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[2021] ZAGPJHC 467
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Firstrand Bank Limited v Madigage and Another (2017/23569) [2021] ZAGPJHC 467 (27 September 2021)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NUMBER:
2017/23569
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: NO
REVISED: NO
27 SEPTEMBER 2021
In the matter between:
FIRST
RAND BANK
LIMITED
Applicant
and
MADIGAGE,
ELIAS
ASHTON
First Respondent
MADIGAGE,
LINAH
MAKHAYA
Second Respondent
JUDGEMENT
This judgement is
handed down electronically by circulation to the parties or their
legal representatives via email and by uploading
same onto CaseLines.
The handing down of this judgment is deemed to be 27 September 2021.
MOOKI AJ:
[1]
First Rand Bank Limited and the respondents
concluded a loan agreement on 30 August 2007. The loan is “a
credit agreement”
in terms of the National Credit Act, 34 of
2005 (“the Act”).
[2]
I refer to the applicant as “the
Bank” for ease of reference. The second respondent did not file
a confirmatory affidavit.
The first respondent is thus the only
respondent who gave evidence in response to the application. I refer
to the first respondent
as “Elias” for ease of reference,
to signify the response to the relief sought by the Bank. I refer to
“respondents”
as required by the context.
[3]
The Bank seeks relief that the respondents
be ordered to pay R764 757.67, interest in the above amount at the
variable rate of 9.60%
per annum, calculated daily and compounded
monthly from 26 May 2017 to date of final payment. The Bank also
seeks to have the residence
of the respondents, Erf [....] Leboeng
Township, Registration Division I.R. Province of Gauteng, measuring
250 square metres and
held by deed of transfer No. T[....], be
declared specially executable. Lastly, the Bank seeks costs on the
attorney and client
scale.
[4]
The respondents admit the terms of the loan
agreement. The terms include respondents being liable for collection
costs; that all
fees and charges be debited to the bond account, and
that the Bank could institute proceedings to recover outstanding
monies and
seek an order declaring the property immediately
executable. Elias opposed the application essentially on the ground
that the Bank
failed to comply with section 81(2) of the Act.
[5]
Section 81(2) of the Act requires that a
credit provider make the prescribed assessment before advancing
credit. Elias does not
contend that the Bank did not assess the
respondents. He could not say either way when the Bank launched this
application. Elias
pleads that the respondents could not recall
whether the Bank concluded an affordability assessment before
granting respondents
credit.
[6]
Elias sought documents from the Bank about
the financing advanced to the respondents by the Bank. The Bank then
supplied information
in the respondents’ bond application form.
Elias contends that information from the Bank about respondents shows
that the
Bank did not conduct “a proper assessment” for
purposes of section 81(2) of the Act, with the result that the loan
agreement constitutes “reckless credit.”
[7]
Elias relies on the six considerations
referred to below in support of the contention that the Bank did not
conduct “a proper
assessment.”
[8]
First, he contends that the Bank used
outdated salary advices when determining the respondents’ nett
income. He pointed out
that the assessment was done on 14 June 2007,
with reference to salary advices for February 2007 (in relation to
the second respondent)
and April 2007 (in relation to Elias).
[9]
The Bank, in response to the claim about
the salary advices, contends that respondents assured the Bank that
their information pertaining
to the bond application constituted a
“full and truthful disclosure.” The Bank pointed out that
the respondents provided
the Bank with the salary advices and that
the respondents did not say information in the salary advices was
incorrect or irrelevant
at time of the assessment. The respondents
reiterated and confirmed information in the two salary advices in
other supporting documents
that the respondents gave the Bank.
[10]
Second, the Bank gave the respondents a
schedule of expenses. Elias “cannot recall” if the
respondents gave the Bank
information on expenses and the amount
shown on the expense schedule detailing the respondents’
monthly expenditure. Elias
pointed out that the respondents did not
confirm information in the schedule of expenses “by way of our
signatures.”
[11]
The Bank pointed out that the respondents
supplied the Bank with the schedule of expenses. This was after the
Bank requested the
respondents to provide the Bank with a list of
their expenses as part of the bond application. The schedule
reflected part of the
respondents’ expenses at the time. The
schedule also reflected information from the salary advices.
[12]
Third, Elias contends that the Bank did not
consider an ITC Report on the respondents in 2007. He pointed out
that the Bank supplied
the respondents with an ITC Report for 2008,
as opposed to a report for 2007 when the Bank gave the respondents
credit.
[13]
The Bank denies considering an ITC report
concerning the respondents only in 2008. It contended that it used
the ITC report in 2007
before concluding the loan agreement. The Bank
explained that the ITC records reflect all historic and recent
history as at the
date of the printing of the records.
[14]
Fourth, Elias avers that the Bank failed to
obtain at least three months bank statements from him. The Bank
replied that it requested
each respondent to provide three months
bank statements.
[15]
Fifth, Elias denied that the respondents
signed the bond application form. The Bank replied that the
respondents do not say that
information in the bond application form
is incorrect or irrelevant or that the respondents did not submit the
bond application
documents.
[16]
Sixth, Elias contends that the amount
claimed by the Bank includes legal fees, which the Bank debited to
the respondents’
account when that should not have been the
case. The Bank produced a schedule, demonstrating that the amount
claimed in the certificate
of indebtedness has no legal fees.
[17]
The respondents accept that the Bank
conducted an assessment. They dispute that the assessment was
“proper.” They contend
that the Bank failed to comply
with section 81(2) of the Act.
[18]
The Bank points out that the respondents do
not say the Bank did not conduct an affordability assessment, but
that it was not a
“proper assessment”. The Bank pointed
out that section 81(4) of the Act obliged the respondents to disclose
information
“fully and truthfully”, failing which the
respondents are barred from raising a defence of reckless credit.
[19]
The Bank denies not having made a proper
assessment. The Bank considered various information made available to
it by the respondents,
including a list of their income and expenses,
bank statements, bond application form and salary advice.
[20]
The respondents had a joint surplus in the
amount of R5358.00 on assessment for the loan. The total monthly
payment was R4459.96.
The respondents do not say they were over
indebted at the conclusion of the loan agreement. They made monthly
payments from October
2007 until 15 July 2009, when they applied for
debt review. They did not pursue the debt review and never secured a
debt-rearrangement
order.
[21]
The respondents defaulted in their
obligations in terms of the loan agreement. They are in arrears. The
Bank quantified their indebtedness
in a certificate, being the amount
claimed in the notice of motion. The Respondents admit the statement
of account and the summary
of the respondents’ bond account;
save that the amounts includes legal costs that the Bank was not
entitled to charge. The
amounts claimed by the Bank do not include
legal costs. The respondents did not file a reply affidavit. They
thus did not take
issue with Bank’s denial.
[22]
The Bank complied with the formal
requirements such as sending the respondents notices as required by
the Act. There was no response
to the notices.
[23]
I am satisfied that the Bank has shown that
the full outstanding amount owing in terms of the loan has become due
and payable. There
is no merit to the contention that the credit
agreement is reckless credit because the Bank did not comply with
section 81(2) of
the Act.
[24]
The considerations relied upon in opposing
the relief sought by the Bank are unmeritorious. It bears pointing
out that the respondents
do not aver that information in their bond
application was inaccurate or irrelevant when the Bank was assessing
the respondents.
More importantly, the respondents do not say what
information should have been considered but was not so considered.
Similarly,
the respondents do not say information considered by the
Bank did not reflect the status of the respondents at the time when
the
Bank undertook the assessment.
[25]
The opposing affidavit raised spurious
defences. This is illustrated by a denial that the respondents signed
the bond application
form. This denial is to be seen in the light of
the respondents having made payments pursuant to the loan agreement
for more than
10 years. The signing of the application form is raised
as a defence after more than a decade of the respondents making
payments
pursuant to the loan agreement.
[26]
The fact is that the respondents furnished
the Bank with information about the respondents’ finances. The
Bank considered
such information and concluded that the respondents
had a joint surplus of R5 358 and that the loan repayment was R4
459.96. The
respondents do not say the figures are inaccurate. They
do not say they were overindebted when the Bank assessed their
finances
for purposes of advancing credit to them.
[27]
I am also satisfied that the Bank may
execute against the property. The Bank drew the Respondents’
attention Rule 46(1)(a)(ii).
The Bank invited the respondents to
place facts and submissions for the court’s consideration in
terms of Rule 46(1)(a)(ii).
The respondents were advised that the
Court may otherwise order that the property be specially executable
which would permit the
Bank to sell the property in execution. The
respondents did not furnish such facts or made submissions. The
opposing affidavit
merely state that the invitation was “noted.”
The respondents do not contend that they or their dependants will
lose
access to housing should the property be sold in execution.
[28]
The respondents have not established a
basis for a finding that the Bank could not arrive at “a fair
and objective assessment”
in relation to the respondents’
then application for credit. This is more so because the respondents
do not contend, for
example, that the expenses that the Bank
considered did not reflect the expenses by the respondents at the
time. Similarly, the
respondents do not contend that information in
the salary advices used by the Bank did not reflect the circumstances
of the respondents
when the Bank assessed the respondents for credit.
More fundamentally, the respondents do not contend, for example, that
they had
no general understanding and appreciation of the risks and
costs of the credit then proposed by the Bank or that they became
over-indebted
as a result of the credit advanced to them by the Bank.
[29]
The real substance to this application is
not that the Bank failed to comply with the Act. The substance is
that the respondents
failed to meet their obligations towards the
Bank. The respondents were aware that they could undergo a debt
review. They did not
pursue that avenue. Their resistance to the
relief sought by the Bank is unmeritorious.
[30]
I make the following order:
1.
The respondents are ordered to pay the
applicant the amount of R764 757.67.
2.
The respondents are ordered to pay
interests in the amount in paragraph (a) at the variable rate of
9.60% per annum, calculated
daily and compounded monthly; from 26 May
2017 to the date of final payment.
3.
The immovable property known as Erf [....]
Leboeng Township, Registration Division I.R. Province of Gauteng,
measuring 250 square
metres, and held by Deed of Transfer No.
T[....], is declared specially executable.
4.
The respondents are ordered to pay costs on
the attorney-and-client scale.
O. MOOKI
Acting Judge of the
High Court
Gauteng
Local Division, Johannesburg
Heard
:
21 July 2021
Judgment
:
27
September 2021
Applicant’s
Counsel
:
C Denichaud
Instructed
by
:
Roy Suttner Attorneys
First
Respondent’s Counsel
:
F Greeff (Attorney)
Instructed
by
:
Greeff & Van Wyk Attorneys.