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[2016] ZAECPEHC 5
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Nedbank Limited v Norris and Others (2978/2015) [2016] ZAECPEHC 5; 2016 (3) SA 568 (ECP) (1 March 2016)
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IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE
DIVISION, PORT ELIZABETH
CASE NO:
2978/2015
Date
heard: 20 November 2015
Date
delivered: 1 March 2016
In the matter
between
NEDBANK
LIMITED
Applicant
And
FABIAN EDWIN
NORRIS
First Respondent
SONJA
VOLSCHENK
Second Respondent
MAGISTRATE DUMANI
N.O.
Third Respondent
AFRICAN BANK
LIMITED
Fourth Respondent
THOMAS WINTERBROER
N.O.
Fifth
Respondent
ELLERINES FURNISHERS
(PTY) LTD
t/a FURNITURE
CITY
Sixth Respondent
JAYANT DAJI PEMA
N.O.
Seventh Respondent
LESLIE MATUSON
N.O.
Eighth Respondent
ABSA BANK LIMITED
Ninth Respondent
BRIDGE LOANS (PTY)
LTD
Tenth Respondent
THOMAS GEORGE NELL
N.O.
Eleventh Respondent
WONGA FINANCE SA
(PTY)
LTD
Twelfth Respondent
MARKHAMS (PTY)
LTD
Thirteenth
Respondent
EDGARS CONSOLIDATED
STORES LIMITED
Fourteenth Respondent
EAST CAPE DEBT
ADMINISTRATORS
Fifteenth Respondent
DR. N. N.
CHETTY
Sixteenth Respondent
JUDGMENT
GOOSEN, J.
1. The applicant
seeks to review and set aside an order made by the magistrate’s
court on 4 February 2014 rearranging the
debt obligations of the
first respondent in terms of s 87 (1) (b) (ii) of the National Credit
Act 34 of 2005 (hereinafter referred
to as the NCA) and to set aside
a subsequent order, on 30 January 2015, refusing rescission of the
first order. In addition, the
applicant seeks declaratory relief. In
regard to the latter the applicant seeks an order declaring that:
(a) A magistrates court hearing
a matter in terms of s 87 (1) of the Act does not enjoy the
jurisdiction to vary (by reduction or
otherwise), the contractually
agreed interest rate applicable to a credit agreement;
(b) A re-arrangement proposal in
terms of s 86 (7) of the Act that contemplates a monthly instalment,
which is less than the monthly
interest which accrues to the
outstanding balance is
ultra vires
the Act and accordingly, a
magistrate’s court hearing the matter does not enjoy
jurisdiction to grant an order in terms of
such proposal;
(c) An order purportedly granted
in each of the above instances is a nullity in law and accordingly
void
ab initio
and may be ignored as if it doesn’t exist.
2. In the
alternative to this declaratory relief the applicant seeks an order
declaring that a re-arrangement order as set out above
constitutes an
arbitrary deprivation or limitation of the applicant’s right to
property, as protected by s 25 (1) of the
Constitution and therefore
invalid.
Background and
relevant facts
3. The applicant is
a registered credit provider as defined in the NCA. On 29 November
2011 the first respondent made an application
to the applicant for an
unsecured personal loan facility. The applicant presented the first
respondent with a pre-agreement statement,
a quotation and the
proposed terms and conditions of the loan agreement. These were
accepted by the first respondent and on 29
November 2011 the parties
entered into an unsecured personal loan agreement (the “credit
agreement”). In terms of the
agreement the applicant advanced
to the first respondent the sum of R120 000.00 on account number
[.....]. It was agreed that the
first respondent would charge an
initiation fee, a monthly service fee, interest on the outstanding
balance of the loan amount
at a fixed rate of 17.5% per annum,
calculated daily on the outstanding balance and capitalized, and an
amount for credit
life insurance in a monthly sum of R529.80. The
total loan amount, inclusive of charges and interest would be R220
669.40 repayable
by the first respondent by way of 60 equal
instalments in the amount of R3674.49. The credit agreement would
terminate on 1 December
2016.
4. On or about 29
August 2013 the first respondent applied to the second respondent, a
registered debt counsellor, to be declared
over indebted in terms of
s86 (1) of the NCA. In due course the second respondent, having
apparently made a determination of over-indebtedness,
applied in
terms of s86 (7)(c)(ii) (aa) and (bb) for a debt restructuring order.
This application, brought in terms of Rule 55
of the magistrate’s
court rules culminated in the debt restructuring order made by the
third respondent on 4 February 2014.
I shall return hereunder to the
procedure which was followed prior to the order being made.
5. The order granted
by the magistrate on 4 February 2014 is in the following terms:
It
is ordered that:
1.
The First Respondent (hereinafter referred to as “the
consumer”)
is found and declared to be over-indebted in terms
of the
National Credit Act 34 of 2005
.
2.
The obligations of the consumer unto the last Respondent be
re-arranged in accordance
with the debt re-arrangement payment
proposal prepared by the Applicant in accordance with
section 86
(7)(c)(i)(aa) and the
National Credit Act 34 of 2005
and as is
attached hereto as Annexure A.
3.
The consumer pays the gross available amount, identified in the debt
re-arrangement
payment proposal and specifically the sum of R1 600.00
directly to the Payment Distribution Agent, an accredited payment
distribution
agent of the National Credit Regulator.
4.
The first payment by the Consumers, in terms of this order, of the
gross available
amount, be made before or on the 5
th
of
every month in which this order is granted and monthly thereafter,
before or on the 5
th
day of each succeeding month.
5.
That the distribution payment by the Payment Distribution Agent only
occur once
the Applicant’s debt counselling fee, as shall be
determined and calculated in accordance with the guidelines laid down
by
the National Credit Regulator and the legal costs related and
incidental to the Consumer’s application, in terms of
section
86
(1) of the
National Credit Act of 2005
, had been paid by the
Payment Distribution Agent for the gross available amount payable to
it in terms of this order.
6.
That the Payment Distribution Agent is entitled to recover its
distribution charges,
as shall be raised in accordance with the
guidelines of the National Credit Regulator, from the said nett
available amount, before
making distribution payments to the Affected
Credit Providers.
7.
The consumers pays the costs of this application on an unopposed
basis. [sic]
6. The
re-arrangement of the first respondent’s obligations is set out
in Annexure A to the order. In relation to the applicant,
it was
confirmed that the outstanding balance of the loan was R105 612.15.
Provision was made for payment of a distributable amount
to the
applicant of a monthly instalment of R289.15. The re-arranged period
to expire 260 months after the date of the order, with
interest to be
charged at 0%.
7. An application
was made to rescind this order. The basis upon which the rescission
was sought raised a number of procedural and
substantive
irregularities. The applicant also addressed some, if not all, of the
issues upon which relief is sought in this application.
These will be
dealt with hereunder. On 30 January 2015 the third respondent
dismissed the application for rescission of the re-arrangement
order.
In doing so the third respondent
mero motu
ordered that:
“
the interest rates on
accounts relating to the Applicant are changed to the contractually
agreed rates, effective from the date
hereof.”
8. Subsequent to the
dismissal of the rescission application the applicant sought advice
in respect of the prospects of an appeal
and proceeded to note an
appeal 27 February 2015. An appeal record was prepared and
subsequently filed. However applicant was advised
that the nature of
the issues raised were such that the matter is one more suited to
consideration by way of review. Accordingly
the appeal was not
prosecuted and this application was commenced on 30 July 2015 and was
ultimately set down for hearing in November
2015.
9. To the extent
necessary, the applicant seeks condonation for the late prosecution
of the review although there are no fixed time
periods within which
such review must be prosecuted. For reasons which will become
apparent hereunder it is in the interests of
justice that such
condonation, if it is required, be granted.
10. Before turning
to consideration of the merits of the application. It is necessary to
deal with a question concerning this court’s
review
jurisdiction. The issue was raised by the court at the hearing of the
matter. It arises because prior to the enactment of
the Superior
Courts Act, Act 10 of 2013, this court was a Local Division of the
Eastern Cape Provincial Division. It accordingly
did not have
jurisdiction to hear reviews or appeals. Subsequent to the enactment
of the Superior Courts Act this has continued
to be the practice.
However, in this instance the application is brought before this
court and it is requested to exercise its
review jurisdiction.
11. The Superior
Courts Act marks a significant step in the re-organisation and
rationalisation of superior courts in the post-1994
constitutional
democratic order. The preamble to the A notes that:
…
item 16 (6) (a) of
Schedule 6 of the Constitution provides that as soon as practical
after the Constitution took effect all courts,
including their
structure, composition, functioning and jurisdiction, and all
relevant legislation, must be rationalised with a
view to
establishing a judicial system suited to the requirements of the
Constitution;
NOTING FURTHER that, with the
advent of the democratic constitutional dispensation in 1994, the
Republic inherited a fragmented
court structure and infrastructure,
which were largely derived from our colonial history and was
subsequently further structured
to serve the segregation objectives
of the apartheid dispensation;
12. The
re-organisation and rationalisation of the court structures is of
particular moment to the Eastern Cape since, prior to
the enactment
of the Superior Courts Act, the superior courts in the province
exhibited all of the characteristics of a fragmented
structure and
jurisdiction. In
Thembani Wholesalers (Pty) Ltd v September and
others
2014 (5) SA 51
(ECG) Chetty J noted that notwithstanding
the constitutional eradication of balkanised territories, until the
promulgation of Superior
Courts Act,
“
the
status
quo
remained, and the
existing courts, the Eastern Cape Division, the Supreme Court of
Transkei and Supreme Court of Ciskei respectively,
albeit with
various modifications and guises, continued operating independently
of each other, exercising original territorial
jurisdiction over the
defined geographical areas.
[1]
13.
Thembani
Wholesalers
settled the question as to the territorial
jurisdiction of the Division. It did not, however, deal with the
question of the jurisdiction,
other than territorial, of the local
seats of the Division.
14. The Superior
Courts Act does away with the erstwhile distinction between a
“provincial” and a “local”
division. The Act
establishes nine “divisions” which correspond in name to
the nine provinces. A “division”
means “any
division of the High Court”.
[2]
A ‘division’ consists f the Judge President, one or more
Deputy Judges President and so any judges as determined by
the
President each with headquarters within the area of jurisdiction of
that Division.
[3]
Section 6(3) deals with the area of jurisdiction of a Division.
Section 6(3)(c) provides that the Minister, after consultation
with
the Judicial Services Commission, may establish one or more local
seats of a Division. In terms of s 50, at the commencement
of the
Superior Courts Act the High Courts of Bhisho, Mthatha and Port
Elizabeth became local seats of the Eastern Cape Division
and the
area of jurisdiction of those courts part of the area of jurisdiction
of the Division.
15. The effect of
these provisions is to create a single unitary Division in which, as
will be demonstrated hereunder, the
courts of the division
exercise the jurisdiction of the Division, subject only to
territorial limitation based on their location at a seat of the
Division.
16. Section 21(1)
deals with the persons over whom and matters in relation to which a
Division has jurisdiction. It provides that
a Division has
jurisdiction over all persons residing or being in and in relation to
all causes arising or offences triable within
its area of
jurisdiction and has the power,
(a)
to hear and determine
appeals from all Magistrates Courts within its area of jurisdiction;
(b)
to review the proceedings
of all such courts;
(c)
…
.
17. In s 22, which
deals with the grounds of review of proceedings of Magistrates
Courts, the introductory portion of sub-section
(1) indicates that
review proceedings may be brought “
before a court of the
Division
”. The equivalent provision of the now repealed
Supreme Court Act indicated that the power to review a decision of a
lower
court was confined to provincial divisions and ‘a local
division having review jurisdiction’. In terms of s 19(2)(b)
of
the repealed Act only the Witwatersrand Local Division was vested
with both appeal and review jurisdiction.
18. The Superior
Courts Act does not in terms address this. There is no express
provision which indicates that the Witwatersrand
Local Division, now
a local seat of the Gauteng Division, no longer enjoys such
jurisdiction. No doubt if it had been intended
to do so the new Act
would have had to specifically so provide. The absence of an express
provision saving the appeal and review
jurisdiction of the local seat
of that Division points, in my view, to the clear intention of the
legislature to confer the power
to hear and determine appeals and
reviews upon courts of a Division whether sitting at the main seat or
a local seat of the Division.
19. In this regard
s6(4) provides that:
If a Division has one or more
local seats –
(a)
the main seat of that
Division has concurrent appeal jurisdiction over the area of
jurisdiction of any local seat of that Division,
and the Judge
President of the Division may direct that an appeal against a
decision of a single judge or of a Magistrates’
Court within
that area of jurisdiction may be heard at the main seat of the
Division.
(b)
…
.
(c)
The Judge President of
that Division may assign all the judges of that Division within the
Division as he or she deems fit.
20. The use of the
word “concurrent” and the express provision that an
appeal may be heard at the main seat, indicates
that the local seat
has appeal jurisdiction in relation to appeals originating from
courts within its area of jurisdiction. In
the
Thembani
Wholesalers
matter Chetty J dealt with an argument based upon the
omission in the Superior Courts Act of a provision equivalent to s
6(2) of
the Supreme Court Act which was advanced in support of the
proposition that concurrency of territorial jurisdiction was not
intended
by the new Act by examining s 6(2). That section provided
that the provincial divisions of the Transvaal, Natal and Eastern
Cape
shall exercise concurrent jurisdiction in the areas of the
Witwatersrand, Durban and Coast and South Eastern Cape local
divisions.
The learned judge pointed out that,
The effect of s 6 (2) of the old
Act was not to confer jurisdiction on the Provincial Division –
it had original jurisdiction.
The subsection merely conferred
concurrent jurisdiction on the local Division over a specified
territorial area, the whole of which
fell under the area of
jurisdiction of the Provincial Division.
21. By parity of
reasoning the same applies in relation to s 6(4) of the new Act. It
does not confer appeal jurisdiction on the
Division. It exercises
such jurisdiction as original jurisdiction over the whole of its
territory. The effect of s 6 (4) of the
new Act is to confer appeal
jurisdiction upon local seats of the Division over the territorial
area of the local seat.
22. The term “court
of the division”, which is used
inter alia
in s 22, is
to be understood in the context of s 14 which deals with the
composition of courts and the manner of arriving at decisions.
Provision is made for courts of first instance to be constituted by a
single judge and for appeals to be heard by courts consisting
of
either two or three judges as may be determined by the Judge
President. The section makes it clear that a ‘court of the
Division’ refers to a judge or judges of the Division
constituted as a court in terms of section 14 irrespective of where
that court sits. Therefore a court sitting at the local seat is a
court of the Division which exercises the jurisdiction of a Division,
subject only to the limitation as to territory and its constitution
in terms of s 14.
23. It follows that
this court, duly and properly constituted, has jurisdiction to review
the decisions of a magistrate’s
court within its area of
jurisdiction.
24. I turn now to
the merits of the application. This requires, in the first instance,
an outline of the relevant provisions of
the NCA.
25. The preamble to
the NCA indicates that the Act is intended to promote a fair and
non-discriminatory market place for access
to credit. Section 3 sets
out the purpose of the NCA, namely to promote a fair, transparent,
competitive, sustainable, efficient
and accessible credit market. The
section identifies several mechanisms by which this is to be
achieved, including by,
(g)
addressing and preventing over-indebtedness of consumers, and
providing mechanisms for resolving over-indebtedness based on
the
principle of satisfaction by the consumer of all responsible
financial obligations;
(h) …
(i) providing for a consistent
and harmonized system of debt restructuring, enforcement and
judgment, which places priority on the
eventual satisfaction of all
responsible consumer obligations under credit agreements.
26. Section 79
states:
(1)
A consumer is
over-indebted if the preponderance of available information at the
time that a determination is made indicates 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
party, having regard to that consumer’s –
(a)
Financial means,
prospects and obligations;
(b)
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.
27. Section 86 (1)
provides that a credit receiver may apply to a debt counsellor in the
prescribed manner and form to be declared
over-indebted. Upon
acceptance of the application, in terms of s 86(6), the debt
counsellor must, within the prescribed manner
and time, determine
whether the credit receiver appears to be over-indebted and, if the
consumer seeks such declaration, whether
any of the credit agreements
appear to be reckless.
28. Sub-section (7)
provides that if, as a result of the assessment conducted, the debt
counsellor concludes that:
(c)
the consumer is
over-indebted, the debt counsellor may issue a proposal recommending
that the Magistrate’s court make either
or both of the
following orders –
(i)
that one or more of the
consumer’s credit agreements be declared to be reckless credit,
if the debt counsellor has concluded
that those agreements appear to
be reckless; and
(ii)
that one or more of the
consumer’s obligations be re-arranged by –
(aa)
extending the period of the agreement and reducing the amount of each
payment due accordingly;
(bb)
postponing during a specified period the dates on which payments are
due under the agreement;
(cc)
extending the period of the agreement and postponing during a
specified period the dates
on which payments are due under the
agreement; or
(dd)
recalculating the consumer’s obligations because of
contraventions of Part A or B of Chapter
5, or Part A of Chapter 6.
29. A finding that the consumer is over-indebted, reasonably made in
accordance with the prescribed procedure, is a pre-requisite
for a
valid application to court made in terms of section 86 (8) (b) of the
Act.
30. Upon a valid
application for debt restructuring being made, a magistrate’s
court is empowered to hear the application
and may make the orders
contemplated in s 87(1). The court may either reject the
recommendation or application or make an order
in terms of either s
86(7)(c)(i) or (ii) or both such orders where appropriate.
31. With the
statutory scheme in mind I turn to the applicant’s case in
relation to each of the orders in turn.
The debt
re-arrangement order of 4 February 2015
32. As noted above,
the application for debt re-arrangement was commenced in December
2013. The notice of motion indicated that
parties wishing to oppose
the application were required to notify the applicant (the second
respondent in this application) on
or before 6 December 2013, failing
which the application would be heard on 7 January 2014.
33. In its founding
papers the applicant states that a notice of intention to oppose was
served on the second respondent’s
attorneys of record on 6
December 2013 at 12:51pm and filed at court on 9 December 2013. This
is borne out by the copies of said
notices included in the record. On
7 January the applicant’s attorney attended at court to ensure
that the matter did not
proceed. He was informed by the clerk of the
court that the matter was in any event not properly set down and that
the court would
not be sitting. On 8 January the attorney wrote to
the second respondent’s attorneys confirming this and
requesting notice
of set down of the matter. No reply was received
and no notice of set down was thereafter served on the applicant.
34. The court file
however, indicates that the date reflected on the notice of motion
was deleted and another – 21 January
– was entered in
manuscript. On this day the matter was postponed to 4 February and on
that date an order was granted in
the absence of the applicant and
any other of the interested parties.
35. These
uncontested allegations point to a gross irregularity in the
proceedings. On this ground alone the applicant would be
entitled to
an order setting aside the order granted on 4 January 2015. It would
also be entitled to an order setting aside the
refusal of the
rescission application, since on the facts disclosed the order
granted in the absence of the applicant ought to
have been rescinded.
36. The applicant,
however, points to irregularities which relate to substantive issues
in which, so it is submitted, have a material
bearing on the broader
declaratory relief sought.
37. The first of
these concerns the basis upon which the magistrate purported to
exercise the jurisdiction conferred by s 87(1)
of the NCA. An
application for debt re-arrangement can only be made if the debt
counsellor makes a determination that the consumer
is over-indebted.
A finding that the consumer is over indebted can only be made if the
preponderance of all of the information
available indicates that the
consumer will be unable to satisfy all of his or her obligations. In
the first instance it is the
obligation of the debt counsellor to
make such a determination. Once that is made application may be made
in terms of s 86. This
determination is therefore a pre-requisite and
must be established as a jurisdictional fact before a debt
re-arrangement order
can be made in terms of s 87 (1) (cf.
Absa
Bank v Robb
[4]
).
38. In this instance
the evidentiary material placed before the magistrate was such that
the magistrate could not reasonably have
come to the conclusion that
the consumer was indeed over-indebted. All that was placed before the
magistrate was the assertion
that “the consumer’s
repayments exceed his income”.
39. An application
for debt relief must be in accordance with Rule 55 (
Nedbank Ltd v
National Credit Regulator
2011 (3) SA 581
(SCA) at par 28). This
means that the applicant must set out sufficient facts in the
founding affidavit to disclose a cause of
action. (
Motor Finance
Corporation (Pty) Ltd v Jan Joubert and others
[5]
).
In dealing with the nature of the evidentiary material to be placed
before a court in relation to a consumer’s over-indebtedness
it
was held in
Standard Bank of South Africa Ltd v Panyiotts
2009
(3) SA 363
(WLD) at par 9 that:
Having regard to the wording of
s 79, such proof must inevitably involve details of, inter-alia, the
consumer’s financial
means, prospects and obligations.
Financial means would include not only income and expenses, but also
assets and liabilities.
Prospects would include prospects of
improving the consumer’s financial position, such as increases,
and, even, liquidating
assets.
40. In this instance
the evidentiary material placed before the magistrate was woefully
inadequate. On the basis of the evidence
placed before the magistrate
the jurisdictional fact upon which the magistrate is entitled to
exercise his discretion in terms
of s 87 was not established.
Accordingly, the order granted was unlawful.
41. The difficulty
with the order, however, does not end there. As indicated hereinabove
the magistrate re-arranged the first respondent’s
affairs in
such manner as to require payment of a monthly amount of R289.15 over
a 260 month period and ordered that interest would
be reduced to 0%.
42. It is obvious
from these figures that the re-arranged payments will not satisfy the
amount outstanding to the applicant as at
the date of restructuring.
The clear effect of the re-arrangement order is that the first
respondent, as consumer, will not meet
all of his obligations to the
applicant in terms of the credit agreement. Not only will the first
respondent not be obliged to
make payment of the full outstanding
loan, the monthly payments do not even meet the requirement to
reimburse the applicant for
the monthly payment it is obliged to make
on behalf of the first respondent in respect of credit insurance
cover. The order plainly
does not meet the essential purposes of the
NCA as set out in s 3 (g) and (i) (cf.
BMW Financial Services SA
(Pty) Ltd v Mudaly
2010 (5) SA618 (KZD);
Firstrand Bank Ltd v
Adams and Another
2012 (4) SA 14
(WCC)).
43. Apart from this,
the magistrate also ordered that the first respondent’s
contractual obligations to pay interest on the
outstanding balance of
the loan be reduced from the fixed 17.5% to 0%.
44. Section
86(7)(c)(ii) confers no such power upon the Magistrates Court. A debt
re-arrangement order has as its purpose the rescheduling
or
re-arrangement of the obligations of the consumer in such a manner as
to enable the consumer to meet his/her/its obligations
to the credit
provider. It serves to mitigate the effect of over-indebtedness by
making provision for payments within the existing
means of the
consumer and over an extended period. A re-arrangement order, does
not, and cannot, extinguish the underlying contractual
obligations.
This much is plain from the wording of section 86 (7). The order
reducing the first respondent’s contractual
obligation to pay
interest on the outstanding balance of the loan is therefore
ultra
vires
the NCA (
Firstrand Bank v Adams
(supra) at par 28;
SA Taxi Securitisation (Pty) Ltd v Lennard
2012 (2) SA 456
(ECG) at paragraph 10).
45. A magistrate’s
court is a creature of statute. It only has the jurisdiction which is
conferred upon it by statute. It
exercises no inherent jurisdiction
and can accordingly not adjudicate matters which fall outside of its
expressly conferred jurisdiction
and cannot grant orders, other than
those it is expressly authorised to grant (
Ndamase v Functions 4
All
2004 (5) SA 602
(SCA)).
46. In purporting to
make the order the magistrate acted without jurisdiction. At
common law such an order is null and void
(
Master of the High
Court (North Gauteng High Court, Pretoria) v Motala NO and Others
2012 (3) 3 to 5 (SCA) at paragraph 12). Although the applicant
seeks an order to the effect that orders made without jurisdiction
are void
ab initio
and may be ignored, I do not consider that
such an order is necessary in the present matter or that it is
appropriate given the
reach off the declaratory relief sought.
The order of 30
January 2015
47. In the light of
the findings relating to the order of 4 February 2014 the order
refusing rescission must necessarily be set
aside. However it is
necessary to address the further order made
mero motu
by the
magistrate “reinstating” the contractual interest rate
applicable to the credit agreement concluded with the
applicant.
48. The magistrate
had no jurisdiction to grant such an order, for the reasons already
set out. It is however necessary to point
out that apart from a lack
of jurisdiction to make such order, the purported order is tainted by
gross irregularity in as much
as it purported to vary the terms of
the re-arrangement order previously granted without having regard to
the effect that the variation
would have upon either the terms of the
re-arrangement order or the consumer’s obligations to other
credit providers.
49. The issue was
not before the magistrate and he could not have applied his mind in
the exercise of his discretion relating to
the re-arrangement order
and, accordingly, on this ground to the order falls to be set aside
because it is tainted by gross irregularity.
Relief
50. It follows from
what is set out above that the applicant is entitled to the review
relief it seeks. The applicant has made out
a compelling case for the
granting of the further declaratory relief. In the papers it is
pointed out that re-arrangement orders
of the sort made in this
matter are routinely made by magistrates throughout the country. In
the circumstances a declaration to
the effect that contractual
interest rates agreed in a credit agreement may not be varied or
reduced will serve to clarify the
matter. I have already indicated
however that I do not consider that it is appropriate to grant a
declaration that orders of this
sort made by the magistrate’s
court may be ignored on the basis that they are void
ab initio
.
51. I therefore make
the following order:
1. The order granted by the Third
Respondent on 4 February 2014 in the Magistrate’s Court for
the
district of Port Elizabeth held at Port Elizabeth under case number
31018/13M in terms of
s 87
of the
National Credit Act 34 of 2005
re-arranging the obligations of the First Respondent unto his credit
providers is set aside.
2. The order granted by the Third
Respondent on 30 January 2015 in the same matter dismissing an
application for rescission of the order referred to in paragraph 1
above and further
mero motu
varying the terms of the then
re-arranged obligations of the First Respondent by re-instating a
contractually agreed interest rate
in terms of a credit agreement is
set aside.
3. It is declared that:
3.1
A Magistrate’s Court hearing a matter in terms of
s 87
(1) of
the
National Credit Act, 34 of 2005
does not enjoy jurisdiction to
vary (by reduction or otherwise) a contractually agreed interest rate
determined by a credit agreement;
3.2
A re-arrangement proposal in terms of
s 86
(7) (c) of the
National
Credit Act that
contemplates a monthly installment which is less than
the monthly interest which accrues to the outstanding balance does
not meet
the purposes of the Act and a re-arrangement order
incorporating such proposal is
ultra vires
the
National Credit
Act and
a Magistrate’s Court has no jurisdiction to grant such
an order.
G. GOOSEN
JUDGE OF THE HIGH
COURT
BESHE, J.
I agree.
N. G. BESHE
JUDGE OF THE HIGH
COURT
Appearances:
For the Applicant
Mr. E. A. S. Ford SC
Instructed by Pagdens Attorneys
[1]
Thembani Wholesalers
at par 5
[2]
s 1 of the Act
[3]
s 6(2)
[4]
Unreported Judgment, Case no A3030/2012, GSJ, 14 March 2013
[5]
Unreported Judgment, Case no A629/2013, NGP, 14 June 2013