to as “
domicilium
”)
by each defendant “for purposes of this action” and which
are alleged to be the physical addresses of the bonded
properties. In
each case the bond which secures the debt relied upon in the credit
agreement is annexed in which the
domicilium
is stated to be
at the property bonded. I shall revert to the bond below.
[6] Mr
Richards
, on
behalf of the plaintiff argues that the aforegoing constitutes due
delivery as envisaged in the NCA of the section 129(1)(a)
and section
86(10) notices respectively as required in section 129(1)(b). He
accordingly submits that I should be satisfied that
procedures
required by section 129 have been complied with.
[7] The sole issue which arises for
adjudication in this case is whether I can be satisfied, as required
by section 130(3)(a) of
the NCA that the procedures required by
section 129 have been complied with. Section 130(3)(a) provides:
“
(3)
Despite any provision of law or contract to the contrary, in any
proceedings commenced in a court in respect of a credit agreement
to
which this Act applies, the court may determine the matter only if
the court is satisfied that-
(a)
in
the case of proceedings to which sections 127, 129 or 131 apply, the
procedures required by those sections
have been complied with”
Application of NCA
[8] Section 2(1) of the NCA states
that the NCA must be interpreted in the manner that gives effect to
the purposes set out in section
3 thereof. The court is accordingly
enjoined to adopt a purposive interpretation of the NCA.
[9] Section 3 of the NCA states that
the purpose of the NCA is,
inter alia,
“to promote a
fair, transparent, … credit market industry, and to protect
consumers” by pursuing various objectives
set out in
subsections 3(a) to (i). Broadly, I think, the purpose is twofold,
firstly to create a credit market industry which
will have the listed
characteristics and secondly, to protect credit consumers who are,
more often than not, in a grossly inferior
negotiating position.
[10] Subsection 3(d) and (e) are of
particular significance to the present debate. Subsection 3(d) and
(e) provides that the purpose
of the NCA is,
inter alia
, to
protect the consumers by:
“
(d)
promoting equity in the credit market by balancing the respective
rights and responsibilities of credit providers and consumers;
(e)
addressing and correcting imbalances in negotiating power between
consumers and credit providers by-
(i)
providing consumers with education about credit and consumer rights;
(ii)
providing consumers with adequate disclosure of standardised
information in order to make informed choices;
and
(iii)
providing consumers with protection from deception, and from unfair
or fraudulent conduct by credit providers
and credit bureaux.”
[11] In pursuit of a fair and
transparent credit industry the NCA confers in section 65 a right
upon credit consumers to receive
documents. Two sections of the Act
are significant in respect of the manner in which this right is
satisfied, section 65 and section
96.
[12] The material portion of section
65 provides:
“
2(a)
If no method has been prescribed for the delivery of a particular
document to a consumer, the person required to deliver that
document
must-
make
the document available to the consumer through one or more of the
following mechanisms-
in
person at the business premises of the credit provider, or at
another location designated by the consumer but at the consumer’s

expense, or by ordinary mail;
by
fax;
by
email; or
by
printable web-page; and
deliver
it to the consumer in the manner chosen by the consumer from the
options made available in terms of paragraph (a).”
[13] The delivery of a notice as
envisaged in section 129(1)(a) or a notice in terms of section 86(10)
of the NCA is a prerequisite
for institution of action to enforce the
provisions of any credit agreement. (See section 129(1)(b).)
[14] There is no prescribed manner
in the Act for the delivery of section 129(1)(a) and 86(10) notices.
(See
Rossouw and Another v Firstrand Bank
Ltd
2010 (6) SA 439
at 448 para [24] to 449 para [27].) Section
65(2) accordingly finds application.
[15] In order for there to be a
valid notice in terms of either of these sections notice must be
given in the manner chosen by the
consumer from one of the options
set out in section 65(2) of the NCA. (See
Rossouw
(
supra
)
at 456I.)
[16] Section 96 of the NCA provides
as follows:
(1)
Whenever a party to a credit agreement is required or wishes to give
legal notice to the other party for any purpose contemplated
in the
agreement, this Act or any other law, the party giving notice must
deliver that notice to the other party at-
(a)
the
address of that other party as set out in the agreement, unless
paragraph
(b)
applies; or
(b)
the
address most recently provided by the recipient in accordance with
subsection (2).
(2)
A party to a credit agreement may change their address by delivering
to the other party a written notice of the new address
by hand,
registered mail, or electronic mail, if that other party has provided
an email address.”
Manner of delivery
[17] In
Rossouw
(
supra
) the Supreme Court of Appeal (SCA) were called upon to
consider what constitutes proper “delivery” as envisaged
in
section 65(2)(b). The SCA, in the judgment of Maya JA (which was a
unanimous judgment of the Court) concluded:
“
It
is entirely fair in the circumstances to conclude from the
legislature’s express language in s 65(2) that it considered

despatch of a notice in a manner chosen by the appellants in this
matter sufficient for purposes of s 129(1)(a), and that actual

receipt is the consumer’s responsibility.”
[18] It must accordingly be accepted
that the despatch of notice or the sending thereof in the manner
chosen by a consumer set out
in section 65(2) would constitute proper
“delivery” in terms of section 65(2)(b).
[19] This is so, Maya JA said at p.
450 para [32], because-
“
[32]
It appears to me that the legislature’s grant to the consumer
of a right to choose the manner of delivery inexorably
points to an
intention to place the risk of non-receipt on the consumer’s
shoulders. With every choice lies a responsibility,
and it is after
all within a consumer’s sole knowledge as to which means of
communication will reasonably ensure delivery
to him.”
[20] In a supplementary judgment in
Rossouw
(supra)
(which was also a unanimous judgment of
the Court) Cloete JA stated at 456I as follows:
“
I
emphasise that the Act in s 65(2)(b) obliges the bank to deliver the
notice in the manner chosen by the consumer, from the options
in para
(a) of that section. The bank cannot reserve other options to
itself.”
[21] What emerges from the
aforegoing and from the language of section 65(2) is that the
consumer is entitled, as of right, to choose
the manner of delivery
and the credit provider is compelled to give this choice to the
credit consumer.
[22] In the circumstances I think
that in order for a court to be satisfied, as required by section
130(3)(a) that the notices required
to be provided in terms of
section 129(1)(b) of the NCA have been delivered, it is necessary to
allege in the summons, at least
what manner of delivery, from those
set out in s 65(2), the consumer has chosen and that the notice was
delivered in that manner.
[23] In the supplementary judgment
in
Rossouw
(
supra
) Cloete JA, with reference to
the provisions of section 3(e) set out above, sounded this cautionary
note at 457B-D:
“
Unless
credit providers inform consumers of their options in terms of s
65(2), the benefits of that section are likely to remain
illusory
rather than real. A consumer could hardly complain if the method of
delivery of a document chosen by him or her proves
ineffective. But
for so long as credit providers employ standard form contracts which
make provision for one possibility only –
in the present
matter, a notice sent by registered post to an address (which, in the
absence of an address specified, will be the
address of the mortgaged
property) – the argument loses sight of reality. Credit
providers should accordingly not complain
if courts require
compliance to the letter with both the Act and the terms of credit
agreements, ... “
[24] The bond documents annexed to
the Particulars of Claim in each of these matters are identical and
each of them provide for
a
domicilium
only at the bonded
property. No provision is made for any other choice. The bonds make
no mention of the manner in which documents
are to be delivered. In
each matter the summons is silent in respect of the manner of
delivery chosen by the defendants and the
loan agreement is not
annexed to the summons. Accordingly I do not know what manner of
delivery was chosen nor whether that choice
was complied with.
[25] In these circumstances I do not
think that I can be satisfied, as I am required to be, that the
provisions of section 129(1)(b)(i)
has been complied with in respect
of proper “delivery” of the notices. The summons in each
matter lacks necessary averments
relating to the choice of delivery
exercised by the defendants. In this respect I think the summonses
are excipiable (see
Pottas and Others v Firstrand Bank
Ltd & Others
(unreported decision of Alkema J) ECPE
case no. 613/09 delivered on 29 November 2011).
Section 96 address
[26] Where a consumer has chosen
delivery by post then the notice should be delivered at the address
determined in accordance with
section 96 of the NCA. (Compare
Rossouw
(
supra)
at p. 449 para [29].) Leaving aside, for the moment,
the provisions of section 96(2) of the NCA, section 96(1) requires
the notice
to be delivered at the “address ... as set out in
the agreement”.
[27] When regard is had to the
structure of section 96 I think that the address referred to in
section 96(1)(a) must be the address
chosen by the defendant in the
credit agreement (the mortgage loan agreement in the present matters)
which is the foundation of
the plaintiff’s cause of action. The
summons in each of these matters does not disclose the address which
the defendants
chose in the mortgage loan agreements nor are the
mortgage loan agreements annexed to the summons in either matter.
Rather, the
plaintiff has annexed the bond document in each case. In
each case the bond document is identical and provides for a chosen
domicilium
in the following terms:
“
Die
Verbandgewer kies hiermee as sy adres vir die betekening van alle
kennisgewings, mededelings of regsprosesstukke (
domicilium
citandi et executandi
)
vir alle doeleindes kragtens hierdie verband, die fisiese adres van
die eiendom wat kragtens hierdie verband verbind is of, indien
daar
meer as een sodanige eiendom aldus verbind is, die fisiese adres van
enige van sodanige eiendomme.”
[28] In the present matters the
cause of action relied upon is “monies loaned and advanced”
in terms of a credit agreement.
Section 1 of the NCA draws a
distinction between a “mortgage” and “mortgage
agreement”. A “mortgage”
is defined as meaning “a
pledge of immovable property that serves as security for a mortgage
agreement”. A “mortgage
agreement” is defined to
mean “a credit agreement that is secured by a pledge of
immovable property”. Perhaps
the less said about the content of
these definitions the better. Suffice it to say that I think the
legislature sought to draw
a distinction between the “mortgage
loan agreement”, which is a credit agreement and a “bond
document”,
which constitutes the security for the loan
advanced. In these circumstances it seems to me that the mortgage
loan agreement as
opposed to the bond agreement, founds the cause of
action in each of these matters.
[29] The plaintiff clearly
appreciated the distinction between the mortgage loan agreement and
the bond document and, in the circumstances,
an affidavit was filed
in support of the application for default judgment by one Robert
Alexander Herd, a Risk Mitigation Manager
in the employ of the
plaintiff. Herd records in the affidavit in each of these matters as
follows:
“
I
confirm that the Plaintiff’s records reflect that the original
Mortgage Loan Agreement to which this action pertains was
destroyed
in a fire and no copy thereof exists.
In
the normal course of events the
domicilium
address chosen in
the bond would correspond with the address nominated by the
Mortgagors in the Mortgage Loan Agreement, however,
in the event of
there being a difference in such addresses, I respectfully submit
that given that a Mortgage Loan Agreement is
concluded prior to a
Mortgagors signing the Power of Attorney to pass a Mortgage Bond, the
chosen
domicilium
in the Mortgage Bond would constitute an
election by the Mortgagors in terms of Section 96(1)(b) read with
Section 96(2)
of the
National Credit Act.”
[30] In recent times this court,
like other courts, has experienced a flood of applications similar to
the present for default judgment
and summary judgment. Experience has
shown that it is by no means an infrequent phenomenon for a different
domicilium
to be chosen in the loan agreement from that set
out in the bond document. This, experience has taught, is
particularly so where
the bond agreement is in a standard form which
provides simply for the
domicilium
to be at the bonded
property. In the circumstances I do not think that an allegation that
the chosen
domicilium
in the bond would “in the normal
course” correspond with the address nominated by the mortgagor
in the mortgage loan
agreement can satisfy me that a notice in terms
of
section 129(1)(a)
or
86
(10) has been delivered to the address
required in
section 96.
[31]
Section
96(2)
affords the parties to a credit agreement the right to change
the address at which notice is to be given. That occurs when one
party to the agreement delivers to the other “a written notice
of the new address” in one of the modes set out in subsection

(2). I do not think that signing a power of attorney to register a
bond constitutes a notice of this nature, particularly where,
as in
these matters, the bond document is a standard form document which
does not provide any free and informed choice –
it merely
stipulates that the bonded property is the
domicilium
.
A notice of change of address as envisaged in
section 96(2)
must at
least be one given with the intention to change the chosen address in
the loan agreement and to substitute for it an address
which must be
set out in the notice.
[32] During
argument I was referred to the SCA decision in
Rossouw
(
supra
)
where reliance was indeed placed upon the address set out in the bond
document.
Rossouw’s
case was an appeal against the grant of summary judgment. Both the
defendant and the plaintiff were represented in court and it
is
apparent from the report that the parties were in agreement that the
terms of the loan agreement were correctly reflected in
the bond
document. There was no dispute in respect of the chosen address and
the Supreme Court of Appeal was not called upon to
determine the
issue before me. I do not consider that the judgment in
Rossouw’s
case was intended to constitute authority for the proposition that
where a difference exists between the address chosen in the
loan
agreement to that chosen in the bond document that the bond document
would suffice.
[33] In all the circumstances I do
not think that I can be satisfied that the said notices were in fact
“delivered: at the
address set out in
section 96.
[34] In each
case the plaintiff claims that the original of the loan agreements
have been destroyed in a fire and no copy exists.
It therefore finds
itself in breach of its obligations in terms of
section 170
of the
NCA. I do not think that this justifies non-compliance with the
provisions of
section 65
of the NCA. In
Rossouw
(
supra
)
Cloete JA stated at p.456B:
“
...
a court must still be satisfied that a credit receiver has received
the protection afforded by the Act.”
Conclusion
[35] It follows that in each
instance that the application for judgment by default falls to be
dismissed, save against the surety
in case no. 2801/2011.
[36] In the result I make the
following order:
In case no. 2672/2011:
The application for judgment by
default is dismissed.
In case no. 2801/2011:
(a) The application for judgment by
default is dismissed.
________________________
J W EKSTEEN
JUDGE OF THE HIGH COURT
Appearances:
For Plaintiffs:
Adv
Richards
instructed by McWilliams & Elliott Inc, Port Elizabeth