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[2023] ZAFSHC 498
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First Rand Bank v Du Toit N.O and Another (1162/2023) [2023] ZAFSHC 498; 2024 (6) SA 493 (FB) (18 December 2023)
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IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 1162/2023
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
FIRST
RAND BANK
Applicant
And
CAREL
JOHANNES DU TOIT N.O.
1
st
Respondent
[In
his capacity as the executor of the estate of the late
Andries
Smith Myburgh (“the deceased”) administered
by
the Master of the Free State High Court, Bloemfontein
under
deceased estate reference number: 1519/2022]
And
THE
MASTER OF THE FREE STATE HIGH COURT
2
nd
Respondent
BLOEMFONTEIN
HEARD
ON:
31 AUGUST 2023
JUDGMENT
BY:
DANISO, J
DELIVERED
ON:
18 DECEMBER 2023
[1]
During February 2015 and June 2019 the applicant and Mr. Andries
Smith Myburgh (the deceased)
concluded three credit agreements
involving two loans totalling the amount of R4 600 000.00 and an
overdraft facility in the amount
of R120 000.00. The credit
agreements were s
ecured
by mortgage bonds
and repayable by way of monthly
instalments. The deceased
breached
the terms of the credit agreements by failing to make the required
monthly instalments as repayment of the loan and the
overdraft
facility as a result on
17 September 2021, the deceased
was declared to be over-indebted pursuant to an order (“debt
review order”) granted
by the Magistrate Court, Koffiefontein
in terms of section 87 (1) of the National Credit Act, 34 of 2005
(“The NCA”).
[2]
In terms of the said order, the deceased’s debts including the
applicant’s
credit agreements were re-arranged with the effect
that the instalments repayable were reduced, the repayment periods
were extended
for about ninety-three months and a moratorium was
placed on the enforcement of the credit agreements. On 25 January
2022, four
months after the debt review order was granted the
deceased passed away.
[3]
Following the death of the deceased, the first respondent was
appointed as the Executor
of the deceased estate on 14 February 2022.
The applicant submitted its claim against the deceased estate on 26
May 2022 however,
eighteen months from the date of appointment as
Executor the first respondent has still not lodged a liquidation and
distribution
account nor informed the applicant whether the claim has
been accepted or not.
[4]
It is the applicant’s case that, the debt review order
terminated
ex lege
upon the death of the deceased therefore,
the applicant is entitled to enforce the credit agreements and it is
in that regard that
the applicant has launched this application
seeking a declaratory order on the following terms:
“
1.1.
The debt re-arrangement order granted by Magistrate Van der
Westhuizen of the Magistrates Court for the district
of
Koffiefontein, held at Koffiefontein on 17 September 2021, and under
civil case number 25/2021 (“the order”), was
terminated
upon the death of the Late Andries Smith Myburgh on 25 January 2022
(“the deceased”); and
1.2.
The deceased estate, as represented by the first respondent in his
nominal capacity as duly appointed
executor, is indebted to the
applicant in respect of three credit facility agreements respectively
administered by the applicant
under account numbers 4[...], 4[...]
and 6[...], in the amount of R3,163,063.57 as at 1 March 2023
exclusive of such further interest
which such amount attracts and
that said amount is due, owing and payable to the applicant.
2.
Alternatively, to prayers 1 and 1.2 above, declaratory orders
that:
2.1.
The applicant is entitled to enforce the three credit facility
agreements respectively administered by the applicant under account
numbers 4[...], 4[...] and 6[...] against the deceased’s
estate, as represented by the first respondent in his nominal
capacity
as duly appointed executor;
2.2.
The deceased estate, as represented by the first respondent in
his nominal capacity as duly appointed executor, is indebted to the
applicant in respect of three credit facility agreements respectively
administered by the applicant under account numbers 4[...],
4[...]
and 6[...], in the amount of R3,163,063.57 as at 1 March 2023
exclusive of such further interest such amount attracts and
that said
amount is due, owing and payable to the applicant.
3.
That the general notarial covering bond duly registered as
such in favour of the applicant under notarial bond number B[...]
(“the
bond”), be perfected to the maximum amount of
R600,000.00 plus the additional amount of R120,000.00 as referred to
in the
bond and to the extent necessary FNB is granted leave in terms
of the provisions of sections 88(3)(a) and (b)(ii) of Act 34 of 2005;
4.
That the Sheriff of the Court be authorised to attach all
movable assets of the deceased’s estate, as represented by the
first
respondent in his nominal capacity as duly appointed executor,
at the farm “V[...] D[...] M[...] 2[...]”, KOFFIEFONTEIN,
FREE STATE PROVINCE and/or wherever such movable assets of the
deceased’s estate are situated and to be found;
5.
That the Sheriff of the Court be authorised to hand over such
movable assets, attached in terms of this order and under the bond,
to the applicant in order for the applicant to keep such movable
assets in its possession and under its control as security, pending
the finalisation of the administration of the deceased’s estate
by the first respondent;
6.
That the costs of this application be costs in the deceased
estate of the Late Andries Smith Myburgh, such costs to include the
costs consequent upon the employment of two counsel when used.”
[5]
The application is directed against the first respondent only. It is
common cause
that pursuant to the demise of the deceased, the debt
review order was not adhered to in that, no payments were made by the
first
respondent in respect of the months February and March 2022 and
short payments were made in May and September 2022. As at the date
of
the hearing, the balance owed to the applicant is R3 039 661.77.
[6]
The applicant contends that a debt review order cannot endure beyond
the death of
a consumer otherwise it would be in direct conflict with
the purposes of the NCA namely: sections 3 (g) and 3(i) which
encourage
the fulfilment and satisfying of financial obligations by
consumers together with section 35 of the Administration of Estates
Act
(“the Act”)
[1]
which requires expeditious finalisation of the administration of
deceased estates.
[7]
The applicant submits that the NCA makes no provision regarding the
status of a debt review
order upon the demise of a consumer. The
provisions of the NCA must thus be interpreted by taking into account
that “
sensible
meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose
of the
document…”
as
guided by the principle elucidated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality.
[2]
Furthermore,
even if the death of the deceased does not have its commensurate
effect on the termination of the debt review order,
the breach of the
order due to non- payment as provided for in the debt review order
entitles the applicant to enforce the credit
agreements, perfect the
general notarial bonds and seek the attachment and possession of the
movables of the deceased estate pending
the finalization of the
administration of the deceased estate.
[8]
The first respondent counters that there is no merit to the
applicant’s case,
the applicant is merely seeking to pre-empt
the first respondent’s decision regarding the acceptance or
rejection of its
claim. According to the first respondent, the death
of the deceased did not automatically bring about the termination of
the debt
review order instead, the order also binds the first
respondent as the Executor of the deceased estate in that, the first
respondent
will have to discharge the obligations imposed by the
credit agreements in accordance with the provisions of the debt
review order.
[9]
The fact that there were instalments which were not paid as provided
for by the debt
review order is not in dispute. It is the first
respondent’s case the breach has since been rectified as the
outstanding
payments were made. By continuing to accept the payments
without any protest the applicant waived its rights to take
enforcement
action on account of breach of the debt review order
therefore, the moratorium granted to the deceased against the
enforcement
of the claims remains.
[10]
The first respondent disputes that the applicant is entitled to an
order of specific performance
of the contractual obligations by the
Executor to deliver the deceased’s movable properties to the
applicant in order to
perfect them as security under the notarial
bond. The first respondent is however amenable to tendering
constructive delivery of
the assets that would constitute a real
right of a pledge instead.
[11]
The first respondent concedes to the delay in the lodgement of the
liquidation and distribution
account but explains that the applicant
was aware that the first respondent had sought and obtained an
extension from the second
respondent till 09 October 2023. The
applicant nevertheless proceeded to launch these proceedings despite
being aware that if its
claim is admitted it will be included into
the liquidation and distribution account before then, no creditor can
be paid. If the
applicant is dissatisfied about the manner in which
the first respondent performs its duties, the applicant is entitled
to obtain
a court order to compel the first respondent to act
accordingly and to also institute a claim against the deceased estate
in terms
of the common law.
[12]
A party who seeks declaratory relief must satisfy the court that it
is a person interested in
an ‘existing, future or contingent
right or obligation’
[3]
and then if satisfied on that point, the court must then decide
whether the case is a proper one for the exercise of the discretion
conferred on it.
[4]
[13]
As a party to the credit agreements which culminated in the debt
review order, I am satisfied
that the applicant is an ‘interested
person’ as contemplated in section 21(1) (c).
[5]
It was recently stated in
Pasiya
and Others v Lithemba Mining (Pty) Ltd and Others
[6]
that if the court is satisfied that the applicant is an interested
person then in its discretion, the court must consider whether
the
order should be granted or not.
[14]
Having regard to the facts of this matter, I am inclined to agree
with the applicant’s
contention that a debt review order does
not survive a consumer’s demise for the reason that, the
underlying purpose of the
NCA is to protect the interests of a
consumer within the consumer credit industry by preventing and also
alleviating over indebtedness.
[7]
These debt relief mechanisms are limited to consumers as defined in
section 1 of the NCA which include:
“
(a)
the party to whom goods or services are sold under a discount
transaction,
incidental credit
agreement or instalment agreement;
(b)
the party to whom money is paid, or credit granted, under a
pawn transaction;
(c)
the party to whom credit is granted under a credit facility;
(d)
the mortgagor under a mortgage agreement;
(e)
the borrower under a secured loan;
(f)
the lessee under a lease;
(g)
the guarantor under a credit guarantee; or
(h)
the party to whom or at whose direction money is advanced or
credit granted under any other credit agreement;
[15]
An Executor of the deceased estate is not mentioned in section 1 of
the NCA including under juristic
persons.
[8]
It is also important to note that the role of an Executor is not to
become the
persona
of the
deceased, he remains a separate and distinct
personae
solely
vested with dominium of assets of the deceased estate namely, to
administer and later distribute the estate to the heirs.
[9]
To this end, this issue is determined in favour of the applicant. I
hold that debt review proceedings terminated
ex
lege
upon
the death the deceased, the debt review order is no longer extant.
[16]
It is common cause that that the deceased estate is indebted to the
applicant as claimed therefore
a declaratory as prayed for in prayer
1.2 or 2.2. is in my view, superfluous.
[17]
The enforcement of credit agreements which also entitles the
applicant to perfect its security
under the notarial bonds, attach
and take possession of the assets of the deceased estate would be
untenable as it would not be
consistent with the provisions of the
Act. Section 26(1) requires an Executor to take into possession and
retain the assets of
the deceased estate until the finalization of
the administration of the estate and section 30 restricts executing
against the property
of the deceased estate as that could result in
preferring certain creditors above others.
Based
on these reasons,
I am not persuaded that a proper case
has been made out for the granting of the reliefs sought by the
applicant herein.
[18]
The first respondent’s delay in lodging the liquidation and
distribution account is indeed
extreme however, as correctly pointed
out by the first respondent there are sufficient legislative and
common law safeguards the
applicant can invoke against the first
respondent’s failure to comply with his responsibilities as an
Executor
[10]
, the applicant
can also institute a claim against the deceased estate in the event
that there is in an inordinate delay in the
claim’s
procedure.
[11]
[19]
With regard to costs, the applicant has obtained partial success with
its claim and
taking into consideration that
it is
by the first respondent’s own laxity in administering the
deceased estate that the applicant is embroiled in these proceedings,
the applicant shall be awarded its costs. I am however not
persuaded that this matter involved complex issues warranting the
costs
of two counsel.
[20]
In the premises, the following order is made
:
1. It
is declared that the debt re-arrangement order granted by the
Magistrates Court for the district of Koffiefontein
on 17 September
2021 terminated upon the death of the late Andries Smith Myburgh on
25 January 2022.
2. The
application for the declaratory relief sought in paragraph 1.2, 2
(including 2.1 and 2.2.), 3, 4 and 5
of the Notice of Motion is
dismissed.
3. The
costs this application shall include the costs of one counsel and
shall be costs in the deceased estate
of the late Andries Smith
Myburgh.
N.S. DANISO, J
APPEARANCES:
Counsel on behalf
of Applicant:
Adv. P. Zietsman
(SC)
with him Adv. S.
Tsangarakis
Instructed by:
Honey Attorneys
BLOEMFONTEIN
Counsel on behalf
of 1
st
Respondent:
Adv. W.A. Van
Aswegen
Instructed by:
Du Toit Lambrechts
Inc.
BLOEMFONTEIN
[1]
Act
66 of 1965.
[2]
2012 (4) SA 593 (SCA).
[3]
Section 21(1)(c)
of the
Superior Courts Act 10 of 2013
.
[4]
Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
[2005]
ZASCA 50
;
[2006]
1 All SA 103
(SCA);
2005
(6) SA 205
(SCA) para 17.
[5]
Supra at fn 3.
[6]
(
264/2022)
[2023] ZASCA 169
(01 December 2023) para 47.
[7]
FirstRand
Bank Ltd v McLachlan and Others
(394/2019)
[2020]
ZASCA 31
(01
April 2020) para 9.
[8]
A “
juristic
person includes a partnership, association or other body of persons,
corporate or unincorporated, or a trust
…”
[9]
Clarkson
NO v Gelb & Others
1981
(1) SA 288
(W) 293C-E.
[10]
See
section 36 (1) of the Act.
[11]
Nedbank
v Steyn
2016
(2) SA 416
SCA
para 12.