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[2020] ZAGPPHC 35
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Kwinana v Mercedes-Benz Finance and Insurance, a division of Mercedes-Benz Financial Services South Africa (Pty) Limited and Another (20044/2019) [2020] ZAGPPHC 35 (29 January 2020)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
Case No: 20044/2019
29/1/2020
In
the matter between:
YAKHE
KWINANA
Applicant
ID
[….]
and
MERCEDES-BENZ
FINANCE AND INSURANCE,
A
DIVISION OF MERCEDES-BENZ FINANCIAL SERVICES
SOUTH
AFRICA (PTY) LIMITED
First Respondent
THE SHERIFF
CENTURION WEST
Second Respondent
JUDGMENT
KUBUSHI
J,
INTRODUCTION
[1]
This is a Uniform Rule 42 (1)
(a)
application in terms of which the
applicant is seeking an order rescinding the default judgment granted
by the registrar of the
court on 24 July 2019. The applicant is
further seeking an order setting aside the warrant of delivery of the
motor vehicle concerned
and that the credit agreement involved herein
be reinstated.
[2]
I was informed that the applicant had
initially approached court by way of an urgent application. The said
application was opposed
by the first respondent. After having heard
argument, the court found the matter not urgent and instead of
striking off or dismissing
the application, postponed it to the
opposed roll with an order that costs be costs in the main
application.
[3]
The first respondent filed its answering affidavit out of time. At
the hearing of
the main application the applicant did not take issue
with the late filing of the answering affidavit and I made an order
condoning
such late filing of the answering affidavit.
MATRIX
[4]
On 24 April 2014 the applicant entered
into a written credit agreement ("the credit agreement")
with the first respondent.
In terms of the credit agreement, she
purchased a 2013 Mercedes Benz S400 L Hybrid (W222) ("the motor
vehicle") for the
sum of R1 402 677, 15 (one million four
hundred and two thousand six hundred and seventy seven rand, fifteen
cents).
[5]
The motor vehicle was duly delivered to
the applicant but ownership of the motor vehicle remained vested in
the first respondent
until all the amounts due to the first
respondent by the applicant in terms of the credit agreement were
paid in full.
[6]
The applicant commenced and continued making regular monthly payments
in terms of
the credit agreement. However, in 2018 the applicant
began experiencing financial difficulties and could no longer make
the full
regular monthly payments as stipulated in the credit
agreement and as a result fell in arrears with her payments.
[7]
The applicant alleges that towards the
end of January 2019 she applied for debt counselling, with
instructions to prioritise negotiations
with the first respondent. A
firm of debt counsellors called SA Credit Solutions agreed to assist
her and she commenced paying
money into their account from 1 January
2019. She was advised to pay an amount of R8 917, 69 (eight thousand
nine hundred and seventeen
rand, sixty nine cents) towards the
payment of the agreement with the first respondent. Unfortunately,
for the applicant, the debt
counsellor never informed her that they
had failed to secure an agreement with the first respondent for the
reduced payment of
the motor vehicle. Consequently, even though the
applicant made payment to the first respondent, same was less than
the agreed
monthly instalments. Thus, the first respondent regarded
the account as being in arrears and proceeded with legal action
against
the applicant.
[8]
When the applicant became aware that the
debt review with the first respondent was not in place, she
personally approached the first
respondent to try and make
arrangements to pay off the arrears and she was then informed that
summons has already been issued and
judgment granted against her. She
then offered to pay a monthly instalment of R18 000 (eighteen
thousand rand) without paying the
arrears, which offer was rejected
by the first respondent on the basis that the agreement was already
cancelled and could not be
reinstated.
[9]
Due to the applicant's failure to make
due and punctual payments to the first respondent she breached the
credit agreement. When
summons was issued as a result of such breach,
the applicant was in arrears in the amount of R82 597, 71 (eighty two
thousand five
hundred and ninety seven rand, seventy-one cents) and
the outstanding balance on the applicant's account was R428 535, 68
(four
hundred and twenty eight thousand five hundred and thirty five
hundred rand, sixty eight cents). When the applicant approached
court, judgment had already been granted by the registrar and a
warrant for delivery of the motor vehicle issued.
THE ISSUE
[10] The crux of
the application is whether in these circumstances the judgment can
properly and justifiably
be rescinded in terms of Uniform Rule 42 (1)
(a).
THE LEGISLATIVE FRAMEWORK
[11]
The salient provisions of Uniform Rule
42 (1)
(a)
reads
thus -
"(1) The
court may, in addition ta any other
powers
it may have, mero motu
or
upon application of any party
affected, rescind or vary:
(a)
an
order
or
judgment erroneously sought
or
erroneously granted in the absence
of
any party affected thereby;
...
"
[12]
There are two jurisdictional factors
that must be satisfied before it can be said that Uniform Rule 42 (1)
(a)
has
been satisfied. Firstly, the judgment must have been granted in
default. Secondly, the judgment must have been erroneously sought
or
erroneously granted.
[13]
It is not in dispute that the judgment
was granted by the registrar in the absence of the applicant. What is
at issue here is whether
or not the judgment was erroneously sought
or erroneously granted.
THE
APPLICANT’S CASE
[14]
From the perusal of the founding
affidavit it seems that the applicant is basing her case that the
judgment was erroneously sought
or erroneously granted in her absence
on the following grounds that:
14.1
She experienced financial difficulties
and was placed under the impression that her account with the first
respondent was under
debt review and that a reduced payment, as
per
the debt review, was being made;
14.2
Summons was not served personally on her
as alleged;
14.3
The first respondent failed to comply
with the provisions of section 129 of the National Credit Act ("the
Act");
[1]
14.4
The court has a discretion to set aside
the judgment and to reinstate the credit agreement as she is able to
pay and to bring the
account up to date; and
14.5
She will suffer irreparable harm if the
order is not granted.
[15]
However, during argument in court the applicant's counsel relied on
two salient grounds, namely:
15.1
Failure by the first respondent to serve
summons upon the applicant; and
15.2
The premature enforcement of the credit
agreement by the first respondent.
I,
shall hereunder, deal with each ground in turn.
Failure to
serve
the Summons
[16]
Initially, the applicant raised two
grounds in support of her case in this regard. Her first argument was
that when granting the
judgment, the registrar relied on an incorrect
return of service. However, her counsel conceded in argument that the
return of
service used by the registrar when granting judgment was
correct. The second ground, which stands to be determined, is that
there
was no service of the summons, in particular that the summons
was not personally served upon the applicant.
[17]
The parties are in agreement that the
return of service which was used by the registrar when granting
judgment, indicating that
summons was served personally on the
applicant, serves as
prima facie
proof of such service. The parties
are also not in dispute that once
prima
facie
evidence has been established
it stands to be rebutted by furnishing the court with evidence that
confirms that the return of service
does not reflect the correct
facts.
[18] In her
replying affidavit, the applicant does not specifically provide any
evidence to rebut
the first respondent's evidence that the summons
was personally served on her.. She, however, states as follows:
"I deposed to the founding affidavit
and have read the answering affidavit of the First Respondent I have
been advised by my
attorneys of record that the bulk of its contents
are unsubstantiated denials, consequently all I need
to
state in dealing with them granted
the extremely short time period is that I stand by the averments made
in my founding affidavit.
However, there
is
one or two aspects I need answer
directly and I proceed to do so hereunder.
"
[19]
The evidence the applicant relies on in
her founding affidavit challenges the first respondent to produce the
document that she
ought to have signed when the deputy sheriff served
the summons on her. I was informed during argument, which information
was not
challenged, that when summons is served on a person, that
person is made to sign a blue slip as proof of receipt of the
summons.
The blue slip is the document which the applicant sought the
first respondent to produce as evidence that she personally received
the summons.
[20]
The first respondent in its answering
affidavit does not address this aspect save to stress that the return
of service attached
to its answering affidavit serves as
prima
facie
evidence and attacks the
document which the applicant, incorrectly so, thought was used by the
registrar when judgment was granted.
As earlier stated, the applicant
has conceded that the registrar used the correct return of service.
[21]
The applicant had clearly in her
founding papers put this aspect in dispute and it was upon the first
respondent in its answering
affidavit to prove that the summons was
served personally on the applicant. In so doing, the first respondent
should have attached
both the deputy sheriff's return of service
(Annexure "M2") and the blue slip which ought to have been
signed by the
applicant when she received the summons. In the absence
of the blue slip, or proof of signature of acceptance of the summons
by
the applicant, I have to give her the benefit of the doubt and
rule on the probabilities in her favour in this regard.
Premature Enforcement of the Credit
Agreement
[22]
On this aspect, the argument by the
applicant's counsel is that the enforcement of the agreement by the
first respondent was premature
giving the fact that the applicant had
already initiated the debt review process.
[23]
According to the applicant's counsel,
before enforcing the credit agreement, the first respondent should
have, in terms of section
86 (10) of the Act, first terminated the
debt review process which had already been initiated by the
applicant.
[24]
In support of the arguments raised on
behalf of the applicant, counsel referred to the work of the authors
C van Heerden and S Coetzee
contained in an article published in the
2011 Volume 14 (2) of the De Jure. I, as well, had an opportunity to
read the same authors'
further work titled
Perspectives
on the Termination of Debt Review in terms of
Section 86
(10) of the
National Credit Act 34 of 2005
PER/PELJ
2011 (14) 2, which was to me, very instructive. In these articles,
the authors extensively analysed a plethora of divergent
judgments of
this Division and other Divisions on the aspect of termination of
debt review in terms of
section 86
(10) of the Act.
[25] Conversely,
the proposition by the first respondent's counsel is that since the
proposal sent
by the debt counsellor to the first respondent was not
accepted, there was never a formal order to that effect. According to
counsel,
section 86
(10) of the Act is applicable where there is a
proposal between the debt counsellor and the credit provider which is
acceptable
and then it must be made a formal order of court. If there
is no agreement, as was the case in this instance, the debtor should
have applied to court for such an order, which was not done.
Therefore, because there was no formal order, and the applicant
continued
to be in breach of the credit agreement, the first
respondent was entitled to enforce the agreement, as it did, so it
was argued.
[26] In terms of
section 86
(1) of the Act, the debt review process is initiated when
a consumer applies to a debt counsellor to have the consumer declared
over indebted. Such an application may not be made if at the
time of that application, the credit provider under that credit
agreement has proceeded to take steps contemplated in
section 129
of
the Act to enforce the agreement.
[27]
In accordance with
section 86
(8) of the
Act, if a debt counsellor makes a recommendation to the credit
provider and the consumer and each credit provider concerned
accept
the proposal the debt counsellor must record the proposal in a form
of an order and if both the consumer and the credit
provider have
consented thereto, file the order with the court as a consent order
in terms of
section 138
of the Act. If the recommendation is not
accepted, the debt counsellor must refer the matter to the
magistrate's court with the
recommendation.
[28]
Where a consumer is in default under a
credit agreement that is being reviewed in terms of this section, the
credit provider in
respect of that credit agreement may give notice
to terminate the review to the consumer, the debt counsellor and the
National
Credit Regulator, at any time at least 60 business days
after the date on which the consumer applied for the debt review.
[2]
[29]
The debt review can also be terminated
in terms of the Act where the matter is referred to court in terms of
sections 86
(7)
(c)
[3]
or 86 (8)
(b)
[4]
thereof. The authors C van Heerden
and S Coetzee, provide the reason for such termination in their
article as -
"Once a matter has been referred
to
the court by the debt counsellor with
a recommendation regarding debt re-structuring, any further process
cannot be construed as
debt review in terms of
section 86.
The reason
being that when a court considers a debt restructuring application
referred to in accordance with
sec 86
, it
does
so by means of
a
"hearing" at which it
considers information presented as a result of
a
debt review that was contemplated by
a debt counsellor. The court itself does not conduct
a
debt review but merely considers the
debt restructuring proposal that is the result
of
the previously conducted debt review
in order to determine if the proposed method of debt restructuring is
feasible and if it should
exercise its discretion in favour of
granting
a
debt
restructuring order. Once
a
debt
counsellor has referred a matter to court for purposes of section
86
(B) (b) or
00
0000">86
(7) (c) it
is
thus effectively brings an end to the
credit provider's opportunity to apply the provisions of
section 86
(10) as it can no longer be said that the credit agreement "is
being reviewed" in terms of section
86.
"
[30]
I am not in agreement with the argument
by the first respondent's counsel that in order for the provisions of
section 86
(10) of the Act to apply there must be an order and/or a
formal order as he puts it, in place. I am more inclined to align
myself
with the opinions of the two authors - C van Heerden and S
Coetzee, that
'Once
a
debt counsellor has referred
a
matter to court for purposes of
section 86
(8) (b) or
86
(7) (c) it
is
thus effectively brings an end to the
credit provider's opportunity
to
apply the provisions of
section
86
(10) as it can
no
longer be said that the credit
agreement
"is
being
reviewed" in terms of section
86'.
[31]
In terms of
section 129
(1)
(b)
[5]
of the Act, if a consumer is in
default under a credit agreement, the credit provider may not
commence any legal proceedings to
enforce that credit agreement
before first providing notice to the consumer, as contemplated in
section 86(10)
of the Act. This creates an impression that where a
consumer has opted to apply for debt review, it is always a
prerequisite that
a
section 86
(10) notice first be delivered before
enforcement.
[32]
Consequently, in terms of the provisions
of
section 86
(10} of the Act, a credit provider cannot enforce a
credit agreement that is subject to a pending debt review. The debt
review
must be first terminated in accordance with
section 86
(10) of
the Act and certain other requirements in terms of that subsection
must also be met. It also appears that
section 86
(10) of the Act
would only be applicable to a credit agreement that is being reviewed
in terms of
section 86
of the Act.
[33]
The esteemed authors C van Heerden and S Coetzee in their
abovementioned work, when constructing
the provisions of
section 86
(10) of the Act, opine, rightly so in my view, that in order to
determine if
section 86
(10) of the Act was applied correctly it
should first be ascertained if it can be said that the relevant
credit agreement meets
the requirement of "being reviewed"
in terms of
section 86
of the Act before one gets to the next part of
the enquiry which relates to default and the expiry of sixty business
days. On this
construction the emphasis should first, be on the
process that is being terminated and thereafter on the ·
requirements
for termination.
[34]
In light of what is afore stated, the
question that should first be determined is whether the credit
agreement, in this instance,
meets the requirement of being reviewed
or whether it was subject to a pending debt review.
[35]
The
section 86
(10) notice would, as a
result, be necessary only where the consumer has given notice of an
application for debt review in accordance
with
section 86
(4)
(b)
(i) of the Act and such a debt
review is still pending. That is, the debt counsellor has not yet
applied to court for a debt restructuring
order on the credit
providers.
[36]
The facts of this matter are slightly
nuanced in that the recommendation of the debt counsellor was
rejected by the credit provider.
This situation is not specifically
provided for in the Act. However, when the facts of this case are
read with the provisions of
section 86
(8) of the Act, it provides a
sense that the credit provider must still terminate the debt review.
It is my view that as long as
the debt counsellor has not referred
the matter to the court with the recommendations, the debt review is
still pending and must
be terminated by the credit provider by means
of a
section 86
(10)
notice.
[37]
In this instance, the provisions of
section 86
(8)
(a)
of
the Act do not apply because the first respondent did not accept the
proposal. What ought to have happened thereafter, was for
the debt
counsellor to refer the matter to the magistrate's court with the
recommendation. As already stated earlier in this judgment,
my view
is that until such time that the debt counsellor refers the matter to
court the debt review process is still in place and
should be
terminated by the service on the applicant of a
section 86
(10)
notice.
Section 86
(10) prescribes that a debt review may be
terminated after the expiry of sixty days after the defaulting
consumer applied for the
said debt review.
[38]
I rule, therefore, that the
section 129
(1) notice served on the
applicant was prematurely served. The circumstances of this case
required the debt review process initiated
by the applicant to be
terminated before the credit agreement could be enforced.
[39]
Where the debt enforcement is found to
be incompetent, as is the case in this instance, the court is
enjoined to exercise its powers
in terms of
section 130
(4)
(c)
of the Act,
alternatively
in terms of
section 85
of the Act.
[40]
In accordance with
section 85
of the Act,
"despite any
provision of law or agreement to the contrary, in any court
proceedings in which
a
credit agreement is being considered,
if it is alleged that the consumer under
a
credit agreement is
over indebted, the court may
-
(a)
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
(b)
declare
that the consumer is over-indebted and make any order contemplated in
section 87
to relieve the consumer's over indebtedness."
[41]
Section 130
(4)
(c),
on the other hand, provides that
"in
any proceedings contemplated in this section, if the court determines
that
-
(c)
the credit agreement is subject
to
a
pending
debt review, the court may
-
(i)
adjourn
the matter, pending
a
final
determination of the debt review proceedings;
(ii)
order
the debt counsellor to report directly to the court, and thereafter
make an order contemplated in
section 85
(b); or
(iii)
if
the credit agreement is the only credit agreement to which the
consumer is
a
party,
order the debt counsellor to discontinue the debt review proceedings,
and make an order contemplated in
section 85
(b)."
[42]
This court does not have the powers
referred to in
section 85
of the Act.
Section 85
deals with the
powers in
sections 86
(7)
[6]
and 87
[7]
of the Act, which are the powers conferred upon the magistrate's
court by the Act and can only be exercised by that court. The
only
power this court can exercise is in terms of
section 130
(4)
(c)
(i), to adjourn the matter, pending
a final determination of the debt review.
CONCLUSION
[43]
In
Kgomo
v Standard Bank of South Africa,
[8]
the mistake that becomes apparent
from the information made available in an application for rescission
of judgment was held to be
one of the principles governing the
rescission of judgment under Uniform
Rule 42
(1)
(a).
[44] I am,
therefore, of the opinion that the judgment against the applicant was
erroneously sought
and granted. For if the registrar could have been
aware that either there was doubt that the summons was served
personally on the
applicant or that the credit agreement was
prematurely enforced, she/he would not have granted the judgment.
[45]
The relief sought by the applicant ought
to be granted pending a final determination of the debt review.
ORDER
[46]
As a result, J order as follows:
1.
Pending a final determination of the
debt review in this matter -
1.1
The
default judgment granted on 24 July 2019 by the Registrar of this
court in favour of the first respondent is set aside.
1.2
The
warrant for the delivery of the motor vehicle with description 2013
Mercedes-Benz
S400
L Hybrid (W222), Engine Number: 276960030550504,
Chassis Number: WDD2221572A014300 is set aside.
1.3
The
credit agreement concluded between the first respondent, and the
applicant in respect of motor vehicle with description 2013
Mercedes-Benz
S400
L Hybrid (W222), Engine Number: 276960030550504,
Chassis Number: WDD2221572A014300 is reinstated.
2.
The first respondent is ordered to pay
the costs of this application.
3.
The applicant is ordered to pay the
costs of the urgent application.
E.
M KUBUSHI
JUDGE
OF THE GAUTENG
DIVISION, PRETORIA
Appearance:
Appellant's
Attorneys
: L. Mbanjwa
Incorporated
First
Respondent's Counsel
: Adv. J. Minnaar
First
Respondent's Attorneys
: Hammond
Pole Majola
Date of hearing
: 22 October 2019
Date of
judgment
: 29 January 2020
[1]
Act 34 of 2005.
[2]
Section 86 (10) of the Act.
[3]
"86 (7)
If, as a result of an assessment conducted in
terms of subsection
(6), a debt counsellor reasonably concludes that –
(a) …
(c)
the consumer is
over-indebted, the debt counsellor may issue a proposal recommending
that the Magistrate's Court make either or
both of the following
orders- (I) that one or more of the consumer's credit agreements be
declared to be reckless credit, if
the debt counsellor has concluded
that those agreements appear to be reckless; and (ii) that one or
more of the consumer's obligations
be re arranged by ... "
[4]
"86 (8)
If a debt counsellor makes a recommendation in
terms of subsection
(7)(b) and –
(a) …
(b)
if paragraph
{a)
does
not apply, the debt counsellor must refer the matter to the
Magistrate's Court with the recommendation.
[5]
"129. (1)
If the consumer is in default under a credit agreement,
the credit
provider -
(a)
(b)
subject to section 130(2),
may not commence any legal proceedings to enforce the agreement be
fore- (i) first providing notice
to the consumer, as contemplated in
paragraph
(a),
or in section 86(10), as the case may be; and
(ii) meeting any further requirements set out in section 130
[6]
"Application for debt review
(1)
…
(7)
If, as a result of an assessment conducted in terms of subsection
(6), a debt counsellor reasonably
concludes that -
(a)
…
(c)
the consumer is over-indebted, the debt counsellor may issue
a proposal recommending that the Magistrate's Court make either or
both of the following orders-
(i)
that one or more of
the consumer's credit agreements be declared to be reckless credit,
if the debt counsellor has concluded that
those
(ii)
that one or more of
the consumer's obligations be re-arranged by counsellor
reasonably
concludes that"
[7]
"Magistrate's Court may re-arrange
consumer's obligation
(1) If a debt counsellor
makes a proposal to the Magistrate's Court in terms of section
86(8l(b),
or a consumer applies to the Magistrate's Court in terms
of section 15 86(9), the Magistrate's Court must conduct a hearing
and,
having regard to the proposal and information before it and the
consumer's financial means, prospects and obligations, ... "
[8]
2016 (2) SA 184
(GP).