About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2017
>>
[2017] ZAFSHC 36
|
|
Investec Bank Ltd v Motloung and Another (5055/2016) [2017] ZAFSHC 36 (9 March 2017)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5055/2016
In
the matter between:
INVESTEC
BANK
LTD
Applicant
and
ELLIOT
MOTLOUNG
1st Respondent
MING-HAN
MOTLOUNG
2nd Respondent
CORAM:
NICHOLSON,
AJ
HEARD
ON:
2 March 2017
JUDGMENT
BY:
NICHOLSON, AJ
DELIVERED
ON:
9 March 2017
[1]
The applicant has applied for an order;
(a)
Granting judgement against the first and second respondents
jointly and severally, the one paying the other to be absolved,
for
payment of R 1,982 962.65. The second Respondent’s liability
being limited to R 1,905 000.00;
(b) Requiring
Respondents to pay interest on aforesaid amount at the Investec Prime
Rate less 1% per annum from 7 October
2016, calculated daily and
compounded monthly until paid in full;
(c) That First and
second Respondents’ property situated at Erf [....] B. B.,
Buffalo City Metropolitan Municipality,
Division of East London,
Eastern Cape held under Deed of Transfer T4384/2011 (the property) be
declared specially executable;
(d) That First and
Second Respondents pay the costs of the application on an Attorney
and own client scale as provided for
in terms of the restructured
loan agreement.
[2]
It is common cause that the Applicant and the First Respondent
entered into a loan agreement on or about 2 November 2011 and
that
the Second Respondent stood surety for the loan. Said loan
agreement was restructured on or about 4 March 2013 and Second
Respondent bound herself as surety in respect of the loan agreements
on 31 October 2011 and 31 December 2013 respectively.
The
Applicant performed against the loan agreement and that the loan was
secured against the property by way of a registered Mortgage
Bond
(registered in or about 30 November 2011) in favour of the Applicant.
[3]
It is also common cause that the First Respondent was placed under
debt review pursuant to a Debt Review Order issued by this
honourable
court on or about 15 June 2015, in terms of which the First
Respondent was ordered to pay R 18 000.00 per month,
as from 30
July 2015 to an appointed Payment Distribution Agency (PDA) for
distribution to his creditors. The Applicant was
to receive a
monthly payment of R 8 484.60.
[4]
It is clear from the papers that the First Respondent made a short
payment in terms of the debt review order in July 2016 in
that he
paid only R 13 000.00. The First Respondent does not
dispute that he made this short payment. This short payment
resulted
in proportionately short payment to the Applicant. (Applicant
received only R 6047.99 instead of the R 8484.60 that
it was entitled
to receive.)
[5]
The Court is required to determine:
(a) whether or not the
short payment made by the First Respondent in July 2016 constitutes a
default/ breach of its obligations
in terms of the Debt Review Order
as envisaged in s 88(3)(b)(ii) of the National Credit Act (34 of
2005) (the Act); and
(b) whether
Applicant is entitled to proceed with the enforcement of the credit
agreement by instituting the current action.
[6]
In their Heads of Argument and oral presentation to the court, First
and Second Respondents referred the court to various authority:
ABSA
Bank Ltd v Hanekom and another
([2014]
ZAFSHC 120);
ABSA
Bank Ltd v Lubbe and another
([2012] ZAWCHC 253);
Firstrand
Bank Ltd v Britz and another
([2012] ZAFSHHC 13);
Firstrand
Bank Ltd v Fillis and anothe
r
(2010 (6) SA 565
(ECP));
Millman
and another N.O. v Masterbond Participation Bond Trust Managers (Pty)
Ltd
(Under curatorship)(
1997 (1) SA 113
(C));
Moller
v Standard Bank of South Africa Ltd
((2016) ZAFSHC 75) and
Nedbank
Ltd v Thompson and another
([2014]
ZAGPJHC 88;
2014 (5) SA 392
(GJ)). As will appear from the comments
below, the authority did not advance the Respondents’ position
in any way.
[7]
The Respondent’s defence rests upon his bald denial that he is
in default in terms of the Debt Review Order and his assertion
that
he cannot be penalised for a default on the part of the PDA in paying
his creditors. This contention cannot be supported
as, as the
Applicant pointed out, the PDA short paid creditors as a direct
consequence of the First Respondent’s short payment
to
themselves.
[8]
The First Respondent asserts that he has complied in full with the
Debt Review Order and thus, no grounds exist to terminate
same as he
has made “all due and punctual payments to the National Payment
Distribution Agency”.
[9]
The First Respondent contends that his alleged default was in fact
default by the PDA and cannot, in accordance with
ABSA
v Lubbe
(
supra
),
be regarded as his default. This case can however be
distinguished from
ABSA
v Lubbe
(
supra
)
on the basis that in that case, the PDA had not received short
payment from the debtor. Likewise
,
Nedbank v Thompson
can also not find application as it too relates to default by the
PDA, not the consumer. These cases are clearly distinguishable
from the present case and are thus not appropriate authority for this
court in making its determination.
[10]
Second Respondent’s defence herein is simply that, as surety,
her obligations are ancillary to those of the First Respondent
and
thus, Applicant’s action against her is premature.
[11]
Section 3 of the NCA sets out the purpose of the Act and the
Respondents drew the court’s attention to section 3(g)
and (i)
of the NCA in which it appears that the NCA is designed to promote
social and economic welfare of all South Africans and
to promote a
fair, transparent, competitive sustainable, responsible, efficient,
effective and accessible credit market and industry
and to protect
consumers by “addressing and preventing over indebtedness of
consumers, and providing mechanisms for resolving
over-indebtedness,
based on the principle of satisfaction by the consumer of all
responsible financial obligations”, and
“providing for a
consistent and harmonised system of debt restructuring, enforcement
and judgment, which places priority
on the eventual satisfaction of
all responsible consumer obligations under credit agreements”.
[12]
A thorough examination of the Act however reveals in section 3(d),
that that the Act seeks to balance the respective rights
of consumers
and credit providers. It is thus clear that the court may not
only take account of the needs of the consumer
for protection but
must also take note of the credit provider’s legitimate right
to seek relief.
[13]
The Respondents contended that in upholding the purposes of the NCA
the court should view the short payment in July 2016 not
as a default
in terms of s 88(3)(b)(ii) but rather as a minor, unwitting and
excusable default which does not meet the requirement
set out in the
aforementioned section. Again, Respondents rely upon authority
(
Thompson
)
which is not apposite, given that it relates to default by the PDA
and not the debtor himself.
[14]
The First Respondent requests the court to regard him, based on his
pattern of behaviour, as both willing and able to comply
with the
Debt Review Order and to dismiss the application. The Respondents
proceed to point out to the court, on the basis of
Fillis
(
supra
)
that the Act offers extensive protection to consumers. Be that
as it may, this does not mean, however, that the court is
at liberty
to ignore the interest of the credit provider. The authority cited by
the Respondents protect the consumer against breach
of obligations to
creditors where the breach is the consequence of the PDA’s
default, not where the default is that of the
consumer him or herself
as is the case here.
[15]
The consumer here has squandered the opportunity afforded him by the
Debt Relief Order and the Applicant is at liberty to pursue
the
ordinary remedies available to it.
[16]
The First Respondent has breached the Debt Review Order by making a
short payment in respect of July 2016. The Debt Review
Order was
terminated thereby and subsequent overpayments to the PDA therefore
do not address the arrears in his payments which
have, in any event
not been fully addressed to date.
[17]
The Second Respondent’s liability arose when the 1
st
Respondent breached the Debt Review Order. It is thus now
enforceable against her.
[18]
The Court is bound by the Constitutional Court authority in
Ferris
and another v Firstrand Bank Limited
and another
(2014 (3) SA 39
(CC)) where Moseneke ACJ stated (in par
[21]) that actual compliance with debt relief orders is required in
terms of the NCA and
that substantial compliance is insufficient.
The original credit agreement is enforceable without further notice
should any
breach occur (Par [16]). This approach was adopted
in the Supreme Court of Appeal in
Jili
v Firstrand Bank Limited t/a Wesbank
([2014] ZASCA 183;
2015 (3) SA 586
(SCA)) where the court stated (par
[30]) that the debtor who has been granted relief and who has spurned
the advantage offered
him by defaulting cannot be allowed another
opportunity to resolve his difficulties at the expense of the credit
provider who is
entitled to relief.
[19]
Section 3(d) of the Act requires the court to balance the interests
of consumers and credit providers, and this is what the
court has
done in this case.
[20]
The Applicant is clearly entitled to bring the current action in
terms of s 88(3)(b) of the Act as the First Respondent is
in default
under the credit agreement and has defaulted with regards to
his obligations in terms of the Debt Review Order.
This default took
the form of making a short payment to the PDA in July 2016. This
short payment constitutes a breach of the Debt
Review Order as
contemplated in s 88(3)(b)(ii) of the Act. This breach, when taken
together with the First Respondent’s breach
of the loan
agreement, forms a basis for the current proceedings.
[21]
The Second Respondent’s contention that the application
against her cannot succeed because it was commenced whilst a
debt
review process was underway is without merit. The principle debt
became due and payable when the Debt Review Order was breached
by the
First Respondent and the debt review was terminated. The
obligation of the surety is thus also enforceable.
[22]
The property that Applicant seeks to have declared specially
executable is not a primary residence and no hardship should
be
created by making such an order.
Having
considered the papers in this matter and the arguments presented by
both parties, the court issues the following order:
1.
The
applicant is granted judgement against the First and Second
Respondents jointly and severally, the one paying the other to be
absolved, for payment of R 1 982 962.65.
2.
The
second Respondent’s liability is limited to R 1 905 000.00
3.
Respondents
to pay interest on aforesaid amount at the Investec Prime Rate less
1% per annum from 7 October 2016, calculated daily
and compounded
monthly until paid in full.
4.
First
and Second Respondent’s property situated at Erf [....] B. B.,
Buffalo City Metropolitan Municipality, and Division
of East London,
Eastern Cape held under Deed of Transfer T4384/2011(the property) is
hereby declared specially executable.
5.
First
and Second Respondents to pay the costs of the application on an
attorney and own client scale as provided for in terms of
the
restructured loan agreement.
________________
C.
NICHOLSON, AJ
On
behalf of Applicant: Mr Quixley
Instructed
by:
Symington
& De Kok Attorneys
169B Nelson Mandela Drive
Bloemfontein
On
behalf of Respondents 1 & 2: Adv L
Collins
Instructed
by:
Jordaan Rijkheer Attorneys
46 Kellner Street
Bloemfontein
(PS du Plessis)