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[2017] ZAECPEHC 8
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Absa Bank Limited v Potgieter (2344/2013) [2017] ZAECPEHC 8 (31 January 2017)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
Case
No.: 2344/2013
Date
Heard: 29.07.2015;
7-10.11.2016
Date
Delivered: 31 January 2017
In
the matter between:
ABSA
BANK LIMITED
Plaintiff
and
ADELLE
YVETTE POTGIETER
Defendant
JUDGMENT
EKSTEEN
J:
[1]
The
plaintiff instituted action against the defendant for the payment of
the balance outstanding on a loan, together with interest
thereon.
The loan was secured by the registration of a mortgage bond over an
immovable property being portion 16 (a portion
of portion 2) of the
farm Brak River, number [...], in the Nelson Mandela Metropolitan
Municipality, division of Uitenhage, Province
of the Eastern Cape
(the property). The plaintiff accordingly seeks a further order
declaring the property to be specially
executable.
[2]
The
action was opposed. Although the defendant was represented
throughout by an attorney in Durban, who drafted all pleadings
and
advised the defendant throughout the duration of the trial the
defendant appeared in person. In doing so she acquitted
herself
admirably. In her pleading she denied the existence of any loan
at all and contested the copy of the loan agreement
annexed to the
declaration alleging that it was not a true copy of the original.
She denied her indebtedness to the plaintiff
and denied compliance
with the provisions of the National Credit Act, 34 of 2005 (the
NCA). In addition to these blanket
denials the defendant
pleaded that, in the event that the plaintiff proves a loan and its
material terms as alleged, then the granting
of such credit was
reckless in that at all material times the plaintiff knew or ought to
have known that the ability of the defendant
to make payment was
dependent upon charitable donations and/or grants which by their
nature are sporadic and fluctuate. Finally,
the defendant
pleaded that the declaration of executability of the property would
infringe her rights under section 26 of the Constitution.
The
plaintiff’s claim
[3]
Notwithstanding
the blanket denials contained in the pleading the plaintiff did not
contest any of the material evidence in respect
of the plaintiff’s
case.
[4]
As
alluded to earlier a photocopy of the loan agreement signed by the
defendant and a duly authorised representative of the plaintiff
was
annexed to the plaintiff’s declaration. Mr Lotz, an
attorney and conveyancer practising as a director in the firm
McWilliams & Elliot Incorporated in Port Elizabeth testified that
he was duly authorised by the plaintiff to sign the loan
agreement on
their behalf and that the signature which appears on the annexure to
the declaration is his. He testified that
the defendant signed
the agreement in his presence. This evidence was not challenged
and the defendant later acknowledged
that she had indeed signed the
loan agreement and she did not contest the authenticity of the
document. In the trial it was
not in dispute that the amount of
R490 000 was indeed advanced to her for the purpose of acquiring
property.
[5]
Simultaneously
with the signature of the loan agreement, Mr Lotz testified that a
further document being the standard mortgage conditions
applicable to
all mortgage bonds registered in favour of Absa Bank was duly
presented to the defendant and that she signed the
document in his
presence. A house owner’s insurance policy was similarly
signed on the same occasion together with
a document headed
“Confirmation of
National Credit Act compliance
in respect of
rights, risks and obligations and costs”. I shall revert
to this document later herein. Finally,
Mr Lotz testified that
the defendant signed a power of attorney authorising him to register
the said bond over the property.
Each of these documents were
handed in in evidence.
[6]
Mr
Fourie, a risk mitigation manager in the plaintiff’s Kempston
Road office in Port Elizabeth testified that he calculated
the
outstanding balance on the loan account as at 28 July 2015 in the
amount of R770 057. The certificate of balance
and the
calculation underlying the certificate were not challenged.
[7]
Ms
Pienaar, a legal secretary in the firm McWilliams & Elliot
Incorporated testified that on 29 July 2013 she had communicated
via
email with the defendant and requested the defendant to confirm that
they may correspond with her via her email address for
purposes of
notifications which need to be sent in terms of the NCA. The
defendant responded indicating that she would prefer
to receive
letters by mail at P O Box [...], Moselville as her email signal was
intermittent, however, she confirmed that Mc Williams
& Elliot
Incorporated may also write to her at her email address. On 30
July 2013 Ms Pienaar forwarded a notice in terms
of
section 129
of
the NCA to the defendant at her email address. She obtained a
computer generated confirmation of the delivery of the email.
The letter was subsequently also forwarded to the defendant via
registered post. On 8 August 2013 the defendant responded
acknowledging receipt of both the email and the registered letter and
indicating that she had received the registered letter on
7 August
2013. She expressed her intention to apply for debt review.
This she duly did on 13 August 2013. The
plaintiff, however,
contended that by virtue of her failure to have applied prior to
receipt of the
section 129(1)
notice the debt to the plaintiff should
be excluded from the debt review process. The evidence of Ms Pienaar
was not challenged
in any manner and the plaintiff acknowledged
later, during her evidence, that by virtue of the plaintiff’s
stance the debt
review process was not proceeded with. There
was therefore no process pending before a debt counsellor at the time
when proceedings
in this court were commenced.
[8]
In
these circumstances, notwithstanding the issues raised in the
pleadings, I am satisfied that the plaintiff has established its
claim against the defendant.
[9]
In
its declaration the plaintiff claimed an amount of R588 185,02
together with interest at the rate of 12,95% per annum calculated
on
daily balances and capitalised monthly on the first day of each month
from July 2013 to the date of payments, both dates inclusive.
It transpires from the evidence of Mr Fourie that a fresh calculation
was done on 28 July 2015 , the day preceding the commencement
of
trial. I have alluded to this evidence. Although the
calculation by Mr Fourie was not challenged in cross-examination
it
emerged later, during the evidence of the defendant and after the
close of the plaintiff’s case, that she contends that
her loan
was subject to a fixed interest rate of 12%. In this regard the
plaintiff pleaded the material terms of the mortgage
loan agreement
and specifically pleaded that the initial interest rate in respect of
the loan was 12,2% per annum, such interest
rate now being 12,95%.
As set out earlier the plaintiff denied the existence of the loan and
challenged the authenticity
of the copy annexed to the particulars of
claim on the basis that it did not represent a true copy of the
original. Having denied
the existence of the loan she did not raise
any specific dispute relating to the interest rate. She has
since conceded both
these issues. The pre-agreement quotation
delivered in terms of
section 92(2)
of the NCA, which is incorporated
in the mortgage loan agreement itself, specifies that interest will
be levied at a variable rate
commencing at 12,2%.
[10]
After
the plaintiff had closed its case, the defendant for the first time
suggested that the interest rate had been varied.
She
acknowledged that at the time of the signing of the agreement the
interest rate was variable, however, she states that when
the
economic situation changed she was afraid that the interest rate
would shoot through the roof and so she went to the bank and
asked
them to fix the interest rate for her for a period of ten years and
she contends that this was done. Thereafter, however,
against
her expectation, interest rates dropped considerably and she again
approached the plaintiff and requested that her interest
rate be
changed back to a variable interest rate. This they declined to
do. Although she states that the agreement
to change the
interest rate to a fixed interest rate was in writing she was unable
to produce any correspondence or an agreement
evidencing such a
change. She does not state when it occurred, who she spoke to
or where the alleged agreement was concluded.
Her evidence in
this regard is accordingly vague and unsubstantiated and relates to
an issue which was not raised in the pleadings
nor suggested to Mr
Fourie when he testified in respect of the calculation. In the
circumstances, on a preponderance of probability,
I find that the
agreement is subject to a variable interest rate currently at 12,95%
per annum.
The
defence of reckless credit
[11]
The
defendant’s amended plea filed on 28 July 2015, the date
preceding the commencement of trial, records that in the event
that
the plaintiff proves her loan the granting of such credit was
reckless by virtue thereof that the plaintiff knew or ought
to have
known that the ability of the defendant to make payments was
dependent upon charitable donations and/or grants which by
their
nature are sporadic and fluctuate. The contention of reckless
credit in the amended plea was limited to this single
ground.
During the course of her evidence at the resumed hearing of the trial
and whilst she was under cross-examination
the defendant introduced a
further special plea on 8 November 2016. Although the document
is headed “Special Plea”
it contains a number of prayers
at its conclusion. In the further special plea the defendant
contended that the plaintiff
granted credit recklessly in that she
was over- indebted from the outset of the loan agreement. In
these circumstances she
sought an order that I declare the property
not executable; set aside the credit agreement and cancel the
remaining debt,
alternatively, reduce the interest rate on the loan
from the date of the inception thereof to 1%, and refer the defendant
for debt
review.
[12]
Mr
Beyleveld
did not object to the filing of this further plea, however, in view
of the content thereof he sought to file a replication on 10
November
2016. The replication denied that the defendant was entitled to
the relief sought in the said special plea.
The replication
further addressed the question of reckless credit as raised in the
original pleading and contended that the defendant
was not entitled
to the relief by virtue of the provisions of
section 81(4)
of the NCA
as the defendant had provided false and misleading information
relating to her income at the time that the loan was
granted.
This amendment was supported by evidence which had previously been
fully canvassed in cross-examination of the defendant
and her
witnesses. I shall refer to this evidence below.
[13]
The
matter of reckless credit formed the foundation of the defendant’s
case.
Background
[14]
The
defendant was previously employed by the South African Police
Services (SAPS) between 1994 and 2005. In the course
of
her duty she developed a post-traumatic stress disorder with
underlying depression. Whilst absent from duty on extended
sick
leave due to the said condition she was further diagnosed with
cancer. She has received treatment for this condition
intermittently and is currently on passive treatment. In
these circumstances she applied to be medically boarded from
SAPS,
however, they refused to process her application. She was
ultimately advised by her psychiatrist from whom she received
treatment for her depression that she was unlikely to recover until
such time as she had put SAPS behind her and had cut all ties
with
the organisation. She accordingly resigned from SAPS in 2005.
[15]
At
the time that she sought to be medically boarded the defendant was
resident in Central, Port Elizabeth. During the period
from
approximately 2002 to 2003 she had founded two charitable
organisations which were registered as non-profit organisations.
The first was the Help Our People Excel Foundation (H.O.P.E
Foundation) and the other the Restoration of Human Abilities
Association
(ROHA). These organisations engaged in a number of
admirable initiatives aimed at assisting and making a positive
contribution
to the lives of disadvantaged and handicapped people.
This still continues.
[16]
In
2007 the defendant resolved to purchase a smallholding, the property,
both for personal use and to house some of her charity
projects.
The purchase price of the property amounted to R895 000 and the
defendant was at that time awaiting a pension
pay-out from SAPS.
She intended too to sell her property in Central which was bonded at
the time to the plaintiff but which
she anticipated would render a
reasonable free residue. The defendant accordingly approached
Mortgage SA to ensure that she
would qualify for a loan.
Mortgage SA advised her that the banks would look at her financial
position and require proof of
income for a six month period.
Bank statements and payslips would constitute such proof of income.
The defendant states
that she advised Mortgage SA that by virtue of
her employment by two non-profit organisations (H.O.P.E Foundation
and ROHA) she
had a fluctuating income from month to month and the
organisations do not produce payslips. She advised too that the
non-profit
organisations would hire office space from her on the
property at an agreed rental thereby providing additional income.
In
these circumstances Mortgage SA advised that the banks require a
letter from the non-profit organisations to state that the defendant
is in fact employed by the non-profit organisations and that she
earns a specific amount of money. The letters had also to
confirm the existence of the rental agreement.
[17]
The
defendant accordingly approached Ms Goulding who was at the time the
chairperson of the H.O.P.E Foundation and Ms Bell who was
a
management member of ROHA to issue these letters.
[18]
Ms
Goulding issued a letter on behalf of the H.O.P.E Foundation on 30
July 2007. The content of the letter reads:
“
RE:
RENTAL AGREEMENT BETWEEN MS A.Y POTGIETER AND THE H.O.P.E FOUNDATION
& CONFIRMATION OF EMPLOYMENT AND WAGES
I refer to your
telephonic conversation with our Director, Ms Adelle Potgieter, two
weeks ago.
Rental
Agreement
We wish to confirm
that a rental agreement exists between Ms Adelle Potgieter and The
H.O.P.E Foundation for the rental of an office
situated at Ms
Potgieter’s residence at [...] R. H., Central, Port Elizabeth.
We have inspected the smallholding which
Ms Potgieter wishes to
purchase and have agreed to continue renting office space from Ms
Potgieter at the new premises. We
also wish to rent a field
from her to present farming training workshops and to supply our soup
kitchens with fresh produce.
Currently our
rental is Three Thousand Six Hundred Rands, which is used as follows:
R1 600-00
(from March, formerly R800-00 pm) is paid directly to Ms Potgieter’s
ABSA bond account on a month basis; and
R2 000-00 is paid
monthly directly to the municipal account held in Ms Potgieter’s
name.
This rental amount
will be increased depending on the size of the additional space we
will rent at the new premises. This
agreement is valid for a
period of not less than five years.
Employment &
wages
We also wish to confirm that Ms
Potgieter has been employed on a full-time basis as Director since
November 2005 at a salary of
twelve thousand rands (R12 000-00)
per month. (Ms Potgieter founded the Foundation in June 2002
and originally did volunteer
& part-time work for the Foundation
until her full-time employment as Director last year.) Only a
part of the said wages
are transferred to Ms Potgieter’s bank
account monthly, with part paid out in cash and other amounts paid
directly to service
providers (ie Cell C, medical aid, etc) on behalf
of Ms Potgieter.
Please feel free to
contact me personally if you have any further enquiries regarding the
above.
Yours sincerely
(Mrs) Madeleine
Goulding”
[19]
Ms
Goulding referred also in her evidence to a resolution of the H.O.P.E
Foundation which was handed in in evidence. The exhibit
was
unsigned, however, Ms Goulding confirms that she in fact signed the
original at the time. She is unaware of the whereabouts
of the
original. The resolution reads as follows:
“
The
Management Committee of Help Our People Excel Foundation resolves
that the Director may be determine his/her remuneration level
and
package structure, whether as self-employed service provider
contracted to HOPE Foundation or staff member, as well as of other
staff and service providers, including salary, wages, … .
No staff member, whether internal staff or external service
provider
will be paid unless the funds for the remuneration is raised in cash
or in kind.”
[20]
For
this reason Ms Goulding testified that the salary of the defendant
was never guaranteed and was always dependent upon whether
or not
sufficient money was raised. The non-profit organisation was
dependent upon donations and grants received from time
to time from
the National Lottery Distribution Trust Fund (the Lotto). In
the event that sufficient funds were raised she
states that the
defendant’s salary was R12 000 per month at the time.
[21]
In
cross-examination Ms Goulding acknowledged that she was requested to
write the letter by the defendant. She knew that the
defendant
intended to purchase the property and she too was keen for the
property to be purchased because the H.O.P.E Foundation
intended to
operate from the property. She knew that the defendant did not
have sufficient money to purchase the property
and that she required
a bond. In these circumstances she acknowledges that when she
wrote the letter she knew that the defendant
intended to present the
letter to the bank in order to satisfy the bank that the defendant
meets the financial requirement to qualify
for a bond because they
were assessing her ability to repay bond instalments. She
acknowledged that that was the purpose
of the letter.
[22]
She
was constrained to acknowledge during cross-examination that on a
reading of the letter it unequivocally conveys that the defendant
earns a fixed salary from the H.O.P.E Foundation which amounts to
R12 000 per month. She denied however that it
was
her intention to mislead the plaintiff and contends that she did not
think at the time of annexing the resolution to which
I have
referred. She states that she expected the plaintiff to carry
out its own investigation to verify the facts.
[23]
Ms
Bell authored the letter on behalf of ROHA. The letter records:
“
RE:
CONFIRMATION OF EMPLOYMENT: MS A.Y POTGIETER
This letter serves
to confirm that Ms Adelle Y. Potgieter, ID [7...], is employed on a
full-time basis (1½ days per week)
in the capacity as Acting
Ddirector, at an average wage of One Thousand Five Hundred Rands
(R1 500-00) per month. Ms
Potgieter has been employed in
this position since 7 November 2003, but has only been remunerated
since January 2005. Ms
Potgieter was a founding member of ROHA
and Chairman since February 2000.
Please do not
hesitate to call me if you require further information regarding the
above.”
[24]
Ms
Bell testified that she has a highest educational qualification of
Standard 8 and that she suffers from depression. In
cross-examination Ms Bell acknowledged that the defendant had
requested her to write the letter and advised her what should be
contained in the letter. She acknowledged that she knew that
the only purpose for the letter was to convince the plaintiff
to
grant a bond. Ms Bell, however contends that the information
contained in the letter was factually correct.
[25]
Ms
Bell wrote a further letter to Mortgage SA on the same day which
reads as follows:
“
I
herewith wish to confirm that I am a boarder with Miss Adelle
Potgieter of [...] R. H., Central, Port Elizabeth since September
2003. Currently I pay boarding fees of R700-00 per month in
cash for room and board. I supplement my contribution to
the
household by doing household chores like cooking and laundry.
I intend moving
with Miss Potgieter to the smallholding and live there indefinitely.
Please feel free to
contact me if you have any further enquiries in this regard.”
[26]
During
her evidence, however, she referred to two resolutions taken by ROHA,
the first in November 2003 reads in identical terms
to the resolution
allegedly taken by the H.O.P.E Foundation in June 2007 which I have
set out earlier. The second resolution
is dated 23 July 2007,
just one week prior to the loan application. The resolution
provides:
“
The
salary scale and Lotto application is approved without amendments.
Members agreed that wages are only payable if funds
are raised for
that purpose and that payments need not be made on a monthly basis,
but may be made on a per job/task/project basis.”
[27]
She
explained that both ROHA and the H.O.P.E Foundation applied from time
to time to the Lotto for funding. Lotto did not,
however, call
for project applications every year. When applications were
invited ROHA and the H.O.P.E Foundation submitted
applications.
They did not receive funding every year and not every application
submitted by them was successful. In
these circumstances there
was not always money available to pay salaries. At the time of
the hearing they had not received
Lotto funding for approximately
three years.
[28]
After
a lengthy adjournment and at the resumed hearing of the matter the
defendant produced documentation to which she referred
as management
accounts for ROHA and the H.O.P.E Foundation. These are in the
form of a computer printout and were prepared
by the defendant and Ms
Bell on 2 November 2016, just a week prior to the recommencement of
the hearing. No source documents
are provided in support of the
figures set out therein, however, Ms Bell explained that the
documents were only prepared on 2 November
2016 as she is no long
resident in Port Elizabeth and had only returned to Port Elizabeth on
2 November 2016. She still had
information in her emails which
she had not discarded and she was able therefrom to present these
management accounts in respect
of the financial years 1 March 2007 to
28 February 2009 in respect of the H.O.P.E Foundation and ROHA.
The management accounts
are not supportive of the information set out
in the respective letters by Ms Goulding and Ms Bell. In
respect of the H.O.P.E
Foundation it reflects wages to the defendant
in the amount of R500 in June 2007, R700 in July 2007, R12 000
in August 2007,
R6 500 in September 2007 and R7 000 in
October 2007. In June 2007 the management account reflects
further payments
of R353,49 in respect of insurance which may or may
not be to the benefit of the defendant personally, R260 in respect of
medical
aid for the defendant and R1 600 in respect of municipal
services. In July 2007 a similar amount was paid in
respect
of insurance and R270 in respect of medical aid for the
defendant. R1 831,25 was paid in respect of municipal
services.
On the figures presented in the management accounts,
to the extent that they may be reliable, it is apparent that the
representation
made in the letter by Ms Goulding is not supported by
the evidence presented by the defendant. In fact
the evidence
suggests that at no time preceding 30 July 2007 has the
defendant earned the amounts set out in the letter of Ms Goulding
which
was provided by defendant as proof of income.
[29]
On
30 July 2007, the same day upon which the other letters to which I
have referred were written the defendant addressed a letter
to
Mortgage SA for presentation to the banks. Her letter reflects
the following:
“
APPLICATION
FOR BOND FOR SMALLHOLDING
I refer to our
conversation two weeks ago.
I have made an offer to purchase a
small holding in the Rocklands area and need your assistance in
obtaining a bond.
Herewith included
is the following:
-
my
accepted offer to purchase;
-
proof
of income from my employers (ROHA and the H.O.P.E
Foundation);
-
proof
of income from a boarder;
-
proof
of income from trading partner (Africa React UK).
-
your
Home Loan Expenditure and Liability Form and accounts details.
Although I owe
R103,000-00 on the bond of my current address, I am awaiting a payout
of my Police pension, which should cover this
amount. I am
expecting the payout to arrive in the next three to four months.
I am seeking a bond
of roughly R345,000-00 plus cost. Please see what the maximum
is that I would qualify for, as to speed
up the process I may have to
lower the selling price of my current property. I should be
able to put down R500,000-00 on
the new property.
In addition, I plan
to rent out stabling and to open an apiary and will be able to
generate an income from the property within six
months of
occupation.
Thanking you in
anticipation.
Yours truly
(Ms) Adelle Y
Potgieter
PS: My sister
also boards with me at a fee of R700-00 per month for room and board
and an extra R200-00 towards bread and
milk for the household.”
[30]
The
proof of income from ROHA and the H.O.P.E Foundation submitted were
the letters by Ms Goulding and Bell respectively.
The proof of
income from a boarder was the letter from MS Bell which I have set
out earlier herein. In addition she submitted
a letter signed
by one Benningfield of Africa React (UK). This letter too was
dated 30 July 2007. It records:
“
Africa
React (UK) wishes to confirm that we have purchased an average of
R7 000-00 worth of beadwork per month from Miss Adelle
Yvette
Potgieter, RSA ID [7...], from January 2007. These funds have
been paid to her by moneygram or direct transfer into
an ABSA account
held in my name and on which she has signing power.
I have been buying
beadwork from Miss Potgieter for four years now. I hereby
confirm that our business arrangement will continue
indefinitely as I
have set up a shop in the United Kingdom to sell the goods I purchase
from Miss Potgieter.”
[31]
The
defendant testified that due to the economic downturn in the United
States of America and Europe Mr Benningfield never placed
another
order after 30 July 2007. Moreover, the
financial position of ROHA and the H.O.P.E Foundation
deteriorated
rapidly and they were unable to pay the salaries set out in the
letters which the defendant had anticipated would
in fact occur.
[32]
The
plaintiff received the bond application together with the proof of
income submitted. They carried out a credit assessment
as
envisaged in
section 80(1)
and
81
(2) of the NCA and advised the
defendant on 24 August 2007 that a bond in the amount of R395 000
was approved. On 6 September
2007, however, the defendant
addressed a letter to Mortgage SA in which she expressed the wish to
increase the bond amount to R600 000
as it appeared that the
pension pay-out from the SAPS may be further delayed and she wished
to effect certain repairs and maintenance
or minor alterations to the
property. The request was conveyed to the plaintiff and the
plaintiff accordingly carried out
a new credit assessment in respect
of the request to borrow R600 000. The plaintiff concluded
that the defendant had
inadequate income to qualify for such a loan
but offered to extend to her a bond in the amount of R490 000.
[33]
Ms
de Klerk testified on behalf of the plaintiff in respect of the
pre-credit assessment. She explained that the NCA came
into
force in June 2007, just one month prior to the bond application.
Pre-credit assessments are required by the NCA and
the plaintiff
would take into account the income and expenditure of an applicant
and then assess what surplus is available to determine
whether or not
the applicant can afford to repay the bond. In circumstances
where the applicant puts down a significant deposit
on the purchase
price the bank would consider the risk to it to be mitigated by
virtue of the free residue available in the
value of the property.
[34]
Ms
de Klerk explained the various computer printed documents presented
in evidence in respect of the pre-credit assessment.
The income
which the defendant represented to the plaintiff and supported by the
letters to which I have referred earlier amounts
to R25 500 made
up as follows:
“
Salary
ROHA
R 1 500
Salary H.O.P.E
Foundation
R12 000
Rental from H.O.P.E
Foundation
R 3 600
Sales to Africa React
(UK)
R 7 000
Rental from Ms
Bell
R 700
Rental from Defendant’s
sister
R 700
TOTAL
R25 500”
[35]
Ms
de Klerk explained that it appeared from the pre-credit assessment
that the plaintiff disregarded the sales of R7 000 per
month and
the rental amounts received from Ms Bell and the defendant’s
sister and conducted the assessment conservatively
on an acceptance
of an income of R17 100. Having regard only to this income
the plaintiff concluded that the defendant
could only afford to
service a bond of R490 000.
[36]
In
cross-examination Ms de Klerk acknowledged that the plaintiff has an
obligation to carry out a pre-credit assessment and that
they bear
the onus to verify the information provided to them. She
acknowledged that the plaintiff would have had regard
to bank
statements, however, it is common cause that the plaintiff is
currently not in possession of any bank statements which
were
utilised for purposes of the assessment. Ms de Klerk was unable
to explain the whereabouts of such bank statements.
Ms de
Klerk, however, asserted that the plaintiff did verify that the
salaries were paid to the defendant. In this regard
both the
letters submitted by Ms Bell and Ms Goulding as retrieved from the
plaintiff’s records contain a handwritten inscription
which
reads:
“
2/8
Confirmed”
[37]
The
author of this note was not identified in evidence nor called to
testify. Ms Goulding, Ms Bell and the defendant deny
that any
representative of the plaintiff contacted any of them to obtain
further information in respect of the said letters or
to confirm the
correctness thereof. The bank statements which the defendant
contends were delivered to the plaintiff have,
as set out earlier,
not been traced and it appears from the purported management accounts
of the two non-profit organisations that
the representations made in
the letter of Ms Goulding bears little correlation to the true income
of the defendant.
Application
of
section 80
and
81
of the NCA
[38]
Reckless
credit is regulated by
section 80
and
81
of the NCA. The
material portion of
section 80
provides:
“
(1) A credit
agreement is reckless if, at the time that the agreement was made, or
at the time when the amount approved in terms
of the agreement is
increased,…-
(a)
the credit provider failed to conduct an
assessment as required by
section 81(2)
, irrespective of what the
outcome of such an assessment might have concluded at the time; or
(b)
the credit provider, having conducted an assessment as required by
section 81(2)
, entered into the credit agreement with the consumer
despite the fact that the preponderance of information available to
the credit
provider indicated that-
(i)
the consumer did not generally
understand or appreciate the consumer's risks, costs
or obligations
under the proposed credit agreement; or
(ii)
entering into that credit agreement would
make the consumer over-indebted.”
[39]
When
such an assessment is made as to whether a credit agreement is
reckless or not the criteria set out in subsection (1) should
be
applied as they existed at the time the agreement was made.
(See
section 80(2).)
[40]
The
prevention of reckless credit is provided for in
section 81
of the
NCA. The material portion of
section 81
, for purposes of the
present matter, provides:
“
(1)
When applying for a credit agreement, and while that application is
being considered by the credit provider, the prospective
consumer
must fully and truthfully answer any requests for information made by
the credit provider as part of the assessment required
by this
section.
(2) A credit provider must not enter
into a credit agreement without first taking reasonable steps to
assess-
(a) the
proposed consumer's-
(i)
general understanding and appreciation of the risks and costs of the
proposed credit, and of the rights and obligations
of a consumer
under a credit agreement;
(ii)
debt re-payment history as a consumer under credit agreements;
(iii)
existing financial means, prospects and obligations; and
(b) …
(3)
…
(4) For all purposes of this Act, it
is a complete defence to an allegation that a credit agreement is
reckless if-
(a) the
credit provider establishes that the consumer failed to fully and
truthfully answer any requests
for information made by the credit
provider as part of the assessment required by this section; and
(b) a
court or the Tribunal determines that the consumer's failure to do so
materially affected the ability of the credit
provider to make a
proper assessment.”
[41]
The
evidence of Ms de Klerk as set out earlier clearly establishes that
the plaintiff did indeed conduct a pre-credit assessment
as required
by section 80(1)(a). Section 82(2)(b) of the NCA provided at
the time that the National Credit Regulator may
publish guidelines
proposing evaluative mechanisms, models and procedures to be used in
conducting an assessment in terms
of section 81. This the
National Credit Regulator failed to do until 2013. Section
82(1), as it read at the time, afforded
the credit provider the right
in these circumstances to determine for itself the evaluative
mechanisms or models and procedures
to be used in meeting its
assessment obligations under section 81, provided that such
mechanism, model or procedure results in
a fair and objective
assessment. There were therefore no prescribed mechanisms or
procedures at the time.
[42]
The
pre-credit assessment in this case was carried out during or about
September 2007. When the application was made on 30
July 2007
Mortgage SA, on behalf of the plaintiff, requested proof of the
defendant’s income. I have set out earlier
the proof of
income submitted by the defendant. The assessment was carried
out on an acceptance of such income save that
the plaintiff
disregarded the income generated from sales to Africa React (UK) and
the rentals received from Ms Bell and the defendant’s
sister.
Whilst it is not clear why the plaintiff disregarded such income Ms
de Klerk postulated that it must have been considered
to be
sufficiently uncertain so as to exclude it from the reliable income
to which plaintiff had regard. This approach suggests
a fair
and objective approach to the assessment carried out.
[43]
Whether
or not a credit grantor has taken the required reasonable steps to
meet its assessment obligations is to be determined objectively
on
the facts and circumstances of any given case (see
Horwood
v Firstrand Bank Limited
[2011] ZAGPJHC 121 (21 September 2011) para [5]). The defendant
bears the onus to establish that credit was recklessly granted.
[44]
It
is the defendant’s primary case that the plaintiff knew or
ought to have known that her income would fluctuate and was
dependent
upon the receipt of donations to the charities. The foundation
for this contention is two-fold. Firstly,
the defendant
contends that the H.O.P.E Foundation banked with the plaintiff and
had the plaintiff perused the bank statements
of the H.O.P.E
Foundation it would have seen that the plaintiff did not earn R12 000
per month from the H.O.P.E Foundation.
Secondly, she contends
that she advised an employee at the bank that her salary was not
guaranteed and it was dependent upon donations
to the charities.
[45]
The
evidence establishes that the H.O.P.E Foundation did indeed bank with
the plaintiff. Defendant testified further that
she had
provided three months bank statements of her own to the bank at their
request. The defendant is however unable to
advise what her
bank statements revealed. The difficulty with this argument is
that the letter of proof of income which was
provided by the
defendant to the plaintiff states categorically that only a portion
of her salary would be paid into her bank account
and that the
remainder would be paid either in cash to her or by payment to
service providers to whom she was indebted. A
perusal of the
bank statements would therefore not have advanced the enquiry in
respect of the earnings from the H.O.P.E Foundation
as the
undisclosed cash payments and disbursements on behalf of defendant
could not be identified on the statements. It seem
to me, as a
matter of probability, that cash payments are unlikely to pass
through the bank accounts of either the H.O.P.E Foundation
or the
defendant.
[46]
The
major refrain throughout the cross-examination of the witnesses on
behalf of the plaintiff and in her own evidence was that
there
was an obligation on the plaintiff to carry out further
investigations in order to determine whether the proof provided
by
the defendant was indeed true and correct. I have given careful
consideration to the provisions of section 80(1) and (2),
81(1) and
(2) and 82(1) of the NCA. I can find no indication in these
sections which could possibly give rise to such an
obligation on the
part of the plaintiff and, as recorded earlier, the National Credit
Regulator had published no guidelines in
respect of procedures to be
followed. The plaintiff, through Mortgage SA, requested proof
of income from the defendant.
The defendant is enjoined by
section 81(1) of the NCA to answer fully and truthfully to this
request. On a consideration
of the evidence set out above it
seems to me that “the proof of income” provided was
clearly incomplete and untruthful.
To the extent that
resolutions existed which stipulated that remuneration would not be
paid to the defendant unless funds were
raised these were not
revealed to the plaintiff. In the case of each of the
non-profit organisations such a resolution was
allegedly taken
shortly before the application for credit was made. It must
have been fresh in the memory of the defendant,
Ms Bell and Ms
Goulding. I think that the inescapable conclusion is that they
were intentionally withheld thereby creating
a false impression in
the mind of the plaintiff as to the financial ability of the
defendant. The plaintiff was entitled
to rely on the integrity
of the defendant’s response because the NCA specifically
requires of the defendant to answer such
requests fully and
truthfully. The letter of Ms Goulding seems to me to be clear
and unambiguous and it contains no suggestion
of any fluctuation of
income which would require further investigation.
[47]
The
second ground advanced by the defendant is that she in fact advised
both Mortgage SA and an employee of the plaintiff that she
has a
fluctuating income. This contention may rightly be described as
an afterthought. It was never suggested to any
of the witnesses
on behalf of the plaintiff nor did it form any part of the
defendant’s evidence in chief. It emerged
only under
cross-examination. Her evidence that she discussed it with
Mortgage SA is inconsistent with her evidence in chief
that Mortgage
SA advised that the bank required of her to produce a letter which
confirmed not only that she was employed by also
that she earned “a
specific amount of money”. When her evidence emerged in
cross-examination that she had in
fact discussed her fluctuating
income with an employee of the plaintiff counsel asked her which bank
employee she spoke to.
The reply was:
“
Well
it was not with them. It was the bank official who called me in
to first sign the loan. When they spoke to me I
had said to
them my income fluctuates, because they asked me for the documents
again for the loan and they asked me for bank statements
and I said
to them how much bank statements do you want and they said three
months and I explained to them my income fluctuates.”
[48]
The
reply is mostly unspecific and generalised both in respect of the
identity of the person she spoke to and the content of what
she told
such person in respect of her earnings. Later during
cross-examination she again contended that she had discussed
her
fluctuating income with “the bank”. She was again
asked who she had discussed it with at the bank.
On this
occasion she was uncertain. She stated:
“
That
was the person, I do not remember if it was the person who telephoned
me to ask me for the bank statements or when I discussed
it with the
lady who called me in for the contract but I did discuss it with
them.”
[49]
Yet
later, it was suggested to her that it never occurred. She
responded:
“
I
did speak to Absa Bank about this. … I had a meeting
with ABSA, I think it was home loans in the city centre when
they
called me regarding the loan they had approved and at the time I had
this meeting I had told the lady that I am concerned
about the job
and income.”
[50]
On
this occasion she was certain that it was in fact a lady that she
spoke to however there is no indication of the position of
the lady
in the bank or the function that she was employed to perform and she
still does not say that she told the lady that receipt
of her salary
was dependant on the receipt of donations. Even if the
defendant had spoken to a clerk in the employ of the
plaintiff, I do
not think that it detracts from the fact that she did not fully and
truthfully answer the request relating to her
income when she was
asked to provide proof thereof. I am satisfied that her failure
to do so materially affected the ability
of the plaintiff to properly
assess her creditworthiness.
[51]
In
all the circumstances I think that even if the defendant was
over-indebted at the time that she entered into the credit agreement
it occurred by virtue of the misrepresentations made by the defendant
when requested to provide proof of her income. In these
circumstances section 81(4) provides a full defence to this
assertion.
[52]
Finally,
in respect of the reckless credit, the defendant asserted during her
evidence that she did not understand the risks and
costs of the
proposed credit and the rights and obligations of a consumer under a
credit agreement. In particular she did
not understand the
implications of section 129 and section 86 and 87 (debt review) of
the NCA and therefore she did not apply for
debt review. This
argument too, I consider to be without merit. I referred
earlier to the documents signed in the presence
of Mr Lotz. Mr
Lotz made particular reference to a document “Confirmation of
National Credit Act (NCA) compliance in
respect of rights, risks,
obligations and costs”. He testified that he explained the
general import of all the documents
which were signed in his presence
but did not explain each clause of the loan agreement and bond.
With specific reference,
however, to this document he testified that
he took the defendant through each of the points stipulated on the
document and explained
it to her so that she fully understood what
the loan involves and thereafter he afforded her the opportunity to
ask questions relating
to any of the documents. This evidence
was not seriously contested in cross-examination. Defendant
testified further
that shortly before receiving the section 129(1)
notice an official of the plaintiff called her to advise her that it
was now her
last opportunity to apply for debt relief.
[53]
During
her evidence the defendant suggested that Mr Lotz had run through the
documents rapidly and that she did not understand the
implications
thereof. The requirements of section 81(2) is that a credit
provider should take “reasonable steps”
to assess the
proposed consumer’s general understanding and appreciation of
the risks and costs of the proposed credit and
of the rights and
obligations of the consumer under the credit agreement. In the
present instance the plaintiff specifically
appointed an experienced
attorney to explain the legal implications to the defendant.
One of the specific contentions raised
in the said document and
explained by Mr Lotz relates to the defendant’s right to apply
for debt review. I accept the
evidence of Mr Lotz in this
regard. On a consideration of the evidence I consider that the
plaintiff has clearly complied
with the obligation placed upon it in
terms of section 80(1)(b)(i) and 81(2)(a)(i) of the NCA. I
accordingly find that the
defendant has failed to discharge the onus
to establish that the credit was reckless.
Section
85 of the NCA.
[54]
Section
85 of the NCA provides that in any court proceedings in which a
credit agreement is being considered and 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 to
declare that the consumer is over-indebted, as determined in
accordance with Part D of Chapter 4 of the NCA and make
an order as
contemplated in section 87 to relieve the consumer’s
over-indebtedness. The defendant requests that I should
make
such an order.
[55]
Section
85 confers a discretion on the court. In
Firstrand
Bank Limited v Olivier
2009 (3) SA 353
(SE) at para [14] on p. 359 Erasmus J considered the
nature of the discretion. He held as follows:
“
[14]
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 para
(a)
or
(b)
.
The court will exercise this discretion judicially with due regard to
the objectives of the NCA which, in the present regard,
is to assist
the over-burdened consumer to rehabilitate his affairs. In doing so,
the Act makes significant inroads into the credit
provider's
common-law rights, as well as its constitutional right 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 NCA.”
[56]
These
sentiments accord with the sentiment expressed by Cameron J in
Sebola
and Another v Standard Bank of South Africa Limited and Another
2012 (5) SA 142
(CC) at para [40] p. 154 where he confirmed the
dictum of the SCA in
Nedbank
Limited v National Credit Regulator
2011 (3) SA 581
(SCA) at p. 585 para [3] stating:
“
(t)he
interpretation of the NCA calls for a careful balancing of the
competing interests sought to be protected, and not for a
consideration of only the interests of either the consumer or
the credit provider”.
(See
also
Standard
Bank of South Africa Limited v Hales and Another
2009 (3) SA 315
(D) at 322B-C.)
[57]
The
discretion which section 85 confers upon a court arises when a credit
agreement is considered in proceedings before it and it
is further
alleged by the defendant (the consumer under the credit agreement)
that he/she is over-indebted. Once these two
jurisdictional
facts co-exist the discretion arises.
[58]
In
the present proceedings a credit agreement is being considered and
the defendant does allege that she is over-indebted.
The
discretion does accordingly arise. What is required of the
court at this stage is to exercise a discretion and to do
so
judicially with due regard to the objectives of the NCA.
[59]
The
objectives of the NCA are set out in section 3 of the Act. The
purpose of the Act is 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 various means set out
in section 3(a)-(i). The careful
balancing of the competing
interests sought to be protected to which the SCA referred in the
matter of
Nedbank
Limited
supra
clearly emerges from the provisions of subsection (a)-(i). In
terms of section 3 the objectives of the Act are sought to
be
achieved
inter
alia
by:
“
(c)
providing responsibility in the credit market by-
(i)
encouraging responsible borrowing, avoidance of over-indebtedness and
fulfilment
of financial obligations by consumers;
and
(ii)
discouraging
reckless credit granting by credit providers and contractual
default
by consumers
;
(d)-(f) …
(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 harmonised system of debt
restructuring, enforcement and judgment,
which
places
priority
on the eventual satisfaction of all responsible
consumer
obligations
under credit agreements.”
(emphasis
added)
[60]
Where
credit is recklessly advanced the Act provides for stringent
sanctions to protect the consumer (see section 83 and 84 of the
NCA). Where, however, credit has not been recklessly advanced
section 3 emphasises the obligation of credit consumers eventually
to
satisfy all consumer obligations under credit agreements. I
have already held that it has not been established that the
credit
was recklessly advanced. It is accordingly necessary for a
defendant who makes an appeal upon the provisions of section
85 to
establish sufficient facts on oath to enable the court to exercise
the discretion which is conferred upon it and to satisfy
itself that
the application for referral is
bona
fide
and
not made as a delaying tactic. Such a defendant should
establish particulars of his financial prospects in the foreseeable
future so as to enable the court to determine whether there is a
reasonable prospect that he/she will be able to rehabilitate his/her
affairs within a reasonable period.
[61]
In
the present instance the defendant has fallen far short thereof.
I have alluded earlier to the outstanding balance on the
loan
account. As calculated on 28 July 2015 it
already amounted to R770 057 upon which interest accrued
at
12,95%. The defendant has not made any payment at all in
respect of the loan agreement since May 2013. The interest
alone on this commitment amounts to nearly R100 000 per annum or
R8 300 per month. The defendant has provided no
information in respect of her current expenses and financial
obligations nor has she provided any reliable indication of her
current
income. She has not provided any indication of other
credit agreements or her liability in respect thereof. During
cross-examination Mr
Beyleveld
taxed the defendant in order to establish her income over the last
year. She was unable to provide any significant meaningful
information. At the conclusion of a lengthy cross-examination
the defendant was able to testify to an average monthly gross
income
of nearly R5 000 per month. She contends further that
there are a number of persons resident on the property
who do not pay
rent and she was hopeful of persuading them to do so. There is,
however, no evidence of any tangible progress
made towards this
goal. She has established that the non-profit organisation has
made an application to the Lotto for a grant
of approximately R1
million per year over the next three years to support certain
projects of the H.O.P.E Foundation and ROHA.
In the event that
the grant materialises she is hopeful that her salary will be paid
thereafter. Again there is no indication
from the Lotto at the
present stage of any probability that the said amount, or any amount
at all would be allocated to ROHA or
the H.O.P.E Foundation.
Previous grants received from the Lotto were considerably smaller and
ranged from R250 000 to
R400 000. On a consideration
of all the evidence I do not consider that any reasonable prospect
has been shown to exist
which would enable the defendant to
rehabilitate her affairs in the foreseeable future in a manner which
holds any prospect of
a restructuring of her liabilities so as to
satisfy the entire indebtedness to the plaintiff. On the
information provided
it would seem that her gross income at present
is insufficient to service even the monthly interest on the bond
only, while ignoring
other essential living expenses and
obligations. In the circumstances I decline to exercise my
discretion in terms of section
85 of the NCA.
Section
26 of the Constitution
[62]
Rule
46(1)(a)(ii) of the Uniform Rules of Court provides:
“
(1)(a)
No writ of execution against the immovable property of any judgment
debtor shall issue until —
(ii)
such immovable
property shall have been declared to be specially executable
by the
court … Provided that, where the property sought to be
attached is the primary residence of the judgment debtor,
no writ
shall issue unless the court , having considered all the relevant
circumstances, orders execution against such property.”
[63]
The
defendant pleaded that declaring the property executable would
infringe her rights in terms of section 26 of the Constitution
in
that the premises is her and a number of dependents primary residents
including four disabled persons, two pensioners and six
minors and
she and them would then have no alternative adequate housing.
She pleads that the premises are the source of income
of various
charities upon which the defendant’s income and various
dependents are reliant and any order declaring the property
executable will render the defendant and such dependents homeless and
without a source of income.
[64]
At
the resumed hearing of the trial, more than a year after the pleading
was drafted, the defendant testified that there are now
approximately
forty people living there who would have nowhere to go if the
property were declared executable. Herself and
her husband
reside there. I have set out earlier the defendant’s
medical tribulations. She testified that her
husband has
suffered a brain injury and receives a disability grant. Her
sister, who also has a psychiatric condition and
receives a
disability grant, also resides on the property. She states that there
are more than a dozen minor children living on
the property.
For these reasons it is contended that an order declaring the
property executable should not be granted.
[65]
In
Jaftha
v Schoeman and Others, Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC) at 162 para [58] Mokgoro J considered the sale
in execution of a debtor’s primary residence and stated:
“
Another
factor of great importance will be the circumstances in which the
debt arose. If the judgment debtor willingly put his or
her house up
in some or other manner as security for the debt, a sale in execution
should ordinarily be permitted where there has
not been an abuse of
court procedure. The need to ensure that homes may be used by
people to raise capital is an important
aspect of the value of a home
which courts must be careful to acknowledge.”
[66]
In
Standard
Bank of South Africa Limited v Saunderson
and
Others
[2006] 2 All SA 382
(SCA) at 389 para [19] Cameron and Nugent JJA
considered the provisions of section 26(1) of the Constitution in the
context of
the sale in execution of bonded property and declared:
“
Even
accepting for present purposes that execution against mortgaged
property could conflict with section 26(1) such cases are likely
to
be rare. It is particularly hard to conceive of instances where
a mortgagee’s right to reclaim the debt from the
property will
be denied altogether; and it is therefore not surprising that
the Constitutional Court noted in
Jaftha
that in the absence of abuse of court procedure – and none is
alleged here – a sale in execution should ordinarily
be
permitted against a home bonded for the debt sought to be reclaimed.
Nor can the approach differ depending on the reasons
the property
owner might have had for bonding the property, or the objects on
which the loan was expended.”
[67]
In
the present matter the property was purchased in 2007 at a purchase
price of R895 000.
Prima
facie
,
it seems to me that the property could probably not be described as
“adequate housing” as envisaged in section 26
of the
Constitution and more fully discussed in
Jaftha
supra
.
The property was given as security to raise the purchase price.
No abuse of the court process is alleged in these
proceedings.
In these circumstances, ordinarily, an order for execution should
follow unless there is an indication of bad
faith on the part of the
plaintiff. Thus, in
Gundwana
v Steko Developments
CC
and Others
2011 (3) SA 608
(CC) at p. 625 the Constitutional Court referred with
approval to the dictum in
Jaftha
which I have quoted earlier herein and Froneman J went on to state at
p. 625 [48]:
“
An
agreement to put one's property at risk as security in a mortgage
bond does not equate to a licence for the mortgagee to enforce
execution
in
bad faith
.”
(emphasis
added)
[68]
Later
at para [54] at p. 626 Froneman J went on to state:
“
It
must be accepted that execution in itself is not an odious
thing. It is part and parcel of normal economic life. It is only
when
there is disproportionality between the means used in the execution
process to exact payment of the judgment debt, compared
to other
available means to attain the same purpose, that alarm bells should
start ringing. If there are no other proportionate
means to attain
the same end, execution may not be avoided.”
[69]
I
have considered earlier, with reference to the provisions of section
85 of the NCA, other available means by which payment of
the judgment
debt could be effected. I do not consider that the defendant
has shown any alternative method by which the judgment
debt could be
satisfied.
[70]
Moreover,
reverting to
Jaftha
supra
at 158 at para [41] Mokgoro J stated:
“
It
might be that the debtor incurred debts despite the knowledge of his
or her inability to repay the money and was reckless as
to the
consequences of incurring the debt. While it will ordinarily be
unjustifiable for a person to be rendered homeless where
a small
amount of money is owed, and where there are other ways for the
creditor to recover the money lent, this will not
be the case in
every execution of this nature.”
[71]
This
dictum is particularly apposite to the present set of facts. I
have found earlier that the inescapable conclusion on
the evidence
before me is that there has been an intentional misrepresentation of
the defendant’s financial means in order
to obtain approval of
the loan which materially affected the pre-credit assessment of her
means to repay. In respect of the
numerous persons living on
the smallholding it is apparent that they reside there through and
with the consent of the defendant.
It does not seem to me
to follow that they would necessarily be evicted in the event that
the property is sold. Eviction
is of course a very different
process which would have to occur in accordance with the law.
In these circumstances I consider
that an order declaring the
property executable must follow.
Procedural
issues
[72]
There
are two procedural issues which need to be dealt with prior to the
conclusion of this judgment. I have referred earlier
to the
evidence of Mr Fourie which occurred at the initial hearing of the
matter. At the resumed hearing of the matter during
November
2016 the defendant intimated her intention to request the recall of
Mr Fourie in order to further cross-examine Mr Fourie.
Notwithstanding the initial intimation the application to recall Mr
Fourie did not arise prior to the plaintiff having closed its
case.
Upon enquiry the defendant intimated that she wished to further
cross-examine Mr Fourie in respect of the pre-credit
scoring
assessment. Mr
Beyleveld
objected. I dismissed the application to recall Mr Fourie.
My
reasons are the following:
[73]
Mr
Fourie testified that he was a risk mitigation manager at a branch of
the plaintiff. In the course of his evidence in chief
he made
reference to certain computer printouts which were exhibits before
court and identified them as being the “credit
scoring”
in the present matter and explained that the bank utilises an
electronic printout of the score. He identified
certain
features appearing on the scoring system, however, when
cross-examined about the evaluative mechanisms adopted by the bank
he
states that he did not do the application and that the scoring for
purposes of the pre-credit assessment is done by the bond
originating
department of the plaintiff which is a totally different section from
the section at which he works. He accordingly
has no direct
knowledge of the scoring mechanisms adopted for purposes of the
present case. To that end Ms de Klerk was called
to testify.
She was fully cross-examined in respect of the scoring system.
In respect of Mr Fourie Ms de Klerk testified
that Mr Fourie’s
function related to collections and that he did not fall in the same
hierarchy as she does.
[74]
The
defendant intimated that she was in possession of certain letters
from the plaintiff which were not available in the previous
hearing
which she wished to put to Mr Fourie. Mr
Beyleveld
,
however, drew attention to the fact that the letters in question were
in fact discovered by the defendant and that the letters
were
accordingly at all times in her possession. In these
circumstances I dismissed the application.
[75]
The
second issue for determination relates to the filing of the
replication on behalf of the plaintiff. I have dealt earlier
with the circumstances under which it arose. The defendant
objected to the filing of the further replication alleging that
it
was late in the day and that the plaintiff ought to have known that
the issues would arise.
[76]
As
alluded to earlier the replication followed two days after the filing
of a further special plea which introduced new averments
relating to
the basis upon which it was contended that the credit was extended
recklessly by the plaintiff and particularly that
the effect of
granting the credit was that defendant was then immediately
over-indebted. The replication deals with the provisions
of
section 81(4) of the NCA which have been discussed earlier herein and
had not previously been raised in pleading. It is
apparent from
the cross-examination of the defendant and her witnesses that the
plaintiff commenced these proceedings on the understanding
that the
“proof of income” provided by the defendant for purposes
of the pre-credit assessment was true and correct
and that the credit
was therefore not recklessly extended. It was only during
cross-examination of the defendant and her
witnesses that it became
apparent that the defendant had never earned such income at the time
and that the letters presented as
proof of income did not represent
the true position. The amendment was accordingly supported by
evidence which had already
been elicited and fully canvassed at the
time that the application was made. In these circumstances I admitted
the replication.
Costs
[77]
For
the reasons set out earlier I consider that the plaintiff has indeed
established the claim which was made and that the defendant
failed to
discharge the onus in respect of the defence of reckless credit.
There appears no reason why the ordinary rule
that costs should
follow the result should not find application in the present matter.
The mortgage bond provides for such
costs to be paid on a scale as
between attorney and client.
[78]
In
the result:
(a)
The
defendant is ordered to pay to the plaintiff the amount of R770 057
together with interest calculated at the rate of 12,95%
per annum on
daily balances and capitalised monthly on the first day of each month
from 28 July 2015 to the date of payment, both
dates inclusive;
(b)
It
is ordered that the immovable property being portion 16 (a portion of
portion 2) of the farm, Brak River, number [...], in the
Nelson
Mandela Metropolitan Municipality, division of Uitenhage, Province of
the Eastern Cape, which was mortgaged by mortgage
bond number
B4960/08, be declared specially executable.
(c)
The
defendant is ordered to pay the plaintiff’s costs of suit, on a
scale as between attorney and client.
J
W EKSTEEN
JUDGE
OF THE HIGH COURT
Appearances:
Plaintiff:
Adv Beyleveld SC instructed by McWilliams & Elliot Incorporated,
Port Elizabeth
Defendant:
In person