About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2019
>>
[2019] ZAGPPHC 121
|
|
Makda v MFC, a Division of Nedbank Limited and Others (2018/28419) [2019] ZAGPPHC 121 (7 March 2019)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF INTEREST
TO OTHER JUDGES: NO
CASE
NO:2018/28419
7/3/2019
In
the matter between:
MAKDA: FATIMA (nee
HADJEE)
Applicant
and
MFC,
a Division of Nedbank Limited
1
st
Respondent
ABSA
BANK LIMITED
2
nd
Respondent
COTWALL:
JHAVEED
3
rd
Respondent
RHOKEM
MOTORS
4
th
Respondent
AUTO
INTEGRITY
5
th
Respondent
CAPITEC
BANK LIMITED
6
th
Respondent
JUDGMENT
MOKOSE
J
[1]
The
applicant seeks an order to declare two credit agreements concluded
with the first and second respondents declared reckless
credit
agreements in accordance with Section 80 of the National Credit
Agreement Act 34 of 2005 ("the NCA") and ancillary
thereto,
the applicant seeks additional relief that the applicant's
obligations under the said agreements be set aside.
[2]
The
basis of the declarator sought is that the first and second
respondents failed to conduct the requisite credit assessment as
envisaged by Sections 81(1) and 81(2)(a) of the NCA, alternatively,
the applicant contends that Section 80(1)(b) of the NCA is
applicable
and that restitution be ordered due to an alleged fraud that was
perpetrated by the third respondent.
[3]
At
the commencement of the matter, the applicant abandoned the
alternative order sought that restitution be ordered due to a fraud
having been perpetrated by the third respondent.
[4]
The
common cause facts are the following:
(i)
on
1 November 2017 the applicant attended at the dealership and
personally signed the credit agreement with the first respondent
to
purchase a Jeep Grand Cherokee vehicle from the fifth respondent;
(ii)
the
release form was duly signed by the applicant who then took delivery
of the vehicle;
(iii)
on
2 November 2017 the applicant attended at the dealership and
personally signed the credit agreement with the second respondent
to
purchase a BMW motor vehicle from the fourth respondent;
(iv)
the
applicant signed the release note and took delivery of the vehicle.
[5]
The
applicant's case is that the requisite credit assessment as envisaged
by Section 81(2) of the NCA was not conducted by the first
and second
respondents. If the credit assessment had in fact been conducted as
alleged, they chose to extend credit without demanding
an explanation
from the applicant regarding a discrepancy in her expenses as listed
on the credit application. The applicant further
alleges that she had
failed to fully disclose her income and expenditure. As such, the
first and second respondents as credit providers
could never have
acted reasonably and had in fact acted irrationally.
The
law
[6]
Section
80(1) of the NCA provides as follows:
(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, other than an increase in terms of Section
119(4)-
(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 .
[7]
Section 81(1) of the NCA provides as
follows:
“
(1)
When apply 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.”
[8]
Section 81(2) provides as follows:
"(2)
When a determination is to be made whether
a
credit agreement
is reckless or not, the person making that determination must apply
the criteria set out in subsection (1) as they
existed at the time
the agreement was made, and without regard for the ability of the
consumer to
-
(a)
meet the obligations under
that credit agreement; or
(b)
understand or appreciate
the risks, costs and obligations under the proposed credit agreement,
at the time the determination
is made.
[9]
Section 81(4) provides as follows:
"(4)
For all purposes of this Act, it is a complete defence to an
allegation that
a
complete defence
to an a/legation 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."
[10] When making a
determination whether a credit agreement is reckless or not, one
needs to turn their
attention to the period when the consumer applied
for credit. If during this period a credit provider failed to conduct
an assessment
or, if having conducted an assessment, a credit
provider entered into a credit agreement with the consumer despite
the fact that
a preponderance of information available to the credit
provider indicated that the consumer did not understand or appreciate
the
risk, costs or obligations under the proposed credit agreement or
entering into that credit agreement would make the consumer
over-indebted,
the credit agreement is reckless.
[11]
Furthermore,
Section 81(2) of the NCA provides that a credit provider must take
reasonable steps in its assessment as described
by Louw J in the
matter of Absa Bank v De Beer
[1]
where
he said the following:
"The first requirement is
that 'reasonable steps' must be taken to assess the proposed
consumer's existing means, prospects
and obligations. To me this also
means that the assessment must be done reasonably, i.e. not
irrationally. Only a reasonable assessment
will comply with the
following phrase in the preamble to the Act
-
to promote
responsible credit granting and use and for that purpose to prohibit
reckless credit granting.·
[12]
A
prospective consumer’s obligation commences the moment he or
she applies for credit and continues to exist while the credit
application is being considered by the credit provider. The consumer
must fully and truthfully disclose the information required
by the
credit provider.
[13]
The
applicant in the matter in
casu,
contends that the requisite credit
assessment as envisaged in Section 81(2) of the NCA was not conducted
by the first and second
respondents. The applicant argues that she
did not know and understand the true nature of the Absa agreement in
particular, nor
did she appreciate the risks and her obligations in
terms of the said agreement. As a result of the agreements concluded,
she does
not have the means to comply with her obligations in terms
of the credit agreements and tenders the return of the vehicles by
handing
over tracking reports in respect of such vehicles.
[14]
The
first respondent denied that no credit assessment had been made at
all or that it was not done adequately and in terms of the
NCA. From
the papers on hand, it is evident that a full and proper credit
assessment was done with the information provided by
the applicant to
ensure that she was indeed in a financial position to honour her
obligations.
[15]
The
second respondent was of the view that there was a dispute of facts
fundamental to the application and not only in respect of
the alleged
fraud and that the allegations should have been tested in
cross-examination. In support of this contention, counsel
for the
second respondent brought to the court's attention statement of
accounts which showed large amounts of monies having been
received
into the applicant's bank account, far in excess of the amounts
declared as her earnings in the credit application. However,
counsel
for the second respondent realised that this should have been brought
in
limine
for
consideration by the court. He however, agreed with the submissions
of the first respondent that the assessment had been made
in terms of
the NCA.
[16]
Counsel for the second respondent also brought to the court's
attention the fact that the applicant
was a forty-year old Grade 12
teacher. The second respondent was of the view that bearing in mind
the trite principle of
caveat subscriptor,
the applicant
should not be assisted in the application before the court.
[17] After
counsel for the applicant indicated that he was abandoning the
allegations of fraud on the part
of the fifth respondent, counsel for
the fifth respondent did not make any submissions but to confirm that
the applicant participated
in some meaningful way in the application
by submitting her driver's licence.
[18] The
court in the matter of Edwards v Firstrand Bank Ltd t/a Wesbank
[2]
reiterated that:
"Human experience has
shown that contracting parties often attempt to evade their
contractual obligations by denying that they
were aware or assented
to the terms of an agreement. This is why our courts adopted the
caveat subscriptor rule years ago. This
entails that a person who
claims not to have read or appreciated the terms to which he has
bound himself cannot generally escape
the consequences of not having
read the document before signing it. In other words, he has assented
to what appears in the document
above his signature."
[19] It is
evident from the papers before this court that the applicant was not
coerced into signing the
credit agreements. She took delivery of the
vehicles and made several payments of the monthly instalments. There
is no evidence
of duress or misrepresentation on the part of the
respondents' employees. This is not evidence of a person who did not
understand
or appreciate the risks and obligations of the agreements.
The court also takes note of the fact that the applicant does not
dispute
that an application for credit was made by her nor does she
dispute that she signed and acknowledged delivery of the said
vehicles.
Accordingly, I am of the view that no case has been made
out by the applicant for the relief sought.
Reckless credit
[20]
The
applicant seeks an order that the credit agreement concluded with the
respondents be declared reckless and set aside. The applicant
makes a
bald allegation that Absa failed to conduct a credit assessment at
all and secondly, that despite the credit assessment,
Absa should not
have granted the credit as she was found to have understated her
expenses. Accordingly, the credit provider could
not have acted
reasonably in extending credit to a party that is untruthful.
[21]
From
the answering affidavit, the second respondent went to great lengths
to explain not only how the assessment was done, but also
how credit
applications are assessed and processed. The second respondent
averred further that the result of the assessment revealed
that there
still remained a surplus of income after all the applicant's declared
and verified expenses were calculated.
[22]
In
terms of the NCA, the time for determining whether an agreement is
reckless is the time when an agreement is entered into. It
is evident
from the papers that despite the information the applicant furnished
herself, Absa nevertheless increased the amount
of living expenses to
a minimum amount having consulted the credit bureau records. This is
evidence that the second respondent
took reasonable steps to assess
the applicant's obligations under the instalment sale agreement, her
debt repayment history and
her existing financial means.
[23]
The
court in the matter of Horwood v Firstrand Bank Ltd
[3]
held that where a credit provider has taken the required 'reasonable
steps to assess' the matters referred to in Section 81(2)
NCA, the
credit agreement is not reckless in terms of Section 80(1) of the NCA
whether or not the assessment is tainted by a consumer's
incomplete
or untruthful answers.
[24]
I
am of the view that the applicant has failed to meet her onus of
proving that the credit assessment performed was contrary to
the
provisions of the NCA. Accordingly, the applicant has failed to make
out a case for this relief and the application must accordingly
fail.
Costs
[25]
Counsel
for the second respondent made submissions to the court that costs be
awarded on a scale as between attorney and client
to mark its
displeasure with the applicant's conduct, particularly her admission
to providing false information to her lenders.
[26]
Counsel
for the first respondent did not make out a case for a costs award on
the scale as between attorney and client. He merely
asked the court
to award cost on a party and party scale
[27]
Counsel
for the fifth respondent however made submissions that the applicant
was not justified in launching these motion proceedings
as against it
and as such, is entitled to a cost order.
Costs
[28] I am
of the view that the costs should follow the result. Strong argument
and reasons were not made
to award the costs on a scale as between
attorney and client and as such, the following order is made:
(i)
the
application is dismissed;
(ii)
the
applicant is ordered to pay the costs of the first, second and fifth
respondents on a scale as between party and party.
MOKOSEJ
Judge of the High Court
of South Africa
Gauteng Division,
Pretoria
For
the Applicant:
Adv
R Bhima instructed by
Hajibey-Bhyat
Inc
For
the First Respondent:
Adv
CJ Welgemoed instructed by
Strauss
Daly Attorneys
For
the Second Respondent:
Adv
R Scholtz instructed by
Lowndes
Dlamini Attorneys
[1]
2016 (3) SA 432
at para [60]
[2]
2017 (1) SA 316
(SCA) at paragraph (47)
[3]
2011 JDR 115 1 (GSJ)