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[2017] ZAFSHC 102
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Smith v African Bank (4704/2016) [2017] ZAFSHC 102 (12 June 2017)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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SAFLII
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IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 4704/2016
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
HAZEL
DAWN
SMITH
Applicant
ID
- [4...]
and
AFRICAN
BANK
Respondent
(Registration
number: 1975/002523/06)
HEARD
ON:
25 MAY
2017
JUDGMENT
BY:
DAFFUE, J
DELIVERED
ON:
REASONS DELIVERED ON 12
JUNE 2017
REASONS FOR JUDGMENT
[1]
Hazel Dawn Smith, a 74 year old widow, filed an application against
African Bank Ltd in terms whereof she
inter
alia
seeks orders declaring that reckless credit was advanced to her in
respect of two credit agreements as well as alternative relief.
[2]
I heard argument by counsel on behalf of the parties on 25 May 2017
where after the application was dismissed with costs.
I
indicated that my reasons would follow in due course. These are
my reasons.
[3]
Applicant cited the respondent as African Bank Ltd, registration
number 1975/002523/06. This citation is wrong.
African
Bank Ltd with the mentioned registration number was placed under
curatorship which entity underwent a name change and is
presently
registered as Residual Debt Services Ltd referred to in the answering
affidavit as RDS. A new entity, African Bank
Ltd with
registration number 2014/176899/06 was incorporated and by operation
of law, in particular s 54(3) of the Banks Act, the
assets and
liabilities of RDS including the rights and liabilities in the two
relevant credit agreements, were transferred to African
Bank Ltd
registered in 2014, as opposed to the Bank registered in 1975.
Save for the facts mentioned herein, nothing further
turns around
this issue. I shall not distinguish between the two African
Banks and shall refer to either of them as the respondent.
[4]
Before I deal with the allegations contained in the papers, it is
important to remember that in motion proceedings the affidavits
not
only serve as the pleadings, but must also contain the essential
evidence that would ordinarily be led at the trial.
See
Transnet
Ltd v Rubenstein
2006
(1) SA 591
(SCA) at para [28]. A party in motion proceedings is
obliged to state the facts as well as the conclusions drawn from such
facts in his/her affidavit and is not allowed to base an argument on
passages in documents annexed to the papers, unless the conclusions
sought to be drawn from such passages have been canvassed in the
affidavits. See
Minister
of Land Affairs and Agriculture and Others v D & F Wevell Trust
2008
(2) SA 184
(SCA) at 200B-E. An applicant must make out his/her
case in the founding affidavit and will not be allowed to do so
and/or
to rely upon new matter in the replying affidavit. See
Van Zyl
and Others v Government of the Republic of South Africa and Others
2008
(3) SA 294
(SCA) at 307E – 208A and
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others
2013
(4) SA 539
(SCA) at 552A.
[5]
In line with Plascon Evans final relief may only be granted in motion
proceedings if the facts averred by the applicant which
have been
admitted by the respondent, justify such an order. In certain
instances a denial by the respondent of a fact alleged
by the
applicant may not be such as to raise a real and
bona
fide
dispute
of fact and if the court is satisfied with the inherent credibility
of the applicant’s factual averment, it may proceed
on the
basis of the correctness thereof. In motion proceedings, as a
general rule, decisions of fact cannot properly be founded
on a
consideration of the probabilities, unless the court is satisfied
that there is no real and genuine dispute on the papers
regarding the
facts in question, or that the one party’s allegations are so
far-fetched or clearly untenable that they may
be rejected on the
papers or that
viva
voce
evidence
would not disturb the probabilities appearing from the papers.
See
Administrator
of the Transvaal and Others v Theletsane and Others
[1990] ZASCA 156
;
1991
(2) SA 192
(A) at 197A-B.
[6]
Applicant entered into four credit agreements with the respondent, to
wit:
(1)
a credit card agreement entered into in Johannesburg on 7 March 2008
whilst she was still resident in Gauteng;
(2)
a loan agreement entered into on the same day in terms whereof
R23 000 was lent and advanced to her;
(3)
five years later, on 8 April 2013, and when applicant was still
resident in Gauteng, a further loan agreement was entered
into in
terms whereof an amount of R127 300 was lent and advanced to
her; and
(4)
a year later, on 22 May 2014 and at Bloemfontein, applicant entered
into a further loan agreement in terms whereof an
amount of R151 900
was lent and advanced to her.
It
is clear from the papers that the 2013 loan agreement was settled
with a portion of the proceeds of the 2014 loan agreement.
The
loan agreement entered into on 7 March 2008 for the amount of R23 000
was also settled earlier.
[7]
Therefore, the two credit agreements that applicant seeks to be
regarded as reckless credit in accordance with s 80 of the National
Credit Act, 34 of 2005 (“the NCA”) are the credit card
agreement of 7 March 2008 entered into in Johannesburg and the
last
loan agreement of 22 May 2014 entered into at Bloemfontein. It
is doubtful whether this court has jurisdiction to adjudicate
upon
the agreement entered into in Johannesburg, but for purposes hereof
and on the basis of no formal objection by respondent,
I accepted
that I could adjudicate applicant’s claim in this regard.
[8]
It is extremely peculiar that applicant, having made use of a credit
card over a period of eight years, all of a sudden decided
to insist
that no credit should have been advanced to her in this regard.
The respondent is accused of granting reckless
credit now, whilst she
had the benefit of the credit card and accompanying credit facilities
for many years.
[9]
Applicant failed to set out in this application her respective
monthly expenditure at the two relevant stages, i.e. in March
2008
and May 2014 when the two agreements were entered into. The
court has also not been informed as to what her assets and
liabilities were at these stages. However, it is apparent that
her income was disclosed in 2008 and 2014.
[10]
Applicant presented her present monthly net income and expenses.
The court has been informed as to the outstanding debts
due to
entities such as Absa Bank, Nedbank, Foschini/American Swiss and
Edcon. Although the agreements with these entities
were entered
into before 2008, applicant failed to set out what was due and owing
in respect of each of these accounts on the relevant
dates in March
2008 and May 2014 respectively. She merely stated the
outstanding amounts as at the stage when the founding
affidavit was
deposed to. It is apparent that applicant’s existing debt
obligations are mostly revolving credit or
credit facilities and that
the balances relied upon by her have nothing to do with her debt in
either March 2008 or May 2014.
[11]
Having set out a list of her present creditors and the amounts now
due to them, the following is stated in paragraph 14:
“
I
humbly submit that as appears from what has been set out herein, it
is clear that the inference can be drawn that the Respondent
did not
conduct an assessment as required by Section 81(2) of the NCA, which
in turn, I am advised, would mean that these credit
agreements were
recklessly granted, in terms of section 80(1) of the NCA,
alternatively, I submit that even had the credit provider
conducted
an assessment, which I deny, the Respondent entered into these credit
agreements with me despite the fact that the preponderance
of
information available to the Respondent indicated that I will not be
able to afford the instalments, and that entering into
those credit
agreements would make me over indebted.”
Applicant
merely quoted the relevant sections of the NCA, but otherwise relied
on speculation or unfounded conclusions without placing
sufficient
and relevant information before the court as to her exact financial
position in March 2008 and May 2014 respectively,
being the relevant
dates. On page 3 of annexure “H6” to the founding
affidavit – the 2014 credit agreement
– applicant
declared under her signature that her total monthly expenses, i.e.
all her living expenses – were R1 070.
The declared
amount in respect of the first agreement was R1 200. She
failed to address this at all. Despite applicant’s
declarations, respondent made the affordability assessments based on
living expenses of R1210 (in 2008) and R2 277 (in 2014).
The court cannot make a determination on whether reckless credit was
granted as a result of applicant’s failure to inform
the court
in respect of her debt obligations at the time of entering into the
two credit agreements. If applicant’s
living expenses at
the time in 2008 and 2014 were as high as now alleged in her founding
affidavit, her expenses would have been
materially greater than
presented to respondent and consequently, she would have failed to
fully and truthfully answer requests
for information during the
pre-agreement assessment contrary to the provisions of s 81(1) of the
NCA and this would have materially
affected respondent’s
ability to make a proper assessment. In such a scenario
respondent would have an absolute defence
in terms of s 81(4).
[12]
It appears from the papers that applicant was staying with her
daughter when the first two credit agreements were entered
into. One can hardly expect a daughter to charge her elderly
father or mother rental or for water and electricity usage,
but this
is exactly what applicant now claims is payable by her on a monthly
basis. I do not know with whom she is living
at this stage and
her expenses may be different from those in 2008 and 2014. She
failed to indicate with whom she living
now and whether these
expenses were indeed her expenses during 2008 and 2014 respectively.
I do not believe that to be the
case. I also note that she now
claims R500 per month for a fuel expense. It is not clear
whether this was an expense
in either 2008 or 2014. An
exorbitant amount of R1655.84 is claimed in respect of monthly
insurance. There is no indication
whether this is for short or
long term insurance premiums. I doubt whether it could be long
term insurance, bearing in mind
the age of the applicant. If it
is for short term insurance, applicant must be the owner of or in
possession of numerous
valuable assets the details which she failed
to disclose.
[13]
Contrary to the vague version of applicant, respondent has set out in
detail why the application should be dismissed.
Affordability
assessments were done in respect of both credit applications and it
is apparent that detailed information was obtained,
not only from
applicant, but also from the Experian Credit
Bureau
.
[14]
I am satisfied that the granting of the credit card facility and the
loan agreement did not constitute reckless credit.
Applicant’s
allegation in this regard must be regarded as false and stands to be
rejected. Respondent granted credit
based on the application of
its Risk and Credit Affordability Assessment Policy which indicated
that applicant was not over-indebted
at the time when the credit
agreements were entered into in 2008 and 2014. Contrary to the
vague averments made by applicant,
respondent presented the court
with clear, concise and persuasive evidence of the assessments
carried out on each occasion.
[15]
Applicant’s counsel submitted that draft regulations issued
during 2014 had to be complied with during the affordability
assessment of applicant which respondent failed to do. The
regulations relied upon were merely in draft form and it is
unnecessary
to consider them at all. The 2006 regulations did
not deal with credit assessment or reckless credit. Therefore,
no
regulations dealing with affordability assessment were promulgated
until 7 March 2015 when the Minister published regulations which
included affordability assessment regulations. I am not
prepared, bearing in mind the Plascon Evans test to be applied, to
accept that the reasonable monthly expenses calculated by respondent
in respect of the affordability assessments could be regarded
as
incorrect, far-fetched or untenable, especially in the light of
applicant’s disclosure at the time.
[16]
I agree with respondent that applicant’s failure to present the
court with proper facts as it existed at the time of
the conclusion
of each of the credit agreements is fatal. Applicant’s
application, and the founding affidavit in particular,
does not pass
the test applicable to applications as set out
supra
.
She failed to show that reckless credit was granted to her or that
she was at any stage over-indebted as stated in s 79
of the NCA.
[17]
Contrary to applicant’s vague and unconvincing version,
respondent presented the court with material facts upon which
its
defence is based as well as the evidence in support of such defence.
I do not deem it necessary to summarise the assessments
conducted by
respondent. There is no room for a finding that respondent’s
version is untenable or far-fetched or so
improbable that it should
be rejected on the papers. Personally I doubt whether I would
have taken the risk of lending the
particular amounts to applicant,
but I am mindful of the fact that I should not adopt an over-critical
armchair approach towards
respondent. If courts were to take
such a stance towards credit providers when evaluating whether
reckless credit has been
granted, it would chill the availability of
credit and especially to less affluent members of our society, the
previously disadvantaged
sector in particular.
[18]
Applicant, being the unsuccessful party, should be burdened with the
costs of the application. This is in accordance
with the
general rule that costs should follow the event. In exercising
my discretion in this regard, I could not arrive
at any other order.
Therefore I issued the orders set out in paragraph 2
supra
.
_____________
J.P. DAFFUE, J
On
behalf of applicant:
Adv L Collins
Instructed
by:
Jordaan Rijkheer & Partners
Bloemfontein
On
behalf of respondent: Adv JG Dobie
Instructed
by:
McIntyre & Van der Post
Bloemfontein