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[2018] ZAGPPHC 749
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First Rand Limited v Roux N.O and Others (32017/2017) [2018] ZAGPPHC 749 (9 February 2018)
IN
THE REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
CASE NO: 32017/2017
9/2/2018
FIRST
RAND
LIMITED
APPLICANT
and
JOHANNES
ANDREAS ROUX N.O
1
ST
RESPONDENT
KATRINA
ROUX
N.O
2
ND
RESPONDENT
JOHANNES
ANDREAS
ROUX
3
RD
RESPONDENT
KATRINA
ROUX
4
TH
RESPONDENT
JUDGMENT
KHUMALO
J
1]
In this application, First Rand Limited ("the Applicant")
seeks the
following relief:
[1.1]
Judgment to be granted against the Respondents jointly and severally
, the one paying the other to
be resolved for :
[1.1.1] Payment in the amount of
R2,020 392.04
[1.1.2] Payment of interest on the
amount of R2 020 392.04 calculated daily and compounded monthly,
which amount is due and payable,
at the RMB Private Bank facility
rate (currently 9.75%) plus 0.45% per annum, calculated from 6
February 2017 to date of final
payment, both days inclusive;
[1.1.3] Cost of suit on a scale of
attorney and own client;
[1.2]
Judgement to be granted against the Third and Fourth Respondents for
an order :
[1.2.1] declaring, Holding 19
Pashewa Agricultural Holdings,
Registration Division J R,
Province of Gauteng,
Measuring:
4, 9702 hectares:
Held by Deed of Transfer No:
T166045/07
Subject to the conditions therein
contained specifically executable;
[1.2.2] directing execution
against the mortgaged property referred to above
[2]
Mr J A Roux and Mrs K Roux who are
husband and wife are sued in their representative capacity as
trustees of Equus Trust ("the
Trust") a debtor of the
Applicant, cited as the 1
st
and 2
nd
Respondent respectively. It is common cause that the 1
st
and 2
nd
Respondent in their capacity as representatives of the Trust, are in
arrears with their repayments of a credit facility that has
been
extended to the Trust by the Applicant. They are also sureties on the
credit facility having signed suretyship binding themselves
as such
jointly and severally as also co-principal debtors
in
solidum
with the Trust. They are in
that capacity cited as the 3
rd
and 4
th
Respondent .
[3]
According to the terms of the facility
agreement that Applicant is reliant upon:-
[3.1] default on the
facility would be if:
[3.1.1.] they fail to pay any
amount owing to the Applicant when it is due;
[3.1.2] they fail to pay the rates
and taxes on any mortgaged property to the Applicant on time or any
insurance policy.
[3.2] If in default of the
facility, then the Applicant may withdraw the facility and claim
immediate repayment of the full outstanding
balance, or terminate the
facility without affecting any of its other rights.
[3.3] a certificate signed by an
authorised employee of the Applicant shall constitute
prima facie
evidence of the outstanding balance owing due and payable and of
the rate of interest payable or due any other amount owing and or
due
and payable to the Applicant in terms thereof and or any other matter
from or related to the facility.
[4]
The Applicant alleges that besides the
arrears on their credit facility, rates and taxes on the mortgaged
property are also owed
to the municipality in the amount of
R81175.90.
[5]
The Applicant is as a result of the
Rouxs’ breach of their contractual obligations in terms of
facility agreement claiming
payment of the full amount payable under
the facility agreement plus interest that is according to the
certificate of balance an
amount of R2 020 392.04 as from
February 2017.
[6]
The Rouxs have as security for their
suretyship caused two mortgage bonds of R2 000 000.00 and R500 000.00
to be passed and registered
in favour of the Applicant, over their
residential property, Plot 90- 3rd Avenue, 19 Pashewa Agricultural
Holdings, Tierpoort.
It is the property that the Applicant seeks to
be declared specially executable, in lieu of the debt owed.
[7]
In their answering affidavit deposed to
by Mr Roux, the Rouxs are resisting the Application even though they
concede that the money
is owing. They allege that at the time of the
grant they were not in a financial position to make any repayments
and the Applicant
failed to ensure that they are creditworthy when
the facility agreement was concluded in 2010. They argue that the
Applicant did
not act according to the provisions of s 81 (2) of the
National Credit Act 34 of 2005 (“NCA”) when it
negligently and
irresponsibly granted them the loan facility.
Therefore the matter should have been referred to mediation.
[8]
Moreover on 13 April 2016 the Applicant obtained a writ against their
movables and
they were able to settle all the arrears that were
outstanding which were in the region of R554 768.00.
[9]
Furthermore, they claim not to believe that they consented to the
fact that the loan
facility be transferred to a mortgage bond. They
say the money was used to renovate the property and admit that they
did not make
payments according to the loan agreement during 2016.
[10] They
point out that they had however in respect of this application
tendered payment of all the arrears
and all the costs involved in
bringing this Application. A letter dated 3 July 2017 in which their
attorney tenders the payment
and requests to be furnished with the
calculations of the amounts to be paid is annexed to the Affidavit.
The letter was sent to
Applicant's attorneys by fax on the same day.
[11] They
therefore pray for the Application to be dismissed with costs and the
matter to be stayed and
that the Applicant delivers a declaration so
that the matter can be heard with verbal evidence.
[12]
In Reply the Applicant denies that a
thorough investigation of the Rouxs financial standing was not done
and attaches the outcome
of such a test, indicating a high score of
28 to prove that it ensured that the Rouxs will afford the bond and
be able to repay.
The Applicant for that reason disputes that the
matter should be referred to mediation. Seemingly the Respondents had
no conviction
on the point, as it was not argued any further by the
Respondent’s Counsel.
[13]
The Applicant also acknowledges that
there was indeed a prior default by the Rouxs in 2016 and that the
credit agreement was definitely
reinstated as alleged when they
settled the arrears and the total costs. However he argued that with
their request for reinstatement
amount in this Application, the
Respondents are abusing the process and that cannot continue.
[14] The
Applicant further argues that with the amount that is owing to the
municipality, the Respondents
have committed a breach that, in
accordance with the facility agreement, takes them out of the realm
of s 129 (3) of
National Credit Act protection
. Hence they cannot in
that case reinstate the credit agreement, subsequent to the
acceleration of the debt.
[15]
Section 129
(3) (a) of the NCA reads:
'Subject to subsection (4), a
consumer may at any time before the credit provider has cancelled the
agreement, re-instate a credit
agreement that is in default by paying
to the credit provider all amounts that are overdue, together with
the credit provider's
permitted default charges and reasonable costs
of enforcing the agreement up to the time of reinstatement.
[16]
Whilst
s 80(1)
of the NCA reads:
Reckless lending
1.
A
credit agreement is reckless if, at the time that the agreement was
made, or the time when the amount proved in terms of the agreement
is
increased, other than an increase of
s 119
(4)-
(a)
The credit provider failed to conduct an
assessment as required by
s 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
s 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
risk, cost or obligations under the proposed credit agreement;
or
(ii)
entering
in to the credit agreement would make the consumer over indebted
[17]
The Applicant has indicated that a thorough investigation was
conducted and the Rouxs got a Financial
Rating of 28, which is a very
good rating. The allegation of reckless lending and of mediation
therefore has no merit. Especially
if its compared to the assertion
the Rouxs made regarding their previous settlement of the arrears
plus costs and the tender they
made on this occasion to settle the
overdue amounts and the costs, their allegation is indeed irrational
as observed by the Applicant's
Counsel. The Respondents have also not
furnished the court with sufficient from which it could be
established if a case is made
to find that it the credit was granted
recklessly in contravention of
s 80
(1) of the NCA.
[18]
Nevertheless, as sureties the Rouxs do not fall within the definition
of a consumer in s 1 of
the Act. They are not considered as such for
the purpose of s 80 (1) and their existence neither here or there
until the principal
debtors have failed to comply with their
obligations. In the matter of
Absa Bank v De Beer and Others
2016
(3) SA 432
(GP}, at '[54] and [61], the court held that the
requirement that reasonable steps must be taken to assess the
proposed consumer's
existing means, prospects and obligations also
meant that the assessment must be done reasonably, i.e not
irrationally. It was
clearly irrational to have taken the sureties'
income into account in reaching the conclusion that the "existing
financial
means" existed to pay the instalments. A surety did
not fall within the definition of a consumer in s 1 of the NCA. It
was
emphasised that a surety remains totally out of the picture until
the principal debtors have failed to comply with their obligations.
[19]
With regard to the tender made to pay
the arrears and costs in order to reinstate the agreement in terms of
s 129 (3), it has been
argued on behalf of the Applicant that the
credit agreement is not capable of reinstatement due to the fact that
the Rouxs' other
breach relied upon by the Applicant is independent
from the facility agreement, for that reason the Respondents are
barred from
reinstating the agreement.
[20]
The argument is misguided. Provided both
arrear debts and the concomitant costs are all paid up, resulting in
the correction of
the breaches committed, if the contract not yet
cancelled, the credit agreement should be capable of resuscitation.
[21]
It will therefore mean that since the
Applicant had relied on both breaches in enforcing the acceleration
of the debt, both being
mentioned in its s 129 Notice and the
particulars of claim, for the tender to be adequate to put off the
acceleration of the debt,
it must also include the undertaking to pay
up or allegation to have paid up (to correct) the municipality debt
also . In that
case if there is no indication of the other breach
having been corrected or of a specified undertaking to do so, the
tender will
not be sufficient to delay the Applicant from enforcing
the payment of the accelerated debt. At the time of such a tender and
its
fulfilment, the agreement should not have been cancelled.
[22]
The Applicant has argued that the tender
should have resulted in a payment for it to be effective. However in
the instance where
the credit provider has failed to respond to a
request for the calculations of the total arrears and costs, such a
tender should
be sufficient to challenge the enforcement of the
acceleration of the debt; see De Bruin v First Rrand Bank Limited t/a
Wesbank
(42493/2015) [2017] ZAGPJHC 132 (5 May 2017). It should be
clear that it is not good to reinstate the credit agreement but to
delay
the enforcement of the accelerated debt; see
Nkata
v First Rand Bank Limited and Others
2016
(4) SA 257
(CC) AT [51], reinstatement can be effected by paying the
amounts s 129 (3) requires. At [68] Cameron J held that what it mean
is that Ms Nkata had to pay those costs, or, at least, to tender
payment of them.
[23]
The Applicant's final argument on that
point was that their request for reinstatement amount in this
Application, is an abuse of
the process and that cannot continue . In
Nkata v First Rand Bank Limited and
Others,
despite periodically falling
behind in her payments, Ms Nkata paid up all her arrears and the
court found the credit agreement to
have been reinstated in all those
instances . Moreover taking into account that the credit agreement
was not cancelled, therefore
legible for reinstatement when the arrears were settled.
[24]
The Rouxs tender however did not address
the issue of the second breach.
It
therefore is not good for the purpose of preventing the Applicant
from enforcing the acceleration of the debt. The Applicant is
therefore entitled to a judgment for the accelerated debt.
[25]
On the order that is sought for the
execution of the surety's property that has been registered as
security for the debt. I have
been implored to take into account that
the property mortgaged is the primary residence of the Rouxs and to
consider the application
in of the provisions of Rule 46 (1) (a) that
states that:
'No writ of execution against
immovable property of any judgment debtor shall issue until_
(i)
a return shall have been made or any
process which may have been issued against the immovable property of
the judgment debtor from
which it appears that the said person has
not sufficient immovable property to satisfy the Writ; or
(ii)
such immovable property shall have been
declared to be specially executable by the court, or in the case of a
judgment granted in
terms of Rule 31 (5) , by the Registrar: 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"
[26]
There is no reason for the court to
declare the property specially executable. The property is indeed the
Rous primary residence'.
All the Notices and the legal proceedings
were served at the property which is indicated to be their
residential address. In Gondwana
v Steko Development and Others the
CC held that :
'Where the execution against the
homes of indigent debtors who run the risk of losing their security
of tenure is sought, after
judgment on a money debt, further judicial
oversight by a court of law, of the execution process, is a must.
[27]
I have also for the consideration of
this order taken into account that they have tendered the payment of
the amount required to
bring the payments under the facility up to
date. The fact that they have previously managed to settle their
arrears and all the
Applicant's costs reinstating the credit
agreement. The debt was not secured for the purpose of buying the
property but for improvements.
The age of the Rouxs being 49 and 50
years old respectively. The Applicant did not file a statement to
indicate the status of the
debt at the time of the Application for
default judgment.
[28]
Under the circumstances the following
order is made:
[1]
Judgment is granted against the
Respondents jointly and severally, the one paying the other to be
resolved for:
[1.1] Payment in the amount of
R2,020 392.04
[1.2] Payment of interest on the
amount of R2 020 392.04 calculated daily and compounded monthly,
which amount is due and payable,
at the RMB Private Bank facility
rate (currently 9.75%) plus 0.45% per annum, calculated from 6
February 2017 to date of final
payment, both days inclusive;
[1.3] Cost of suit on a scale of
attorney and own client;
[2]
the Application for Judgement to be
granted against the Third and Fourth Respondents for an order :
[2.1] declaring ,
Holding 19 Pashewa Agricultural Holdings,
Registration Division J R,
Province of Gauteng,
Measuring: 4, 9702 hectares:
Held by Deed of Transfer No:
T166045/07
Subject to the conditions therein
contained specifically executable;
[2.2] directing execution
against the mortgaged property referred to above.
is
postponed sine die
[2.3] execution to be
effected against the movables
NV
KHUMALO J
JUDGE OF THE HIGH COURT
GAUTENG DIVISION: PRETORIA
For
the Applicant:
ADV J EAS TES
Instructed
by: DELPPORT
VAN DER BERG INC
Ref: L Kilian-Eastes/FCR0002
Tel: (012) 361-5001
For
the Respondent:
ADV J THART
Instructed
by:
VAN STADEN ATIORNEYS
Ref:
PvS/RJ026/1216
Tel: 012 754 6735