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[2012] ZAECPEHC 44
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Nedbank Ltd v Ngqeleni and Another (1524/12) [2012] ZAECPEHC 44 (10 July 2012)
IN THE HIGH COURT
OF SOUTH AFRICA
EASTERN CAPE
DIVISION – PORT ELIZABETH
CASE NO: 1524/12
DATE HEARD: 19 JUNE
2012
DELIVERED: 10 JULY
2012
In
the matter between:
NEDBANK
LIMITED
….........................................................
PLAINTIFF
and
PHUMZILE
NGQELENI
….........................................
FIRST
DEFENDANT
ID:
NOMPUMELELO
TRYPHINA NGQELENI
…............
SECOND
DEFENDANT
ID:
____________________________________________________
JUDGMENT
____________________________________________________
MAGEZA
AJ:
[1] This is an
application for summary judgment against the defendants who are
married to one another in community of property.
Plaintiff claims the
sum of R71 730.89 with interest at 9% per annum as well as an
order declaring first and second defendants’
jointly owned
Kwa-Dwesi property executable. Costs are also claimed on a scale as
between attorney and client.
[2] The amount claimed
arises from a credit agreement as defined in the
National Credit Act
34 of 2005
, hereinafter referred to as “the Act”. The
debt is furthermore secured through a mortgage bond registered over
the
immovable property situate at Kwa-Dwesi, Port Elizabeth.
[3] The particulars of
claim set out that the loan agreement for the original sum of
R110 000.00 was entered into on 28 November
1997. It is common
cause that in 2010,
the defendants commenced to
experience financial difficulties as a result of which they took the
decision to apply for debt review
in terms of the Act and a debt
re-arrangement was ordered. The details thereof appear hereunder.
[4] Plaintiff expands
in its particulars by averring that,
“…
defendants
have defaulted on their obligations in terms of:-
7.1 the re-arrangement agreement
granted by the Magistrate’s Court inasmuch as they have failed
to maintain the payments to
the Plaintiff as stipulated in the
re-arrangement agreement; alternatively
7.2 the restructuring order granted
by the Magistrate’s Court inasmuch as they have failed to
maintain the payments to the
Plaintiff as stipulated in the
restructuring order granted by the Magistrate’s Court.”
[5] First defendant (on
behalf of both defendants) in turn is of the view that defendants
have a valid defence to plaintiff’s
claim in that plaintiff is
not entitled to the relief sought. First defendant elaborates in
support of this contention that on
18 May 2010, the defendants
jointly approached accredited debt counsellors - DRC Debt Counsellors
- to assist them to lodge an
application for debt review in terms of
the relevant provisions of the
National Credit Act 34 of 2005
. Five
credit agreements in respect of which the defendants are indebted
(inclusive of one in favour of plaintiff) are cited therein.
[6] Pursuant to this
application, an order was granted by the Magistrate – Port
Elizabeth on 27 October 2010, the terms of
which were that the
defendants collectively pay the sum of R3 747.23 on the 7
th
day of each month commencing 7 December 2010, to a Payment
Distribution Agency for onward distribution to the cited credit
providers.
The aforesaid amount was regularly paid by the defendants
without fail for a period of a year.
[7] On or about
December 2011, the defendants, with their difficulties not abating,
again approached DRC debt counsellors to assist
in bringing a
variation application. All the credit providers (including plaintiff)
were aware of this application and were served
with the necessary
papers. On 7 March 2012 a new court order for the payment of the sum
of R3668.02 to the Payment Distribution
Agency was granted by the
Magistrate – Port Elizabeth. A copy of this order is headed
-‘Varied Court Order’-
and is attached as annexure ‘E’
and paragraph 2 thereof provides that:
“…
the
first two payments due and payable by the consumer after the date on
which the order has been granted to the PDA will be used
for the
payment of the Debt Counsellor’s fees as well as the attorneys
legal costs. Thereafter all the remaining payments
will be made to
the Respondents as per the distribution schedule attach to the court
order.”
[8] The distribution
schedule incorporated by reference in the order sets out the gross
amount to be paid by defendants to the Payment
Distribution Agent as
the sum of R3 668.02, of which the sum of R1282.12 is to be
apportioned to defendants’ indebtedness
to plaintiff.
Defendants assert that they have at all material times complied with
this Court order and have regularly made the
payment of R3 668.02
in accordance with the ‘varied court order’. Accordingly,
the alleged default on which plaintiff
relies upon occurred in the
month of April and occurred as a result of the costs deduction
provision in the Court order and was
implemented by the Payment
Distribution Agency as outlined above. That being the position,
plaintiff is barred in terms of
section 88(3)
of the
National Credit
Act from
instituting action against the defendants.
[9] To the extent
relevant,
section 88(3)
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
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 to (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 Tribunal.”
[10] As was stated in
Joob Joob Investments (Pty) Ltd v Stocks
Mavundla Zek Joint Venture
2009 (5) SA 1
(SCA) para 31
,
‘summary judgement procedure was not intended to
“shut
(a defendant) out 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 by causing great loss to plaintiffs who
were endeavouring to enforce their rights’.
Whilst
over-indebtedness is not a defence on the merits, because of its
extraordinary and stringent nature a court has an over-riding
discretion to refuse an application for summary judgment. –
see
also Collett v Firstrand Bank Ltd and Another
2011 (4) SA 508
(SCA);
C van Heerden in JW Scholtz, J M Otto, E van Zyl, CM van Heerden and
N Campbell – Guide to the
National Credit Act (2008
) para
12.16.
[11] The Act provides
protection to consumers who find themselves in circumstances where
unmanageable indebtedness to credit providers
becomes an unwelcome
but settled feature of their life. Sections 85 - 88 set out the
procedure prescribed for a debt counsellor
once in receipt of an
application for debt review as well as the debt re-arrangement and
powers of a Magistrate court to which
a matter has been referred, and
the effect of a re-arrangement order.
The terms of the
availed collective protections must however be respected by the
debtor,
the object of Chapter 4 of the Act being:
“…
to
provide protection and assistance to an over-indebted consumer in an
environment that encourages participation in good faith
by both
parties…” –
see
Wesbank a division of Firstrand Bank Ltd v Papier (with the NCR as
Amicus Curiae)
2011 (2) SA 395
(WCC).
[12] Once a credit
review is commenced in respect of a particular credit agreement and a
debtor obtains a debt re-arrangement order
from a competent court, a
credit provider can only enforce that agreement if the consumer is in
default under such credit agreement
and
when either an event
contemplated under section 88(3)(1)(a) has occurred or
when the
consumer defaults on any obligation in terms of a re-arrangement by
way of order of court (or Tribunal).
– See Firstrand Bank
Ltd v Fillis
2010 (6) SA 565
(ECD).
[13] I have set out
that plaintiff’s application for summary judgment is founded on
the contention that defendants have defaulted
on their obligations in
terms of the re-arrangement agreement granted by the Magistrate’s
Court inasmuch as they have failed
to maintain the payments to the
Plaintiff as stipulated in the re-arrangement order and, in the
alternative, that defendants have
failed to comply with the
restructuring order granted by the Magistrate’s Court inasmuch
as they have failed to maintain
the payments to the Plaintiff as
stipulated in the restructuring order granted by the Magistrate’s
Court.
[14] It is common cause
that the initial re-arrangement order made by the Magistrate - Port
Elizabeth on the 27 October 2010 enjoined
the defendants to pay a sum
of R3 747.53 per month commencing 7 December 2010 to the Payment
Distribution Agent. Plaintiff’s
debt being one of five, the
admitted
net
proceeds from the payment distributing agents
amounted from December 2010 to a sum of R1 310.62. Plaintiff was
quite content
receiving this amount without any discomfort until the
variation order of 7 March 2012.
[15] Once the
defendants again approached DRC debt counsellor’s to assist in
bringing a variation application to this original
order and there
being a new court order commencing 7 March 2012 for the payment of
the sum of R3668.02, the
net
amount due changed and plaintiff
(as one of five creditors) received the sum of R1 282.12 (less
the legal costs portion for
the first two months) as its allocated
monthly payment. This reduction was occasioned by the slightly
reduced figure as well as
the varied order that now provided that-
“…
the
first two payments due and payable by the consumer after the date on
which the order has been granted to the PDA will be used
for the
payment of the Debt Counsellor’s fees as well as the attorneys
legal cost”.
[16] The payments have
been made to plaintiff by appointed Payment Distribution Agents.
These agents are an integral part of the
debt review process and are
accredited after rigorous scrutiny by the National Credit Regulator
to assist debt counsellors who
serve a statutory function. The
scrutiny placed on these agents includes probity checks,
infrastructure evaluation to perform the
function of payment
distribution and insurance cover held to protect indebted consumers.
The entities are vital to controlling
monetary payments from indebted
consumers for onward transmission to credit providers. They effect
these payments in accordance
with court re-arrangement orders. To the
extent that in any given case the distributions made by such an
entity accord with an
order of court no default on the part of a
consumer can be imputed.
[17] All that the
defendant has done has been to comply with a lawful order of court by
dutifully paying the sum of R3668.12 and
any temporary effect of the
order on plaintiff’s allocated portion arises therefore by
operation of a lawful order and is
not due to a breach by defendant.
To date the defendants as debtors have since the first debt
re-arrangement order proved to be
model adherents and have made
commendable use of the opportunities and relief provided by sections
85 to 88 of the Act. The objects
of the Act are stated in section 3
and are directed at providing protection for the consumer whilst
addressing the imbalances that
exist between consumers and credit
providers. The Act seeks -
“
to promote
and advance the social and economic welfare of South Africans, to
promote a fair, transparent, competitive, sustainable,
responsible,
efficient and accessible credit market and industry, and to protect
consumers…”
The credit providers
are also considered by the Act as the ultimate desired outcome -
“…
places
priority on the eventual satisfaction of all responsible consumer
obligations under credit agreements.”
[18] Despite plaintiff becoming
restive, this court can find no reason to come to the conclusion that
defendants are in breach of
the variation order of 7 March 2012.
[19] In the result:
19.1 The summary
judgment application is refused and leave to defend is granted to the
defendants to defend the action.
19.2 Costs of this
application are to be costs in the main action.
__________
MAGEZA AJ
FOR PLAINTIFF: MR
GAJJAR
INSTRUCTED BY: PAGDENS
ATTORNEYS
18 CASTLE HILL
CENTRAL
PORT ELIZABETH
(REF: F
Vienings/ag/N0569/4430)
FOR DEFENDANTS: MR
INSTRUCTED BY: PIERRE
KITCHING ATTORNEYS
22 HURD STREET
NEWTON PARK
PORT ELIZABETH
TEL: 041 – 365
5955
(REF: W P
CASTELYN/vl/MAT2089)
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