Driskel v Maseko and Others (A100/2016) [2017] ZAFSHC 150 (24 August 2017)

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[2017] ZAFSHC 150
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Driskel v Maseko and Others (A100/2016) [2017] ZAFSHC 150 (24 August 2017)

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IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Appeal
number:   A100/2016
In
the appeal between:
BELINDA
LOUIZA
DRISKEL
Appellant
(on
behalf of Help-U Debt Counsellors)
and
MOSHIDI
YVONNE MASEKO
1
st
Respondent
STANDARD
BANK OF SOUTH AFRICA LTD
2
nd
Respondent
NEDBANK
LTD
3
rd
Respondent
SAM
DALE TRADING (PTY) LTD t/a
CONSUMER
FRIEND
4
th
Respondent
CORAM:
RAMPAI,
J et VAN ZYL, J
JUDGMENT
BY:
VAN ZYL, J
DELIVERED
ON:
24 AUGUST 2017
[1]
This is an appeal against a judgment delivered in the
Bloemfontein
Magistrate’s Court on 31 July 2015, read with the written
reasons provided by the magistrate in terms of Magistrate`s
Court
Rule 51(1)(a) and (b), dated 22 September 2015.
[2]
In terms of the heading of the founding affidavit the appellant, a
debt counsellor, approached the court
a
quo
with an application
“
for
debt review in terms of section 86(7), read with
sections 86(8)(b)
,
87
and
79
of the
National Credit Act, 34 of 2005
.
In terms of the Notice of Motion the following relief was sought:
“
(a)
That the applicant is granted leave in terms of
section 86
of the
National Credit Act 34 of 2005
to bring this application;
(b)
That the first respondent is declared over- indebted as set out in
section 85(b) of
the National Credit Act 34 of 2005;
(c)
That the first respondent’s debt obligations be re-arranged in
terms of section
87(1)(b)(ii) read with
section 86(7)(c)(ii)
of the
National Credit Act 34 of 2005
;
(d)
Payment of R4900.00 will be made on a monthly basis as from 15
th
day of February 2015 due to DC Fee and Legal Fee that will be paid to
the appointed Payment Distribution Agency.
(e)
That each party bears its own costs, unless otherwise ordered.”
[3]
The second respondent opposed the application. After the hearing of
the application, it was dismissed with costs.
[4]
I have to point out that in its initial judgment dated 31 July 2015,
reflected on
p.112
- p.113 of the record,
the
court
a
quo
made the following order:
“
1.
That the application is hereby dismissed with costs.”
However,
when the court
a
quo
on
22 September 2015 provided its reasons for the judgment in terms of
Magistrate`s Court
Rule 51(1)(a)
and (b), as reflected on p.113 –
p.119 of the record, the said reasons concluded with the following
order:
“
1.
That the application is hereby dismissed with costs;
2.
The Debt Review is subject to review after a period of 12 months from
the date of this
order.”
No
explanation for the aforesaid difference between the two orders is
evident from the papers before us.  Both parties, however,

approached the appeal on the basis that the last mentioned order of
22 September 2015, is the order that is being appealed against.

This judgment is consequently based on the same approach.
Background:
[4]
The appellant is a registered debt  counsellor as envisaged in
the National Credit Act, 34 of 2005 (“the Act”)
and was
approached by the first respondent (“the consumer”) on 21
October 2014 to have her declared over-indebted and
for debt review
in terms of section 86 of the Act.  For the purposes of the said
application the consumer completed Form 16,
as prescribed by
regulation 24, read with regulation 74 and Schedule 1 to the
Regulations in terms the Act (“the NCA Regulations”).

Subsequent to her assessment, the appellant concluded that the
consumer was over-indebted and applied to the Bloemfontein
Magistrate’s
Court to have the consumer’s obligations
re-arranged in accordance with the proposed restructured payment plan
attached to
the application, annexure H6 - H8, p.61- p.63 of the
record.
[5]
The aforesaid restructured payment plan included the re-arrangement
of the following credit agreements between the consumer
and the
second respondent:
1.
Personal
loan account [4...];
2.
Credit
card account [5...];
3.
Home
loan account [3...];  and
4.
Current
account [0...].
[6]
The appellant and the second respondent were apparently unable to
agree on a plan of debt re-arrangement and the second respondent

consequently filed its answering affidavit in opposition of the debt
review application.  In its answering affidavit the second

respondent,
inter
alia,
raised
the following points of contention against the application:
1.
As
a point
in
limine,
that
the appellant unilaterally amended the interest rates contractually
agreed upon between the consumer and the second respondent
in the
proposed restructured payment plan, which relief cannot be granted as
it is not provided for in section 86(7)(c)(ii) of
the Act.
2.
The
appellant failed to provide sufficient evidence to substantiate the
consumer`s alleged over-indebtedness, considering that the
onus
rested upon the appellant.
3.
In
the alternative, should the Court find that the consumer is proven to
be over-indebted, the appellant`s proposed restructured
payment plan,
according to the second respondent’s calculations, does not
service the required interest and the full outstanding
amounts,
together with interest thereon, and will subsequently not be paid off
in the periods proposed by the appellant.
4.
The
proposed payment plan is not fair, just and equitable and, therefore,
does not comply with the purpose of the Act.
[7]
Pursuant to the filing of the second respondent’s answering
affidavit, the appellant filed her replying affidavit.
The main
issues that were addressed in the replying affidavit are the
following:
1.
The
appellant denied that she unilaterally amended the interest rates.
She specifically referred to the home loan account,
the credit card
account and the personal loan account and averred that the amended
interest rates were accepted by the second respondent,
referring to
Annexures L1, L2 and L3 attached to her supplementary affidavit, p.
78 – 80 of the record.
2.
The
appellant alleged that the financial means of the consumer had been
evaluated by her, which, according to the appellant, is
evident from
Annexures C1, C2, C3, C4, C5, D1, D2, D3 and G1 (proof of income)
attached to the founding affidavit. The appellant,
therefore,
contended that there is sufficient evidence before the court to
enable it to properly determine and adjudicate
whether the consumer
is in fact over-indebted.
3.
Regarding
the criticism by the second respondent on the proposed restructured
payment plan, the appellant denied same and averred
the following:
“
The
proposal and the attached cascades do solve (
sic
),
the payments are in line with the guidelines published.  I
attach hereto the latest proposal, as Annexure A.”
[8]
For the sake of clarity, I will hereinafter refer to the last
mentioned proposal as “the updated restructured payment
plan”.
A draft order was also attached to the replying affidavit (p.103 –
p.104 of the record).
Findings
by the court
a quo
and the grounds of appeal:
[9]
The court
a
quo
,
inter
alia
,
made the following findings in its reasons in terms of Magistrate`s
Court Rule 51(1)(a) and (b):
“
[8]
Interest may be changed by agreement between the parties.  Had
the second respondent
been in disagreement with regard to the change
of interest, they could not have communicated acceptance to the
applicant as per
L1, L2 and L3 of the founding affidavit.
[9]
In (
sic)
page 29 of the founding
affidavit
proof of income is attached as annexure G1 in a form of a salary
advice they did (sic) October 2014.
[10]
The matter was set down for hearing on 17 July 2015.
[11]
In terms of the founding affidavit paragraph 13 and as per submission
by the applicant the court
was informed that the first respondent
earns an amount (sic) R14 183.29 per month, while the salary advice
refers to total earnings
as R18 367.75 for the month of October 2014,
no explanation was provided to the court for the difference.
CONCLUSION
[12]
No recent proof of income was submitted before the court on 17 July
2015 and no reason advanced
for such a failure.
[13]
Having considered the papers filed of record and submissions made by
both parties, I am not satisfied
that the applicant made a case on a
balance of probabilities for the first respondent to be declared
over- indebted as set out
in terms of section 85(b) of the NCA.”
[10]
For reasons that will become evident from the judgment, I deem it
prudent to repeat the grounds of appeal, as set out in the
notice of
appeal, herein:
“
1.
The Learned Magistrate erred in concluding that applicant did not
make out a case on a balance of probabilities
that the first
respondent is over-indebted as set out in terms of the
National
Credit Act, Act
34/2005 (as amended).
2.
The Learned Magistrate erred in applying the principles and
requirements pertaining to the
consideration of the appellant’s
recommendation and proposal that the first respondent be found to be
over-indebted.
3.
The Learned Magistrate erred in finding that no explanation was
provided to court for the
difference in the income of the first
respondent as set out in annexure ‘G1’ to the founding
affidavit, in that it
is recorded on such attachment that the total
earnings of the first respondent is R18 367.75, and the submission
made to court
that the total of the first respondent’s earnings
are R14 183.29.
4.
The Learned Magistrate erred in considering that on annexure ‘G1’
annexed to
the founding affidavit, in which it is recorded that
salary code 0359* (A) DEPRIVATION ALL: R4 184.46 read with number 3
under
‘notes’, indicates that such an amount is an arrear
payment that was made to the first respondent in that particular

month, and does not form part of his (
sic)
continuous
monthly salary.
5.
That the Learned Magistrate erred in finding that no sufficient
explanation was provided
to the court for the difference, as the
difference in amount appears fully from the papers that were before
court.
6.
The Learned Magistrate erred in finding that no reason was advanced
for the failure to attach
a recent proof of income before court on 17
July 2015.
7.
The Learned Magistrate erred in finding, that although the interest
had been changed by agreement
between the parties, and that the
interest rate applicable to a credit agreement may be changed by
agreement between the parties,
and that in fact the interest rate
applicable to this specific credit agreement between the first
respondent and the second respondent,
had indeed been changed by
agreement, that on the papers before the court, the applicant did not
make out a case on a balance of
probabilities for the first
respondent to be declared over-indebted as set out in terms of
section 85(b) of the … Act.
[8]
The Learned Magistrate erred in making the order in terms of which
the application for debt review
is dismissed with costs, with
reference to section 85(b) of the … Act.
8.1
The above-mentioned section provides the court and the magistrate
hearing the matter to
declare that the consumer is over-indebted, as
determined in accordance with this part, and may such Learned
Magistrate make any
order as contemplated in section 87 of the …
Act, to relieve the consumer’s over- indebtedness.
[9]
The Learned Magistrate erred in not applying section 85(a) of the …
Act in that the matter
should have been referred to a debt counsellor
with the request that the consumer’s circumstances be
re-evaluated and that
the appellant should have made a revised
recommendation to the court in terms of section 86.
[10].
The Learned Magistrate erred and acted
ultra vires
in
dismissing the application for debt review with costs and in addition
thereto, made the debt review subject to review after
a period of 12
months from the date of the order, being 22 September 2015.
[11]
The Learned Magistrate erred in finding that the debt review of the
first respondent can be made subject to review
after a certain
period, subsequent to the application for debt review being dismissed
with costs.  The Learned Magistrate
thus erred in finding that
the process of debt review did not come to an end by the dismissal of
such application.
[12]
The Learned Magistrate erred in finding that the first respondent is
not over-indebted on a balance of probabilities
as on the date upon
which the appellant made the assessments in accordance with section
86(6)(a) in the determination of the first
respondent’s over-
indebtedness, and the appellant’s reference to section 79 of
the … Act.
[13]
The Learned Magistrate erred in applying the principles as laid down
in section 86(7)(b) of the … Act, in
that each relevant credit
provider and the first respondent had accepted the proposal, and the
variation of the initial interest
rates applicable to the credit
agreements, and after having accepted same, did not make the recorded
proposal an order of the court.
That the Learned Magistrate had
erred in not finding that if it had been consented to by the first
respondent and each relevant
credit provider, the order should have
been filed and ordered as in terms of section 138 of the …
Act, in the alternative.”
Condonation:
[11]
The appellant filed an application for condonation for the
non-compliance with Rule 50(1) of the Uniform Rules, read with

Magistrate`s Court Rule 51, in that both the noting of the appeal and
the prosecution of the appeal were done outside the relevant

prescribed time periods.  The second respondent did not file any
opposition to the condonation application.  Mr Tshangarakis,
who
appeared on behalf of the second respondent, indicated that the
second respondent is not opposing the granting of condonation,

subject to the qualification that the second respondent`s stance in
this regard is not to be understood to be a concession on the

prospects of success of the appeal.
[12]
In view of the numerous issues I intend addressing in this judgment,
I am of the view that it is of great importance to actually
deal with
the merits of this appeal, as this matter is not only important to
the parties hereto, but also to debt counsellors,
Magistrates and the
public at large who may consider to apply for debt review. I will
therefore grant the condonation application,
with the appellant to
pay the costs thereof.
Merits
of the appeal:
[13]
I will start off by dealing with the two main findings made by the
court
a quo
:
A:
Dispute concerning agreement on the amendment of the interest
rates:
[14]
The finding the court a quo made in this regard is a finding in
favour of the appellant, although the eventual order made by
the
court a quo was not in favour of the appellant. The order of the
court a quo was based on a different finding, being on the
issue of
over-indebtedness. The finding pertaining to the amendment of the
interest rates did, therefore, not constitute the basis
of the court
a quo`s order. This raises the question whether we, as a court of
appeal, ought to and/or need to deal with this finding
at all.
[15]
As correctly pointed out by Mr Tsangarakis, an appeal is directed
against the judgment itself, i.e. the substantive order,
not the
reasons for the judgment. This was stated in
Western
Johannesburg Rent Board And Another v Ursula Mansions (Pty) Ltd
1948 (3) SA 353
(A)
at 355:
“…
it
is clear that an appeal can be noted not against the reasons for
judgment but against the substantive order made by a court.
For
instance, it is open to a respondent on appeal to contend that the
order appealed against should be supported on grounds which
were
rejected by the trial judge: he cannot note a cross-appeal under Rule
6 (4) unless he desires a variation of the order. See
Municipal
Council of Bulawayo v Bulawayo Waterworks, Ltd
.
(1915 AD 611
at pp. 625, 631, 632).”
The
aforesaid principle has since been confirmed and applied in numerous
judgments, one of which was in the matter of
Cape
Empowerment Trust Ltd v Fisher Hoffman Sithole
2013 (5) SA 183
(SCA) at
198, paragraph [39]:
“
[39]
In the result I agree with the ultimate conclusion arrived at by
Davis J, albeit for different reasons. This renders it unnecessary
to
decide on the correctness of his reasoning, since an appeal does not
lie against the reasons for judgment but against the substantive

order made by the court a quo (see eg
Western
Johannesburg Rent Board and Another v Ursula Mansions (Pty) Ltd
1948 (3) SA 353
(A)
at
355).”
[16]
However, in my view and in the circumstances of this appeal, we are
obligated to deal with the finding of the court
a
quo
regarding
the amendment of the interest rates. In the
U
rsula
Mansions
-judgment,
supra,
it was specifically found that “
it
is open to a respondent on appeal to contend that the order appealed
against should be supported on grounds which were rejected
by the
trial judge: he cannot note a cross-appeal…
”
.
In the present appeal it is the very submission of Mr Tsangarakis
that the court
a
quo
erred
in finding that the second respondent agreed to the proposed
amendment of the interest rates and that, therefore, the point
in
limine
regarding
the absence of such an agreement should, in itself, already have
resulted in the dismissal of the application and
consequently the
dismissal of the present appeal. The further reason why I deem it
necessary that we have to deal with this finding,
is in view of the
ground of appeal recorded in paragraph 13 of the appellant`s notice
of appeal, which is based on this very finding
in favour of the
appellant. I will therefore now deal with the merits of this finding.
[17]
Section 87 of the Act determines as follows:
“
87.
Magistrate’s Court may re-arrange consumer’s obligations.
(1)
If a debt counsellor makes a proposal to the Magistrate’s Court
in terms of section 86(8)(b), or the consumer
applies to the
Magistrate’s Court in terms of section 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, may –
(a)
reject
the recommendation or application as the case may be; or
(b)
make
–
(i)
an
order declaring any credit agreement to be reckless, and an order
contemplated in section 83(2) or (3), if the Magistrate’s
Court
concludes that the agreement is reckless;
(ii)
an
order re-arranging the consumer’s obligations in any manner
contemplated in section 86(7)(c)(ii);  or
(iii)
both
orders contemplated in subparagraph (i) and (ii).
(2)
…”
[18]
The court only has the debt re-arrangement powers awarded to it by
the Act.  Section 86(7)(c)(ii) provides that the court
can
re-arrange one or more of the consumer`s obligations by:
“
(aa)
Extending the period of the agreement and reducing the amount of each
payment due accordingly;
(bb)
Postponing during a specified period the dates on which payments are
due under the agreement;
(cc)
Extending the period of the agreement and postponing during a
specified period the dates on which payments are
due under the
agreement; or
(dd)
recalculating the consumer’s obligations because of
contraventions of Part A or B of Chapter 5, or Part A
of Chapter 6.”
[19]
A court is not permitted to reduce the interest rate applicable to an
agreement in order to provide debt relief.  In
SA
Taxi Securitisation (Pty) Ltd v Dick Lennard
2012 (2) SA 456
(ECG) the following findings in this regard were made
in paragraphs [9] to [11] of the judgment:
“
[9]
On a reading of s 87(1) it is clear that the magistrates' court does
not have the power to make any order other than those listed
in paras
(a)
and
(b)
thereof. If it is found that a consumer is over-indebted as
determined by the debt counsellor and a recommendation that the
consumer's
obligations be rearranged is appropriate in the
circumstances, then the said court is empowered to make one or more
of the orders
contemplated in s 86(7)
(c)
(ii).
In the present matter Strydom's recommendation was that the
respondent's obligations arising from the credit agreement concluded

with the appellant were to be rearranged by 'extending the period of
the agreement and reducing the amount of each payment due'
as
envisaged in subpara
(aa)
of s 86(7)
(c)
.
It is, however, clear from Strydom's proposal and the calculations
that, instead of reducing the amount of each payment due each
month
by spreading the payment thereof over an extended period as envisaged
in subpara
(aa)
,
he achieved a reduction in the payments by reducing the interest rate
agreed to in the agreement. Consequently, by ordering that
the
respondent's obligations be rearranged 'as per annexure A to the
application, by extending the periods of the agreements and
reducing
the amount of each payment due accordingly', the magistrate
effectively ordered not only that the monthly payments be
reduced,
but also that the interest rate be reduced to 15,5%.
[10]
I agree with the appellant's submission that in doing so the
magistrate acted outside his powers. An order envisaged by s
86(7)
(c)
(ii)
constitutes a variation of the terms of the credit agreement.
Subparagraph
(aa)
of the said section in terms of which both the recommendation and the
order were clearly made authorises the court to extend the
period of
payment and reduce the amounts of each payment due 'accordingly'. It
makes no reference to any other terms of the credit
agreement. What
subpara
(aa)
provides for is debt relief to an over-indebted consumer by extending
the period of payment, thereby resulting in a reduction of
the
payments without reducing the actual amount owing by him or her in
terms of the relevant agreement. The wording thereof is
clear and
unambiguous and is in my view not capable of any other
interpretation.
It
accordingly does not permit the magistrates' court to reduce the
interest rate applicable to an agreement in order to provide
debt
relief to a consumer
(see Van Heerden
Guide
to the
National Credit Act
(LexisNexis
) para 11.3.3.2). It also follows that as the debt
counsellor's scope for making a proposal as envisaged in
s 86(6)
(c)
is inextricably linked to the powers of the magistrates' court in s
87 of the Act, he or she cannot recommend what the said court
is not
empowered to order. (Own emphasis)
[11]
Accordingly the magistrate in the present matter acted ultra vires
and the order must be set aside…”
[20]
The said principle has since been confirmed in a number of judgments,
inter
alia,
in the matter of
Nedbank
Ltd v Norris and Others
2016
(3) SA 568
(ECP) at paras [43] to [45]:
“
[43]
Apart from this, the magistrate also ordered that the first
respondent's contractual obligations to pay interest on the
outstanding
balance of the loan be reduced from the fixed 17,5% to
0%.
[44]
Section 86(7)
(c)
(ii)
confers no such power upon the magistrates' court. A
debt-rearrangement order has as its purpose the rescheduling or
rearrangement
of the obligations of the consumer in such a manner as
to enable the consumer to meet his/her/its obligations to the credit
provider.
It serves to mitigate the effect of over-indebtedness by
making provision for payments within the existing means of the
consumer
and over an extended period. A rearrangement order does not,
and cannot, extinguish the underlying contractual obligations. This

much is plain from the wording of s 86(7).
The
order reducing the first respondent's contractual obligation to pay
interest on the outstanding balance of the loan is therefore
ultra
vires the NCA
(
FirstRand
Bank v Adams
supra para 28;
SA
Taxi Securitisation (Pty) Ltd v Lennard
2012 (2) SA 456
(ECG)
para
10). (Own emphasis)
[45]
A magistrates' court is a creature of statute. It only has the
jurisdiction which is conferred upon it by statute. It exercises
no
inherent jurisdiction and can accordingly not adjudicate matters
which fall outside of its expressly conferred jurisdiction
and cannot
grant orders other than those it is expressly authorised to grant
(
Ndamase
v Functions 4 All
2004 (5) SA 602
(SCA)).
[46]
In purporting to make the order the magistrate acted without
jurisdiction….”
In
Nedbank
Ltd v Jones and Others
2017 (2) SA 473
(WCC) the Court adopted the reasoning in the
Norris
-judgment,
supra,
and,
inter
alia,
made the following declaratory order:
“
A
magistrate’s court hearing a matter in terms of
s 87(1)
of the
National Credit Act 34 of 2005
, does not enjoy jurisdiction to vary
(by reduction or otherwise) a contractually agreed interest rate
determined by a credit agreement,
and any order containing such a
provision is null and void.”
[21]
The interest rates applicable to the credit agreements entered into
between the consumer and the second respondent in the present
matter
are indicated hereunder, as opposed to the amended interest rates
initially proposed by the appellant in the restructured
payment
plan:
ACCOUNT
ORIGINAL
INTEREST RATE
INTEREST
PROPOSED
BY
THE APPLICANT
[4...]
22,35%
0,00%
[5...]
22,35%
0,00%
[3...]
11,05%
0,00%
[0...]
21,750%
0,00%
In
the updated restructured payment plan attached to the replying
affidavit, three of the four proposed interest rates remained
at
0,00%, whilst the proposed interest rate pertaining to the home loan
account, [3...], was amended to reflect a proposal of 7,75%.
[22]
As indicated earlier, the appellant denied in her replying affidavit
that the relevant interest rates were changed unilaterally
and
averred that the proposed changed interest rates were accepted by the
second respondent, relying on annexures “L1”,
“L2”
and “L3”.
[23]
From a perusal of the papers it seems that the appellant had sent an
e-mail to the consumer’s creditors, including the
second
respondent, on 3 November 2014, advising them as follows (annexure
“A2”, p.66 of the record):
“
This
notice serves to advise you of the attached restructured proposal and
cascading of the above mentioned consumer.
Inform
our company of any changes or errors which require re-work before the
Final Proposal are (
sic
)
issued.  Kindly respond to this Proposal in the form of a (
sic
)
acceptance letter or counter proposal within five (5) business days.
If we do not receive response within  five (5)
business days we
will deam the attached Proposal to be acceptable.”
In
the founding affidavit, dated 4 November 2014, the appellant,
inter
alia,
made the following averments:
“
17.
The following respondents accepted the proposal:
None
17.1
The following respondents rejected the proposal:
None
17.2
The following respondents sent a counter proposal which was accepted
by me:
None
17.3
The following respondents sent a counter proposal which was not
accepted by me:
None
17.4
…
17.5
No response was received from the following respondents:
None”
The
appellant subsequently filed a supplementary affidavit, dated 10
November 2014 (p.76 – p.77 of the record), in which she
made
the following relevant averments:
“
2.
After the application was served on all the respondents some
creditors responded in the following manner:
2.1
The following creditors accepted the proposal attached to the
application.
Second
respondent ‘L2’ and ‘L3’.
2.2
The following respondents rejected the proposal attached to the
application.
None
2.3
The following respondents provided us with counter offer attached to
the application.
Second
respondent ‘L1’.”
[24]
Annexure “L1” reflected on p.78 of the record, dated 7
November 2014, pertains to the home loan account [3...]
and from a
reading thereof it is clear that it indeed constituted a counter
proposal in the following terms:
“
The
debt re-arrangement proposal has not been accepted due to the
following reason/s:
a.
The
re-arrangement proposal does not solve the matter and/or does not
lead to the eventual satisfaction by the customer of all financial

obligations.
Please
find attached our counter proposal, which is an indication of a
re-arrangement that would be acceptable to us.
Outstanding
balance as a date of this letter
R41
0166.49
Proposed
instalment
R3
098.11
Interest
rate
7,75%
per annum, with effect from 2014/11/30, worked out daily and
compounded monthly, which will be fixed for as long as
she remain
in debt review.
Monthly
fees
R57.00
Concession
term
300
months or until repayment of the debt or until you can meet your
original contractual obligations, whichever occurs earlier.
The
attached counter proposal is only valid for a period of ten (10)
business days from date of this letter.”
[25]
Annexure “L2” which is reflected on p.79 of the record
and also dated 7 November 2014, pertains to the credit card
account
[5...].  Annexure “L3”, also dated 7 November 2014,
is reflected on p.80 of the record and it pertains
to the personal
loan account [4...].  Each of these letters indicates in the
heading thereof that it is a provisional acceptance
of the
re-arrangement proposal and then the following is stated:
“
We
confirm our provisional acceptance of the terms of the re-arrangement
proposal for the above account.
This
re-arrangement is accepted on a provisional basis on specific terms
and conditions which will be confirmed at final acceptance
or as
ordered by court.”
[26]
Mr Tsangarakis made the following statements and submissions in
paragraphs 1.3 to 1.7 of his heads of argument filed in the
appeal:
“
1.3   The appellant
had submitted in both her replying affidavit to the debt review
application (par 2) as well as her
Heads of Argument filed for
purposes of argument of the debt review application, that she had
ostensibly ‘accepted’
the second respondent’s
counter proposals which were sent on 5 March 2015 and then proceeds
to attach said counter proposals
to her heads of argument (which is
in itself disallowed).
1.4
….
1.5    That being said,
it should be noted that the appellant’s revised proposal
(Annexure ‘A’)
to both her replying affidavit and Heads
of Argument does not correspond with the second respondent’s
counter proposal and
as such no settlement had been reached.
1.6    As such there
was never a so-called ‘meeting of the minds’ between the
parties which could have
led to this matter becoming settled.
1.7    Accordingly, and
in the absence of any settlement, the bank’s counter proposal
has lapsed and the contractual
interest rates remain applicable.”
[27]
The heads of argument filed for purposes of the hearing of the debt
review application in the court a quo do not form part
of the appeal
record before us.  The second respondent’s counter
proposal(s) “
which
was sent on 5 March 2015
”
are,
therefore, not before us and we have no knowledge of the contents
thereof. If the appellant wanted to rely, or attempt to rely,
on
those counter proposals, it was, at the very least, the duty of the
appellant (or the appellant`s attorney) to have ensured
that those
heads of argument be included in the appeal record. Having said that,
it is also to be recorded that the inclusion thereof
in the appeal
record would, in any event, not necessarily have guaranteed that we,
as a court of appeal, would have attached any
evidential value to it.
Those counter proposals and the appellant’s alleged
acceptance thereof, should have been contained
in the replying
affidavit in order for them to have properly served before the court
a quo as part of the evidence.  It was
possible for the
appellant to have done this, considering that the replying affidavit
was only attested to on 19 June 2015 and
the said counter proposals
were apparently sent to the appellant (probably via e-mail) on 5
March 2015 already.
[28]
We can thus only deal with this appeal based on the papers before us
which form part of the appeal record.  It, in any
event, seems
that the court a quo`s aforesaid finding that the interest rates had
been changed by agreement between the parties,
is based on Annexures
“L1”, “L2” and “L3” to the
supplementary affidavit and not on any counter
proposal(s) attached
to the appellant’s heads of argument at the time.
[29]
I will now deal with the respective accounts the consumer holds with
the second respondent:
Current
Account [0...]:
[30]
It seems to be common cause between the parties that the applicable
interest rate in terms of the credit agreement is 21.75%.
The
revised interest rate proposed by the appellant, both in the initial
restructured payment plan and in the updated restructured
payment
plan, is 0%.  However, Annexures “L1”, “L2”
and “L3” do not pertain to this account.
There was
therefore no proper evidence before the court a quo as to whether the
second respondent had accepted the amended interest
rate, rejected it
or made a counter offer regarding thereto to the appellant.
[31]
There is consequently, in my view, no basis upon which the court
a
quo
could have found that the amendment of the interest rate pertaining
to this account followed from an agreement between the parties.
Home
Loan Account [3...]:
[32]
Annexure “L1” is applicable to this account.  As
indicated by the appellant in her supplementary affidavit
referred to
earlier, Annexure “L1” constituted a counter-offer.
As recorded earlier, the said counter-offer was
only valid for a
period of ten (10) business days from the date of the letter, hence
from 7 November 2014.
[33]
The trite general principles regarding the acceptance of an offer (or
a counter-offer) are summarised in
Wille’s Principles Of
South African Law
, F Du Bois
et al
, 9
th
Edition, at p. 742 to 743:
“
An acceptance is an assent by
the person to whom the offer is made to be bound by the terms
contained in the offer.  In order
for the acceptance to
constitute a contract it is necessary that the acceptance be definite
and unconditional….
The person to whom the offer is made
can convert it into a contract only by accepting, as they stand, the
terms offered; he cannot
vary them by omitting or altering any of the
terms or by adding proposals of his own.  It follows that if the
acceptance is
not unconditional but is coupled with some variation or
modification of the terms offered, no contract is constituted…
The acceptance itself must be
communicated to the offeror, and until it has been so communicated no
contract is constituted…”
Where
an offer (or counter-offer) stipulates a period for acceptance, it
lapses if acceptance does not take place within that period.

See
Contract
General Principles
,
SWJ Van der Merwe e
t
al
, 4
th
Edition, at p. 52.
[34]
Not a single averment was made by the appellant in any of the papers
before us that she accepted the counter proposal contained
in
Annexure “L1”.  The averment she made in the
replying affidavit is that the changed interest rate “
was
accepted by the second respondent
”
(not
by the appellant), in support of which averment the appellant relied
on annexure “L1”, the counter proposal, which
reliance is
clearly ill-founded.
[35]
It is important to be mindful of the fact that the counter proposal
contained in Annexure “L1”, did not only propose
an
interest rate of 7.75% as opposed to the appellant’s proposal
of 0%.  It also proposed a different monthly payment,
R3 098-11,
as opposed to the appellant`s proposed monthly payment of R2 290-76.
In addition the counter proposal proposed
a revised payment term of
300 months as opposed to the 111 months proposed by the appellant.
A monthly fee of R57-00 was
also proposed in the counter proposal, as
opposed to no fee proposed by the appellant.  It is therefore,
in my view, clear
that the counter proposal pertaining to the
interest rate of 7.75% was based upon the “package deal”
proposed by the
second respondent.  Any alleged acceptance by
the appellant of the counter proposal should, therefore, have been an
acceptance
of the complete counter offer as set out in the letter.
Again no such acceptance appears from the record before us.
[36]
The Court
a
quo
consequently erred in finding that an agreement was concluded
regarding the amendment of the interest rate from 11.05% to 7.75%
as
proposed in the updated restructured payment plan.
[37]
For the sake of completeness I need to point out that I agree with
the submission by Mr Tsangarakis that the updated restructured

payment plan does, in any event, not correspond with the second
respondent’s counter-proposal in its totality as set out
in
annexure “L1”.
Credit
Card Account [5...] and Personal Loan Account [4...]:
[38]
In both annexures “L2” and “L3” it is stated
that it is a “
provisional
acceptance
”
which
will be “
confirmed
at final acceptance or as ordered by court
”
.
I am not convinced that these two letters constitute an unconditional
acceptance of the proposal pertaining to the two accounts,
especially
in view of the intimation that it is still to be confirmed.  The
words “
without
prejudice
”
which
appear at the top of both these letters also tend to favour an
interpretation that the acceptance was not unconditional.
I,
however, deem it unnecessary for purposes of this appeal to make a
finding regarding the interpretation of these two letters,
as it will
have no effect on the outcome of the appeal considering the findings
I have already made pertaining to the other two
accounts and the
further findings still to come in this judgment.  I do pause to
mention that I would have expected the applicant
to have dealt with
the interpretation of these two letters in her supplementary founding
affidavit in order for her to be able
to rely upon them as the basis
for alleged agreements on the amended interest rates pertaining to
these two accounts.
Conclusion:
[39]
In the premises I am convinced that the court a quo erred in its
finding that the second respondent agreed to the amended interest

rates. The evidence before court does not support or substantiate
such a finding. That should have been the end of the application.
The
court
a quo
therefore could and should have dismissed the
application (also) on this ground.
[40]
The appellant can, therefore, not be successful with the appeal on
the basis of the ground of appeal contained in paragraph
13 of the
Notice of Appeal.
B:
Discrepancies regarding the monthly income
of the consumer and the absence of recent proof of
income:
[41]
The aforesaid findings are to be considered against the backdrop of
an exposition of the procedural requirements and substantive
law
relating to debt review applications.
[42]
Procedural clarity was brought by the judgment in
National
Credit Regulator v Nedbank Ltd
2009
(6) SA 295
(GNP).  The findings made in the said judgment are
duly summarised in
Guide
to the
National Credit Act
>,
JW Scholtz
et
al
, at
p. 11-52 to p. 11-53, par 11.3.3.2. Relevant to the present matter
are the following:
“
(a)   In
discharging his duties under
section 87
of the
National Credit Act,
the
magistrate fulfils a judicial role.
(b)
The power of a magistrate’s court to conduct a hearing in terms
of section 87 of the Act and to
make appropriate orders in
consequence thereof is derived from section 87 read with section 86.
The Magistrates’ Courts Act
and Magistrates’ Courts Rules
govern the procedure by which the magistrate’s court may
conduct itself in so doing.
(c)
A referral by a debt counsellor to a magistrate’s court under
section 86(8)(b)
and
86
(7)(c) of the
National Credit Act is
an
application within the meaning of the Magistrates’ Courts Act
and rules and falls to be treated as such in terms of magistrate’s

court rule 55
(d)
…
(e)
A debt counsellor who refers a matter to a magistrate’s court
in terms of
section 86(7)(c)
and
86
(8)(b) of the
National Credit Act
has
a duty to assist the court and should be available and able to
render such assistance by furnishing evidence, making submissions

regarding his proposal or by answering queries raised by the court.
(f)
The debt counsellor is the applicant in debt review proceedings under
sections 86(7)(c)
,
86
(8)(b) and
87
; the consumer and his credit
providers are the respondents.
(g)
The appropriate magistrate’s court to approach for the purposes
of
sections 86(7)(c)
,
86
(8)(b) and
87
of the
National Credit Act is
the magistrate’s court having jurisdiction in respect of the
person of the consumer.
(h)    …”
[43]
The aforesaid judgment was confirmed on appeal in
Nedbank Ltd v
The National Credit Regulator
2011 (3) SA 581
(SCA).  In
addition the SCA also dealt with the omission in
section 86(8)
to
refer to
section 86(7)(c).
The court referred to the principle
that a court is empowered to modify the wording of a statute where it
is necessary to
give effect to what was the true intention of the
legislature.  It then concluded that by reading in the words
“and
section 86(7)(c)
” in declaratory 4 of the order by
the court
a quo
proper effect will be given to the intention
of the legislature.
[44]
On 10 May 2012 the Debt Counselling Regulations (‘the Debt
Counselling Regulations”), published in Government Gazette

35327 of 10 May 2012, GN R362, came into operation which, in
regulation 2 thereof, contains procedural provisions pertaining to

applications for debt restructuring orders as contemplated in section
86(7)(c).  The part of the said regulation relevant
to the
current appeal reads as follows:
“
(1)   An
application by a debt counsellor for an order contemplated in section
86(7)(c) of the Act must be lodged in a
manner and form prescribed by
Rule 55 of the Magistrates’ Court’s Rules, unless the
court directs otherwise.
(2)
The application referred to in Regulation 2(1) above must be
substantiated by an affidavit deposed to
by the debt counsellor in
which the following is set out –
(a)
An
exposition of the debt counsellor’s assessment conducted in
terms of section 86(6) of the Act, read with sections 78(3),
79, 80
of the Act and Regulation 24 of the Regulations;
(b)
The relief
claimed in terms of section 86(7)(c);
(c)
Full
particulars of each credit provider;
(d)
Full
particulars of the consumer and the debt counsellor; and
(e)
Confirmatory
affidavit from the affected consumer.”
[45]
Regulation 24 of the NCA Regulations contains the following
requirements relevant to this appeal:
Application
for debt review
-
(1) A consumer who wishes to apply to a debt counsellor to be
declared over-indebted must:
(a)
Submit
to the debt counsellor a completed Form 16; or
(b)
…
(c)
Submit to the debt counsellor the documents specified in Form 16.
(d)
…
(2)
…
(3)
The debt counsellor must verify the information provided in terms of
subsection (1) above by requesting
documentary proof from the
consumer, contacting the relevant credit provider or employer or any
other method of verification.
(4)
…
(5)
…
(6)
…
(7)
When assessing the consumer's application in terms of section
86(6)(a) of the Act, the debt counsellor
must refer to section 79 and
further consider the following:
(a)
A consumer is over-indebted if his/her total monthly debt payments
exceed the balance derived by deducting
his/her minimum living
expenses from his/her net income;
(b)
Net income is calculated by deducting from the gross income,
statutory deductions and other deductions
that are made as a
condition of employment;
(c)
Minimum living expenses are based upon a budget provided by the
consumer, adjusted by the debt counsellor
with reference to
guidelines issued by the National Credit Regulator.”
[46]
Section 79 of the Act deals with “over-indebtedness” and,
inter
alia
,
determines as follows:
“
79.
Over-indebtedness.
—
(1)
A consumer is over-indebted if the preponderance of available
information at the time a determination is made indicates that
the
particular consumer is or will be unable to satisfy in a timely
manner all the obligations under all the credit agreements
to which
the consumer is a party, having regard to that consumer’s—
(a)
financial means, prospects and obligations; and
(
b
)
probable propensity to satisfy in a timely manner all the obligations
under all the credit agreements
to which the consumer is a party, as
indicated by the consumer’s history of debt repayment.
(2) When a determination
is to be made whether a consumer is over-indebted or not, the person
making that determination must apply
the criteria set out in
subsection
(1
)
as they exist at the time
the determination is being made.
(3) …”
[47]
In terms of section 78(3) of the Act the aforesaid “
financial
means, prospects and obligations
”
includes:
“
(
a
)
income, or any right to receive income, regardless of the source,
frequency or regularity of that
income, other than income that the
consumer or prospective consumer receives, has a right to receive, or
holds in trust for another
person;
(
b
)
the financial means, prospects and obligations of any other adult
person within the consumer’s
immediate family or household, to
the extent that the consumer, or prospective consumer, and that other
person customarily—
(i)
share their respective financial means; and
(ii)
mutually bear their respective financial obligations; and
(c)
…”
[48]
In
Standard
Bank Of South Africa Ltd v Panayiotts
2009 (3) SA 363
(WLD) the court dealt with a summary judgment
application wherein the respondent raised his over-indebtedness as a
defence. It
held as follows in paragraphs [8], [9] and [52] of the
judgment:
“
[8]
A party (the consumer) who raises a defence of over-indebtedness must
plead and prove the defence, which includes proving
that he is
over-indebted as envisaged in s 79 of the NCA.
[9]
Having regard to the wording of
s 79, such proof must inevitably involve details of, Inter
alia, the
consumer's financial means, prospects and obligations. Financial
means would include not only income and expenses, but
also assets and
liabilities. Prospects would include prospects of improving the
consumer's financial position, such as increases,
and, even,
liquidating assets.
…
[52]
It is so that the NCA is for the benefit of every consumer who
can prove that he is over-indebted as contemplated in
s 79 of the
NCA.”
There
is no reason why the same principles are not to be
mutatis
mutandis
applied
to a debt review application.
Therefore,
the onus was on the appellant to prove to the court that the consumer
is over-indebted.
[49]
In order for an applicant in an application for debt review to
discharge the aforesaid onus, the founding affidavit should
set out
sufficient evidence to disclose and support the cause of action. The
applicant`s obligations in this regard were determined
and dealt with
in
Motor Finance Corporation (Pty) Ltd v Joubert
2013
JDR 1912 (GNP), paragraphs [7] to [13]:
[7]
… While the NCA does not specify the procedure to be followed
in applications for debt relief,
it is now accepted that in the
Magistrate's Court the procedure in accordance with Rule 55 of the
Magistrate's Courts Act must
be followed. See Nedbank v National
Credit Regulator
2011 (3) SA 581
(SCA) at para [28] …
[8]
Accordingly, an applicant should set out sufficient facts to disclose
a cause of action, and whereas
in pleadings a party is not permitted
to plead evidence, the
nature
of applications is that the affidavits constitute not only the
pleadings but all of the evidence on which the applicant relies
.
See Hart v Pinetown Drive-In Cinema (Pty) Ltd
1972 (1) SA 464
(D);
Louw and others v Nel
2011] 2 All SA 495
(SCA) at para [17]. It
follows therefore that an applicant has to make out a case in his or
her founding affidavit. See Director
of Hospital Services v Mistry
1979 (1) SA 626
(A); Pat Hinde & Sons (Brakpan) (Pty) Ltd v
Carrim
1976 (4) SA 58
(T). (Own emphasis)
[9]
… However, the court retains a discretion, in terms of section
87, to consider whether to accept
a proposal. In this instance,
before a court can decide to issue an order declaring the debtors
affairs to be re-arranged or the
credit agreement to be reckless, it
is obliged to have regard to the proposal and information before it.
That
burden can only be discharged where the applicant under section 86
places full documentary evidence before the court
,
and not, as contended by the appellant, when the debt counsellor
merely pays lip service to the regulations and the Act. In terms
of
section 79 over-indebtedness can only be determined if the consumer
discloses his or her
"financial
means, prospects and obligations; and the probable propensity to
satisfy in a timely manner all the obligations
under all the credit
agreements to which the consumer
is
a party". In Standard Bank of South Africa Ltd v Panayiotts
(2009) (3) SA 363
at para [9], Masipa J noted the following:…
(Own emphasis)
[10]
In the present case, the consumers did not set out in their founding
affidavit proof of income; bank statements
from which their monthly
and fixed expenses could be easily ascertained and importantly; what
prospects existed for the improvement
of their financial predicament.
Only once there has been this level of disclosure, can the debtor's
affairs be fully interrogated.
On that basis, the appellant contends
that the application should have been dismissed due to insufficient
evidence. The observations
of Masipa J in Standard Bank of South
Africa v Pannayiotts (supra) are apposite. …
[11]
In light of the consumer's application being subjected to intense
scrutiny from the appellant (the sixth respondent
in the court
a
quo
), a number of critical deficiencies in the founding affidavit
were extrapolated. For example, the second respondent (the husband)

failed to attach his proof of income from which his precise earnings
could be ascertained as well as the nature and amount of his
monthly
deductions. … All of these factors would affect the amount
available for the distribution to creditors.
[12]
…
[13]
On the basis of the arguments advanced I am satisfied that the
respondent (on the basis of the contents of the founding
affidavit)
had not met the standard of disclosure required of an applicant
seeking debt relief or debt re-arrangement….”
[50]
In the
Norris
-judgment,
supra,
the aforesaid
principles were again confirmed and applied in paragraphs [38] to
[40] of the judgment.
[51]
The debt counsellor in the aforesaid
Joubert
-judgment
subsequently filed a supplementary affidavit in the court
a
quo
,
which was accepted by the said court and taken into consideration in
its adjudication of the application.  With regard to
the filing
of the said supplementary affidavit, the court of appeal made the
following findings in paragraph [13] and further of
the judgment:
[13]
…
However,
the first respondent filed a ‘supplementary affidavit’
seeking to address many of the pitfalls in his founding
affidavit.
The first respondent this time gave a comprehensive breakdown of the
consumers' income and expenditure, supported by
documentary evidence
including the second respondent's salary advice. In addition, details
are provided …
[14]
The appellant submitted that the court
a
quo
erred in accepting the first respondent's affidavit into evidence. It
was contended that no provision exists in Magistrate's Court
Rules
for a supplementary affidavit in application proceedings. That is so
but that omission is regularly ignored and replying
affidavits are
accepted. More particularly, the appellant contends that the first
respondent sought to make out a case for debt
relief and
re-arrangement based on the contents of his supplementary affidavit.
In this regard, the authorities are clear that
an applicant must
normally stand or fall by his founding affidavit. Thus, an applicant
will not be allowed to introduce new material
in reply except within
a very narrow ambit. However, Harms in Civil Procedure in the
Superior Courts (B-53) pointed out that the
present tendency seems to
permit a greater flexibility, and rightly so, in the absence of
prejudice to the other party. See Nick's
Fishmonger Holdings (Pty)
Ltd and Another v Fish Diner in Bryanston CC and Others
2009 (5) SA
629
(W).
[15]
Counsel for the appellant elevated the supplementary affidavit filed
by the first respondent as evidence of a "trial
by ambush".
I do not agree, particularly as nothing stopped the appellant from
raising the same arguments which it presently
does to show why the
consumers should not be granted the relief they seek. I am of the
view that unless the applicant intends to
supplant a cause of action
set out in the founding affidavit, parties should be entitled to have
their case adjudicated on the
fullest facts available, even if
through omission these facts did not appear in the founding
affidavit. In the present case, the
first respondent's founding
affidavit was significantly bereft of the details that ought to have
been set out. The essential ingredients
for an application for debt
relief were however foreshadowed in the founding affidavit –
the consumers' contended that they
were over indebted and gave some
indication (albeit incomplete) of their income and expenses.
[16]
In all probability, the first respondent, who was entrusted with
bringing the application, assumed that the application would
be a
mere formality and the application would not be met with such
resistance. As matters turned out, a number of creditors did
not
oppose the application for debt relief and were content to abide the
decision of the court. The first respondent's tardiness
should not
however prejudice the consumers in having their application for debt
relief being properly considered. In any event,
as a result of the
further information placed before the court, the credit providers now
had a better, more informed picture of
the consumers' financial
circumstances as all (or most) of the deficiencies were addressed in
the supplementary affidavit. Whilst
counsel for the appellant argued
that the appellant was prejudiced in that no provision existed for it
to file an affidavit in
reply, (he always could apply for such leave)
this did not prevent the appellant from using the information
disclosed to properly
argue its case. Ultimately, the court has
discretion to decide whether to allow the introduction of additional
affidavits. …I
accordingly find that the appellants were not
prejudiced in the court
a
quo,
and
I find no grounds to interfere with the court`s decision to allow the
introduction of the supplementary affidavit.”
[52]
With the aforesaid principles in mind I will now consider the
application
in
casu
and the findings of the court
a
quo
pertaining to the alleged income of the consumer and her alleged
over-indebtedness.
[53]
It is evident that the consumer’s income is fundamental to the
consideration by a debt counsellor as to whether a consumer
is
over-indebted or not and
mutatis
mutandis
of fundamental importance to a court considering a debt review
application.
[54]
In the founding affidavit the applicant alleged the following in
paragraph 13 thereof:
“
The first respondent’s
monthly income is R14 183.29.  A copy of the first
respondent’s salary advice is attached
hereto as Annexure
‘G1’.”
From
a perusal of the said salary advice, dated October 2014, the
“earnings” of the consumer are indicated as follows:
Salary Code
Description
Amount
0020*
(C) Pay
R11 982-75
0359*
(A) Deprivation
All -
R  4 184-46
1533*
(C) Housing
All–Other
R
900-00
1276
(A)
S&T per W/Voucher
R  1 300-54
The
“total earnings” is then indicated as R18 367-75.
A
number of deductions are indicated, most of which do not seem to be
in dispute.  I do, however, deem it necessary to record
the
following three deductions:
Salary
Code
Description
Amount
7275
(A)
Pre-paid
W/V
R1 300-54
7910 *
(C)
PAYE RSA
R1 158-20
7910 *
(A)
PAYE RSA
R   509-04
The
“total deductions” is reflected as R5 278-50 and
then there is an amount reflected as “due to you”,
being
R13 089-25.  From a calculation it is evident that the last
mentioned total constitutes the result when the total
of the
deductions is subtracted from the total of the earnings.  The
amount of R14 183-29 alleged in the founding affidavit,
is not
reflected on the salary advice.
[55]
From the details completed on Form 16 attached to the founding
affidavit as annexures “C1” to “C5”,
it is
evident on p. 38 of the record that the appellant calculated the
“total income” of the consumer on the basis
of a “basic
salary” of R11 982-75, “income” of R900-00 and
a further “income” of R1 300-54,
totalling R14 183-29;
hence, excluding the “deprivation all” amount of R
4 184-46.
On
the same page of the record the deductions were reflected in the same
amounts as reflected on the salary advice, totalling R5
278-50, also
similar to the salary advice.  Based on the aforesaid
calculations reflected on p. 38 of the record, the “net
pay”
of the consumer was reflected as R8 904-79 on annexure “C3”,
p. 39 of the record, as opposed to the
amount of R13 089-25 on
the salary advice.
[56]
On the papers which served before the court
a
quo
there, therefore, clearly existed a discrepancy between the
allegation in the founding affidavit pertaining to the consumer’s

income as opposed to what is reflected on the salary advice.
[57]
In its answering affidavit the second respondent stated that
annexures “C1” to “C5”, “D1”
to
“D3, “E1”, “F1” to “F9”,
“G1” and “I1” to “I2”
had not
been attached to the application papers served on the second
respondent.  The second respondent specifically pointed
out that
the appellant failed to attach any form of proof of income to the
founding affidavit and that this failure, as well as
the failure to
put proper evidence before court pertaining to the alleged
over-indebtedness of the consumer, have the result that
the appellant
failed to prove the alleged over-indebtedness of the consumer.
[58]
In the replying affidavit the appellant merely persisted with the
allegation that the relevant annexures had in fact been attached
to
the founding affidavit, including annexure “G1”, the
salary advice, but still without any attempt to explain the

discrepancy between the figure alleged in the founding affidavit,
read with the figures reflected on annexures “C2”
and
“C3”, and the figures reflected on the salary advice. The
appellant also never attempted to file a supplementary
affidavit in
order to explain the discrepancy.
[59]
The following “notes” appear at the bottom of the salary
advice, annexure “G1”:
“
1.
Any enquiry iro the information on this pay advice must be referred
to your duty room/ships
office.
2.
* = Is used for your pay calculation and/or IRP 5 detail.
3.
(C) = Current    (A)= Arrears”
In
addition the following “salary info” appears on the
salary advice:
“
Subsistence and travel (S&T)
is not an allowance or a measure to supplement salary.”
[60]
In the absence of an explanation under oath by the appellant, duly
confirmed under oath by the consumer, there is no basis
upon which
the court
a quo
could have found that the aforesaid
information on the salary advice provides an explanation as to why
the “deprivation all”
amount of R4 184-46 was not to
be taken into consideration for purposes of calculating the
consumer’s net income.
[61]
The first attempt the appellant made to explain the discrepancy, as
correctly pointed out by Mr Tsangarakis, was only in her
founding
affidavit in support of the application for condonation, paragraph 19
thereof, at p. 17 of the record.  This affidavit
did not exist
at the time of the hearing of the debt review application by the
court
a
quo
and
did consequently not serve before the said court.
[62]
The finding by the court
a
quo
that no explanation was provided to the court for the discrepancy,
can, therefore, not be faulted in my view.
[63]
As mentioned earlier, the court
a
quo
also
concluded in its judgment that:
“
No recent proof of
income was submitted before the court on 17 July 2015 and no reason
advanced for such a failure.”
[64]
I deem it apposite to repeat section 79(2) of the Act:
“
When a
determination is to be made whether a consumer is over-indebted or
not, the person making that determination must apply the
criteria set
out in subsection (1)
as
they exist at the time the determination is being made
.”
(Own emphasis)
My
interpretation of this subsection is that when a court considers an
application for debt review and consequently firstly has
to determine
whether the consumer is over-indebted, such a determination by the
court is to be based upon facts and figures as
they exist at the time
of the hearing, or at least relatively close to that time. In my view
logic dictates that this is the correct
interpretation, because had a
determination regarding over-indebtedness been made by a debt
counsellor, for example, a year before
the date of the hearing, the
circumstances could have changed since then, even to the extent that
the consumer might not even be
over-indebted anymore. Surely it
cannot have been the intention of the Legislature that the court
should then still declare the
consumer to be over-indebted just
because that was the situation at the time the debt counsellor made
his/her determination.
[65]
The court seems to have followed a similar interpretation in
Firstrand
Bank Ltd v Barnard
2015 JDR 1614 (GP) when it dealt with the necessity of placing
additional evidence before the court in certain circumstances, as

well as the manner in which it is to be done, in paragraphs [22] to
[24] of the judgment:
“
[22] The second
procedural aspect arises from the fact that the appellants adduced
facts in their answering affidavits which gave
rise to disputes. The
debt counsellor responded to those disputes not, as she should have,
by the delivery of a replying affidavit,
but by the delivery of heads
of argument in which certain factual assertions were made. The
appellants justifiably objected in
the court below to this procedure.
The general rule is that facts are placed before courts in
applications through affidavits sworn
by deponents with personal
knowledge of that to which they depose.
[23] It was submitted on
behalf of the debt counsellor that it was not competent for the
consumer, being a respondent in the application,
to respond to the
issues raised by the other creditor respondents. That is wrong
because it puts form above substance. The application,
in substance
although not in form, is the application of the consumer. He is
required by law to confirm on oath, as he did in this
case, the
allegations made by the debt counsellor in her founding affidavit. He
may go further, as he did in this case, and put
before the court in
his affidavit any factual material which he considers or is advised
is material to the decision of the case.
[24]   While the
provisions of rule 55 are applicable to proposals made by debt
counsellors to the court under s 87(1), this
does not mean that they
must rigidly apply as if this were, for example, a claim for payment
of a specified amount on a cause of
action which accrued before the
application was launched. The power of the court approached under s
87(1) derives, as I have said,
from the NCA and the procedure
provided by magistrates' courts rule 55 should not be applied so as
to defeat the purposes of the
NCA.
The
position of a debtor such as the consumer is dynamic and may, in the
time between when the application to court is launched
and when it is
heard, improve or deteriorate with the vicissitudes of life. The
purposes of s 87 of the NCA, viewed through the
prism of the measure
as a whole, require that the court conducting the hearing be
appraised of such relevant material as the parties
may wish to put
before it. For this purpose, it is a necessary implication of the
provision that the court conducting a hearing
under s 87 is empowered
right up to the time it delivers its judgment to receive information
additional to that provided by the
founding, answering and replying
affidavits conventionally encountered in an opposed application
.
Such power should of course be exercised in accordance with a
judicial discretion, which will usually involve a consideration
of
the reasons for the late provision of the new material and any
prejudice to other parties affected by the hearing and the relief

sought.” (Own emphasis)
[66]
The appellant completely failed to provide the court
a
quo
with
any updated information, despite the fact that Form 16 attached to
the founding affidavit is dated 21 October 2014, the initial

restructured payment plan is dated 31 October 2014 and the founding
affidavit is dated 4 November 2014, whilst the application
only
served before the court
a
quo
on
17 July 2015. Although the appellant apparently did provide the court
with an updated restructured payment plan, dated 4 May
2015, none of
the information reflected therein, was properly placed before the
court
a
quo
under
oath. The appellant in any event reflected the earnings and
deductions of the consumer to be exactly the same as during October

2014, which is most improbable considering the following:
1.
The date of
the hearing fell within a new financial year - the salary advice
still emanated from the previous financial year. The
possibility, or
even probability, of a salary increase can therefore not be excluded.
2.
The mere
fact that the salary advice of October 2014 reflected an arrear
earning, begs the question whether this was a once-off
payment or
whether similar earnings continued after October 2014.
3.
Considering
the nature of the different deductions reflected on the salary
advice, it is most probable that those amounts would
have increased
either at the beginning of the new year, 2015, or at the beginning of
the 2015 financial year, especially the policy
premiums and the
medical fund premium.
[67]
In the circumstances it was fatal for the appellant`s case not to
have provided the Court
a
quo
with
a recent payslip or even better, the three latest payslips available
at the time, in case of payment fluctuations.
[68]
Due to the unexplained discrepancy regarding the monthly income of
the consumer and the appellant`s failure to submit a recent
salary
advice(s), there was no proper prove of the consumer’s monthly
income at the time of the hearing of the application
before the court
a quo.
The court
a
quo,
therefore,
correctly found that the appellant failed to proof the alleged
over-indebtedness of the consumer.
[69]
The appeal can, therefore, not succeed on this ground either.
Remarks
regarding additional shortcomings in the application:
[70]
I unfortunately deem it necessary to highlight further shortcomings
in the application which, in my view, in any event would
have
entitled the court
a quo
to dismiss the application.
Calculation
of net income:
[71]
To demonstrate the appellant`s complete failure to properly apply her
mind when she calculated the monthly income of the consumer,
even
after judgment by the court
a quo
had been handed down, I wish
to refer to the attempted explanation for the discrepancy as
contained in paragraph 19 of the founding
affidavit in support of the
condonation application, at p. 17 of the record:
“
From paragraph 11
of the reasons provided for the Magistrate’s judgment, the
Learned Magistrate sets out that in terms of
the founding affidavit,
paragraph 13 thereof and per submission by the applicant, the Court
was informed that the First Respondent
earns an amount of R14 183-29
per month, whilst the salary advice referred to a total earning of
R18 367-75 for the month
of October 2014.  The Magistrate
went further and said that no explanation was provided to the Court
for the difference.
From annexure “G1” annexed to
the founding affidavit of the debt review application, being the
salary advice, it is
recorded that salary code 0359* (K) (
sic
)
DEPRIVATION ALL:  R4 184-46 (I accept that the ‘(K)’
should read ‘(A)’), indicates an amount specifically
that
amount to be an arrear payment that was made to the First Respondent
during that particular month.  This does not form
part of the
First Respondent’s continuous monthly salary.  As such the
Learned-Magistrate could not have found that
no sufficient
explanation from the papers before the Court were provided for the
difference in the submission that the First Respondent’s
salary
amounts to R14 183-29, and not on a monthly basis R18 367-75.”
[72]
Even if the aforesaid explanation is to be accepted, the basis of the
calculations reflected on Form 16 can, in my view, still
not be
accepted as correct, due to the following scenarios:
1.
The
“S&T per W/Voucher” in the amount of R1 300-54
is also reflected as an “arrears” amount and
should
therefore
mutatis
mutandis
,
on the appellant`s reasoning, not have been taken into consideration
“as part of the first respondent’s continuous
monthly
salary” either. In addition the said payment is specifically
described not to be an allowance or a measure to supplement
salary.
This amount should, therefore, not have been reflected as part of the
consumer’s monthly income.  Luckily
for the appellant,
this mistake is negated by the fact that the very same amount is also
reflected under the deductions, both on
the salary advice and on Form
16.  Therefore this amount does not have an impact on the result
of the calculation of the net
monthly income.
2.
The
deduction reflected as “7910 * (A) PAYE RSA”, in the
amount of R509-04,
prima
facie
seems to be an arrear tax payment on the arrear income amount of
R4 184-46.  The appellant took the deduction of R509-04

into consideration for purposes of calculating the net income of the
consumer. On the appellant`s reasoning, she clearly erred
in doing
so, because if the arrear earning was not to be taken into
consideration, the arrear tax deduction should not have been
taken
into consideration either. This would mean that, at least for the
month of October 2014, the net income would have been  R509-04

more than the amount which was used for purposes of determining
whether the consumer is over-indebted and calculating the proposed

restructured payment plans.
3.
Both the
arrears “Deprivation All” amount of R 4 184-46
reflected under the earnings on the salary advice and the
arrears
“PAYE RSA” amount of R509-04 reflected under the
deductions on the salary advice, are marked with an asterisk.
As I
have already pointed out, one of the notes on the salary advice
indicates that amounts marked with an asterisk, are used for
purposes
of “pay calculation and/or IRP 5 detail”. It therefore
prima
facie
seems
to me that the appellant should have included both the said amounts
in her calculation of the consumer`s net income for the
month of
October 2014, the one as an earning and the other as a deduction.
This would also have resulted in a different net income
figure than
the one the appellant used for purposes of determining whether the
consumer is over-indebted and for calculating the
proposed
restructured payment plans.
[73]
It therefore appears that the appellant failed to ensure that she has
a correct understanding of the payment system of the
consumer`s
employer and hence the nonsensical explanation for the basis of her
calculation of the consumer`s monthly net income.
Prima
facie
the
appellant`s calculation appears to be incorrect and hence it could
not have been expected from the court
a
quo
to
make a determination regarding the consumer`s alleged
over-indebtedness based on those figures.
Required
contents of the founding affidavit:
[74]
I have already extensively dealt with the principles regarding the
procedural requirements and substantive law relating to
debt review
applications. Without dwelling too much on the point, the following
is evident:
1.
Although
Form 16 indicated that the consumer is single, no allegation was made
pertaining to the applicability of section 78(3)(b)
which determines
that the financial means, prospects and obligations of a consumer
include the following:
“
(
b
)
the financial means, prospects and obligations of any other adult
person within
the consumer’s immediate family or household, to
the extent that the consumer, or prospective consumer, and that other
person
customarily—
(i)
share their respective financial means; and
(ii)
mutually bear their respective financial obligations; …”
2.
The
Panayiotts
-judgment
interpreted “financial means” and “prospects”
as follows:
“
Financial
means would include not only income and expenses, but also assets and
liabilities. Prospects would include prospects of
improving the
consumer's financial position, such as increases, and, even,
liquidating assets.”
As indicated earlier, the
aforesaid interpretation has since been approved and followed in
other judgments. Despite this, the application
does not contain any
allegation regarding the assets of the consumer, nor does it contain
any averment pertaining to the consumer’s
prospects of
improving her financial predicament.
3.
The
founding affidavit appears to be a form of pro-forma- or standard
document which is probably being used by the appellant in
all debt
review applications, with only the details being changed in
accordance with the particulars of the different applicants.
That is
probably the reason why paragraph 15. 2 thereof incorrectly refers to
the consumer as “he”. The affidavit contains
the bare
minimum of averments. This is a very far cry from what is required in
order to make out a proper case in the founding
affidavit,
considering that the said affidavit should not only constitute the
pleadings, but all of the evidence on which the appellant
wished to
rely, as determined in the
Joubert
-judgment,
supra.
4.
The
appellant therefore completely failed to set out sufficient evidence
to disclose and support the cause of action.
Relief
sought in terms of  Section 85 of the Act:
[75]
As previously indicated the relief sought by the appellant in her
Notice of Motion
inter alia
entails that the consumer be
declared over-indebted “as set out in section 85(b)”.
Similar relief was requested
in the subsequent draft order to which I
referred earlier.  In its reasons for judgment the court
a
quo
found that the appellant did not make out a case for the
consumer to be declared over-indebted “ as set out in terms of
section
85(b) of the NCA”.  Even in the notice of appeal
reliance is again placed on section 85 by
inter alia
stating
that the court
a quo
erred in not applying section 85(a) of
the Act and further persisting with the submission that the Court
a
quo
ought to have declared the consumer over-indebted in terms of
section 85(b) of the Act.
[76]
Section 85 of the Act reads as follows:
“
85.
Court may declare and relieve over-indebtedness.
-
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, as determined in accordance with
this Part, and make any order contemplated in section
87 to relieve
the consumer’s over-indebtedness.”
Section
86(2) contains the following proviso subsequent to an amendment
thereto by Act No. 19 of 2014:
“
(2)
An application in terms of this section may not be made in respect
of, and does not apply
to, a particular credit agreement if, at the
time of that application, the credit provider under that credit
agreement has proceeded
to take the steps contemplated in Section 130
to enforce that agreement.”
[77]
In the unreported judgment of
Standard Bank of South Africa Ltd
v Kallides
(1061/2012)
[2012] ZAWCHC 38
(2 May 2012),
at paras [6] to [8], the court drew a clear distinction between
sections 85 and section 86. For purposes of this
judgment I only
quote the following parts thereof:
“
[6]
There
is nothing in the wording of
s
85
of
the NCA that contemplates the making of an application in order to
invoke its operation. On the contrary, the trigger to the
operation
of
s
85
is
the allegation in the context of any court proceedings in which a
credit agreement is being considered that the consumer in terms
the
agreement is over-indebted. The allegation in question would be one
made integrally in the context of
pending
proceedings
in which the terms or existence of a credit agreement is relevant. It
might be made either in a pleading, or an affidavit, or even
in the
course of
viva
voce
evidence.
… (Own emphasis)
[7]
The process under
s
85
of
the NCA falls to be contrasted with that in terms of
s
86
of
the Act, in which the over-indebted consumer has the right, subject
to the Act, to initiate debt review proceedings, and ultimately
to
apply, in the manner expressly provided, for a debt re­arrangement
order. …
[8]
Sections
85
and
86
of
the NCA are both to be found in
Part
D
of
chapter 4 of the Act. The process contemplated in terms of both
provisions is directed at obtaining the consideration of a
recommendation
by a debt counsellor in terms of
s
86(7)
and/or
the making of an order of the nature provided for in terms of
s
87(1)
of
the Act. Notwithstanding the breadth of the opening words to
s
85
of
the NCA, reference to the broader context of the statute impels the
conclusion that the section was not intended to provide a
basis for a
repetition of the process already provided for in terms of
s
86
,
or to draw back within the ambit of debt review debts already
excluded therefrom by the operation of other provisions of the Act,

such as
s
86(2)
,
s
86(10)
or
s
88(3).
To
construe
s
85
otherwise
would be conducive to the most unwholesome circularity, at odds with
basic principle -
interest
rei publicae ut sit finis litium.
See
also
Collett
v Firstrand Bank Ltd
2011 (4) SA 508
(SCA) at par [11].
[78]
From the wording of the respective sections, as well as from a
reading of the relevant case law, it is in my view evident that

section 85 bears no relevance to an application for debt review in
terms of section 86.  Section 86 provides for a procedure

whereby the consumer may
mero motu
approach a debt counsellor
before a credit provider approaches court for an order to enforce a
credit agreement.  Those are
the circumstances which prevailed
in the current instance at the stage when the consumer approached the
appellant.  Section
85, on the other hand, is only applicable
once a credit provider has in fact instituted court proceedings
pertaining to a credit
agreement and it is then alleged that the
consumer is over-indebted.
[79]
The appellant’s reliance upon section 85 is, in my view,
therefore completely misplaced. The court
a
quo
could consequently not have granted any relief in terms of section
85(b) of the Act as requested in the Notice of Motion, nor can
the
appeal succeed on this basis.
The
updated restructured payment plan:
[80]
In her replying affidavit the appellant referred to an updated
proposed restructured payment plan, attached to the replying

affidavit as annexure “A”, apparently dated 4 May 2015.
From a perusal of the said document, especially at p.
105 of the
record, it is evident that the appellant still based her calculations
on a monthly net income of R8 904-79, which,
as already
indicated, cannot be correct.  More importantly however, where
the consumer’s monthly commitments/expenses
were indicated as
being R4 004-79 on the initial proposed restructured payment
plan attached to the founding affidavit as
annexures “H6”
to “H8”, (more specifically at p. 62 of the record),
leaving an amount of R4 900-00
per month for distribution, the
updated proposal reflects the monthly expenses to only be R3 204-79,
leaving an amount of R5 700-00
per month available for
distribution (at p. 105 of the record).  Likewise, the Notice of
Motion contains a prayer to the effect
that it be ordered that an
amount of R4 900-00 be paid on a monthly basis, the request for
which relief was confirmed by the
consumer in a confirmatory
affidavit, but the draft order attached to the replying affidavit (at
p. 103 of the record) provides
for the payment of a higher monthly
amount, namely R5 700-00. No explanation was provided as to why
the updated expenses of
the consumer had in the meantime decreased
from R4 004-79 to R3 204-79.  The further fatal
deficiency is that not
only was no confirmatory affidavit of the
consumer attached to the replying affidavit, but the updated proposal
was also not signed
and thus confirmed as being true and correct by
the consumer, despite the fact that the document specifically makes
provision for
such signature and confirmation.
[81]
The result is that the amended updated figures, both pertaining to
the consumer`s monthly commitments/expenses and the consequent
amount
allegedly available for distribution, constitute inadmissible and
unreliable hearsay evidence. It could not have been expected
from the
court
a
quo
to
make a determination of over-indebtedness based on figures presented
in this unacceptable manner.
Attestation
of founding papers:
[82]
The founding affidavit, the confirmatory affidavit by the consumer
attached thereto (at p.67 – 68 of the record), the
affidavit of
the appellant pertaining to service (at p. 69 – 70 of the
record), as well as the supplementary affidavit of
the appellant (at
p.76 – 77 of the record), were all attested to by one Mr De Wet
from Jordaans Rijkheer Attorneys of 46
Kellner Street, Bloemfontein.
The attorney of record of the appellant is one Mr Du Plessis of the
very same firm of attorneys,
Jordaans Rijkheer.
[83]
The Regulations issued in terms of section 10 of the Justices of the
Peace and Commissioners of Oaths Act, 16 of 1963, determine
in
regulation 7 thereof as follows:
“
(1)
A commissioner of oaths shall not administer an oath or affirmation
relating to a matter in which
he has an interest.
(2)
Sub-regulation (1) shall not apply to an affidavit or a declaration

mentioned in the Schedule.”
The
abovementioned affidavits do not fall within the ambit of the
exclusions mentioned in the Schedule.  In
Erasmus
Superior Court Practice
,
Electronic Version, at RS 3, 2016, D3-3 to D3-4 the following
principles are summarised:
“
In regard to the question
whether regulation 7(1) is peremptory, it has been held that both
precedent and principle point to an
affirmative answer.  The
reason for the regulation is that the person attesting an affidavit
is required to be unbiased and
impartial in relation to the subject
matter of the affidavit.  If his position is such that this
qualification is
prima facie
absent, there is danger that he may have influenced the deponent in
regard to the subject matter of the affidavit.  It is
therefore
necessary that in civil matters an affidavit be attested by a
commissioner who is entirely independent of the office
of the
attorneys where the affidavit was drawn.  A failure to observe
this requirement can in certain cases be condoned, however.”
In
Louw
v Riekert
1957 (3) SA 106
(T) the court extended the rule to include also
clerks and partners of the attorney acting for the litigant as well
as attorneys
employed by such an attorney as professional assistants.
In
Radue
Weir Holdings Ltd t/a Weirs Cash & Carry v Galleus Investments CC
t/a Bargain Wholesalers
1998
(3) SA 677
(E) the court dealt thoroughly with the relevant case law
and principles and concluded as follows at 681 G:
“
What emerges
clearly from the above cited cases is that the commissioner of oaths
who attests an affidavit is required to be impartial,
unbiased and
entirely independent of the office where the affidavit is drawn.”
In
the said judgment the court concluded that the attestation in that
matter did not comply with the aforesaid requirement.
The
court then dealt with the matter as follows at 682 H - J:
“
Despite Mr
Cole's
submissions to the contrary, I am satisfied that it would not be the
proper course to proceed with the case as if no affidavit
had been
filed…
Defendant must be
afforded an opportunity of putting its defence before the court in a
regular manner by having the affidavit which
was filed on its behalf
re-attested before a competent commissioner of oaths. (See for
instance
Abromowitz
v Jacquet (supra
);
Louw v
Riekert (supra
).)”
[84]
As the point pertaining to the irregular attestation was not raised
in the court
a quo
, I cannot speculate as to how the court
a
quo
would have exercised its discretion in response thereto and
we need not make a finding in this regard. The reason why I deemed it

necessary to
mero motu
raise this issue, is firstly to
emphasize the numerous defects in the application, but also with the
hope that by pointing it out,
the appellant and other debt
counsellors will be alerted to this requirement relating to
attestation and properly comply with it
in future.
The
second order of the court
a
quo:
[85]
Like I have already indicated at the outset of this judgment, the
court
a quo
also made a second order which reads as follows:
“
The Debt Review is
subject to review after a period of 12 months from the date of this
order.”
[86]
In view of the fact that the application was dismissed, it is evident
that this order was incorrectly made as it is neither
a competent nor
enforceable order. Both counsel are also in agreement that this order
is to be deleted.
Costs:
The
appellant:
[87]
The Court
a
quo
dismissed the application, with costs; hence, the appellant, who is a
debt counsellor, is to pay the costs of the application.
Mrs
Collins, who appeared on behalf of the appellant, submitted that the
Court erred in this regard and relied on the judgment
in
National
Credit Regulator v Nedbank Ltd
2009 (6) SA 295
(GNP) for her submission in this regard, wherein the
court held that, given that a debt counsellor fulfils a statutory
obligation,
Magistrate’s Court rule 33 is applicable to
applications under
sections
86
and
87
of the
National
Credit Act
>.
The implication of this finding is that a statutory functionary who,
in the process of fulfilling his statutory function, is
involved in
court proceedings is not ordinarily ordered to pay the costs of any
other party. An adverse costs order against such
functionaries is
ordinarily made only when they acted improperly or
mala
fides
.
[88]
In
Absa
Bank Ltd v Robb
2013
(3) SA 619 (GSJ) the circumstances were very similar to those in the
present matter. The court specifically dealt with the
principles to
be considered in deciding whether costs should be awarded against a
debt counsellor and came to the following findings:
“
[20]
In opposing the application the appellants rightly pointed out
that the respondent had not properly fulfilled her statutory

obligations in assessing whether the Cassims were over-indebted. The
respondent had adduced no documentary evidence of the Cassims'

monthly and living expenses, as required in reg 24(1). The
determination of Mr Cassim's employment income was outdated. It was

based on a payslip dated 30 November 2010, when the application was
made more than eight months later, in July 2011….
[21]
The reasons given by the magistrate in the ruling delivered on
26 January 2012 for disallowing costs are wholly untenable.
A debt
counsellor is required to have a thorough knowledge of the
debt-counselling process….
[23]
The application for debt review was not based on a proper application
of the statutory standards for assessing over-indebtedness.
The
respondent's determination that the Cassims were over-indebted was
based on an erroneous application of the Act and Regulations,
as also
the Guidelines published by the National Credit Regulator for
assessing over-indebtedness. All of this was clearly spelt
out in the
appellants' answering affidavit which was filed on 10 November 2011.
However, rather than responding responsibly to
the affidavit and
immediately withdrawing the application so as to avoid the incurring
of unnecessary costs, the respondent delayed
for more than three
months and only withdrew the application on the eve of the hearing.
By that stage, the appellants had already
incurred additional costs
in briefing counsel to prepare for the hearing.
[24]
Having withdrawn the application in these circumstances,
there is no reason why the magistrate should not have
followed the
general rule as to costs pursuant to the withdrawal of an application
in the magistrates' court. I am unaware of any
case in which a court
has refused to grant costs against a public official or statutory
functionary who institutes and then withdraws
legal proceedings
simply on the basis of the statutory character of the official's
functions. The obvious reason for this is that
there is no public
interest in encouraging public officials, or those who wield
statutory power, to bring wholly unmeritorious
applications to court.
Dissuading such officials from doing so by costs orders in
appropriate cases in fact enhances the public
interest. To clog the
court roll with cases which are instituted and then later withdrawn
is contrary to the public interest and
the efficient administration
of justice.
[25]
If a costs order were granted in this case it would serve the
important purpose of cautioning debt counsellors to properly
apply
the provisions of the Act, the Regulations and the National Credit
Regulator's guidelines before bringing applications to
court for debt
review.
[26]
The above caution would serve not only the interests of
the courts in maintaining the efficient administration
of justice,
but also the interests of both consumers and credit providers under
the Act. The interests of consumers are protected
because they will
be assured that an application for debt review will be made on their
behalf only when there are reasonable grounds
for concluding that
they are over-indebted. And the interests of credit providers are
protected because only reasonably meritorious
applications for debt
review would be pursued.
[27]
It needs to be emphasised that the discretion to award costs against
a debt counsellor is not limited to instances where the
application
for debt review is withdrawn, as occurred in the present case. The
court has a discretion to award costs against a
debt counsellor who
in any way acts improperly or with mala fides in the discharge of his
or her statutory obligations.”
The
aforesaid principles were also applied in
Joubert-
judgment,
supra
.
[89]
In the
Barnard
-judgment,
supra
, the following
findings and factual matrix were recorded in paragraphs 29 to 32 of
the judgment:
“
[
29]
There are in my view three insuperable problems with this proposal.
The first is that while the court below had jurisdiction
to extend
the term, it had no power to reduce the interest rate applicable to
the debt. …
[31]
The final difficulty with the proposal was the provision for payment
of the costs of para 3 of the
order as proposed by the debt
counsellor and as made by the court below, which reads:
‘
That
in terms of Section 86(7)(c)(ii)(bb) the date upon which payments to
the [creditor respondents] become due be postponed until
after all
Debt Counselling Fees and Legal Fees [in] relation to this
application are paid in full.’
[32]
What the debt counsellor sought to achieve by this remarkable
paragraph was the subordination of the payment
scheme in the order in
favour of her own fees and those of her attorney in relation to the
application. Section 86(7)(c)(ii)(bb)
simply does not permit of such
a subordination.
But
a far greater problem is that these unspecified amounts may never be
paid at all. In such a case, the due dates for settlement
of the
claims of the creditor respondents would be postponed indefinitely
.
This irrationality was imported uncritically into the order of the
court below and is fatal to the order itself.” (Own emphasis)
The
Court subsequently dealt with the issue of costs in the following
manner, as set out in paragraph 39 and further of the judgment:
[
39]
The debt counsellor is a
pro
forma
applicant who has only a professional, as opposed to a personal,
interest in the outcome of the proceedings. She should not take
sides
with one or other of the litigants. She should not in an untoward
manner advance her own interests to the detriment of those
of the
litigants proper. …
[41] A debt counsellor
may not seek to have her own fees and expenses preferred to those of
the creditors and the consumer. A debt
counsellor may however make
provision for her own fees and expenses in specified amounts to be
paid by instalments ranking equally
with the consumer's other
creditors.
[42]   With
this in mind, I think that a debt counsellor who does no more than I
have outlined should not in general be
mulcted in costs if the
proposal is not accepted by the court hearing the matter under s
87(1). …
[43]   …A
court should bear in mind, however, that imposing a costs obligation
on a consumer whose obligations
are re-arranged under s 87(1) would
often defeat the purpose of the order by imposing an obligation not
subject to the order on
an already financially burdened consumer.
[44] To return to the
present case: the debt counsellor entered the dispute between the
parties when she sought the order which
would give her fees and
expenses preference over the claims of the creditor respondents. She
perpetuated her personal involvement
in the dispute in the manner in
which she made the case of the consumer her own. …
[45] In addition, the
proposal made by the debt counsellor was fatally irrational. …
[47] But in my view, in
the case before us exceptional circumstances are present. Not only
did the debt counsellor advance a proposal
which was irrational in
several material respects but she defended it in a partisan manner.
In these circumstances, she should
pay the costs both in the court
below and on appeal as well as the costs of the abortive application
to lead further evidence on
appeal. …
[50]
…However, different considerations apply in relation to the
costs in the court below. We have a transcript
of the proceedings in
that court. It appears from the transcript that only the debt
counsellor, FNB and Nedbank were represented
in those proceedings and
that the consumer played no part in them. There is thus no good
reason to make the consumer pay the costs
incurred in the court
below.”
[90]
The circumstances in the present matter are
on
par
with the factual situation referred to in aforesaid judgment.
Annexure “H2” on p. 85 of the record, is a document
titled “NOTIFICATION TO ALL CREDIT PROVIDERS AND REGISTERED
CREDIT BUREAUS IN TERMS OF SUBSECTION 24(10) OF THE REGULATIONS
OF
THE
NATIONAL CREDIT ACT, 34 of 2005
”, signed by the appellant.
It contains the following statement:
“
Please note:
Payments to all credit providers will only start once all fees (legal
& restructuring) have been paid in full.”
In
addition thereto, both the Notice of Motion and the draft order
contains the following similar prayer, albeit with different
figures
and dates (the prayer in the draft order is quoted):
“
Payment of
R5 700.00 will be made on a monthly basis as from 15
th
day of May 2015 due to DC Fee and Legal Fee that will be paid to the
appointed Payment Distribution Agency”
The
said prayer is apparently directed at ensuring that the appellant`s
fees and legal fees indeed receive preference over the claims
of the
other creditors, considering that the figure mentioned in the said
prayer is the
total
amount allegedly available for monthly distribution amongst the
consumer`s creditors. The date reflected in the said prayer is
the
requested inception date of the updated restructured payment plan.
Had the requested prayer been granted by the court
a
quo
, it
would have had the deplorable result referred to in paragraph [32] of
the
Barnard
-judgment
,
supra,
[91]
It is consequently evident from the
Barnard
-judgment
that the said arrangement and prayer are an exact manifestation of
the unacceptable personal involvement of a debt counsellor
which the
court warned against and which conduct was penalised with an
appropriate order of costs.
[92]
To add injury to insult, in the present matter the appellant also
indemnified, or at least attempted to indemnify, herself
against all
loss or damage which she may sustain as a result of the debt review
application.  I wish to elaborate on this
issue.
[93]
Part 6
of Form 16 of the NCA Regulations makes provision for a
declaration by the consumer in the wording as contained in the
pro-forma
form.  Such a declaration was indeed signed by the
consumer, as is evident from annexure “C5” on p. 41 of
the
record.  However, a similar declaration appears on p. 40 of
the record, but which declaration contains the following proviso:
“
6.
I/we the undersigned consumer/s hereby agree and undertake to keep
the Debt Counsellor
indemnified against all loss or damage from any
cause arising which I/we may sustain as a result of the application
in terms of
Section 86
of the
National Credit Act, 34 of 2005
.”
Neither
the Regulations, nor the pro-forma forms thereto, make provision for
such an indemnification.  Although the said declaration
was not
signed by the consumer, probably also as a result of a lack of
diligence by the appellant, the attempt to obtain such
indemnification, especially as though it forms part of Form 16, is
reprehensible.  Furthermore, although provision was made
in the
initial restructured payment plan for the payment of certain fees, no
such provision was made in the updated restructured
payment plan.
In fact, on p. 111 of the record it is reflected that no legal costs
are due and payable.  Therefore,
if the indemnification was to
be enforced upon the consumer, it will obviously result in her not
being able to comply with the
suggested updated restructured payment
plan.
[94]
In view of the appellant`s unconscionable arrangement and conduct
pertaining to her fees and the legal fees, as well as her
failure to
have complied with the relevant applicable legislation, regulations
and enunciated principles, which resulted in the
flagrant fatal
shortcomings in the application, both in substance and in form, the
costs order made by the Court
a
quo
is
wholly justified, albeit, probably, for different reasons.
[95]
Even despite the mentioned fatal deficiencies in the application, the
appellant persisted with the application by taking the
matter on
appeal. In addition there is no indication whatsoever from the record
that the consumer even has knowledge of the appeal
– she played
no part in it. In the circumstances, I cannot but find that the
appellant acted improperly by the institution
of the appeal and hence
she should also bear the costs of the appeal.
[96]
For the sake of completeness and clarity, it is recorded that the
aforesaid costs orders are meant to be and should be considered
to be
orders
de
bonis propriis
against
the appellant. The appellant is not entitled to claim any of the
legal fees or legal costs from the consumer, neither of
the
proceedings in the court
a
quo
nor
of the appeal.  As a result I deem it essential that the
consumer be properly informed about the contents of this judgment
and
order, wherefore I intend making provision for the service of this
judgment and order on the first respondent.
Condition
of the appeal record:
[97]
Uniform
Rule 50(7)(c)
, which deals with the compiling of the record
for purposes of civil appeals from Magistrates’ Courts, states
the following:
“
The record shall contain a
correct and complete copy of the pleadings, evidence and all
documents necessary for the hearing of the
appeal, together with an
index thereof, and the copies lodged with the Registrar shall be
certified as correct by the attorney
or party lodging the same or the
person who prepared the record.”
[98]
In
Erasmus
Superior Court Practice
,
supra
,
the following is stated at OS, 2015, D2-690, with reference to
applicable case law:
“
If in a civil
appeal a record is not in order, the court may, according to the
circumstances, either strike the appeal off the roll
with costs, or
postpone the appeal for the record to be put in order, making a
suitable order as to costs, or hear the appeal and
disallow portion
of the costs of the party responsible for the omission.”
[99]
In
Rennie
N.O. v Gordon and Another NNO
1988 (1) SA 1
(A) at 20 D the duty of an attorney in this regard was
again confirmed:
“
As appears from the remarks of
my Brother Viljoen in the case of Senator Versekeringsmaatskappy Bpk
v Lawrence
1982 (3) SA 136
(A) at 144 G to 145 B, it is the duty of
an attorney charged with prosecuting an appeal on behalf of a client
to see that a proper
record of appeal is placed before this Court and
in order to discharge this duty (and incidentally to earn his perusal
fee) he
must peruse the record and satisfy himself that it is
complete and in compliance with the ….. Rules as to form,
etc.
…I might just add that even the additional volume
lodged out of time … was not in proper form in that it lacked
an
index, an annoying and inconvenient defect.”
[100]
In the present instance the record has not been certified as correct
by the attorney as required by
Rule 59(7)(c).
No explanation
for such a failure was placed before us.  The contents of many
pages of the record are skew, some to
the extent that not the whole
of the contents are legible.  I do not know whether this is due
to the fact that the original
record was in the same condition or
whether this happened during the copying of the record.  Either
which way, it speaks of
a lack of diligence and care by the
attorney.  This slovenliness continued in the marking of the
annexures.  Some of
the annexures have not been marked at all,
whilst the ones which have been marked, reflect markings which are
eligible or almost
eligible.
[101]
In addition to the aforesaid, the record was prepared and compiled in
a manner whereby the whole of the application which
served before the
Court
a
quo
is
attached to the application for condonation.  This is not in
compliance with the practice in our Court.  The record
of the
proceedings which served before the Court
a
quo
ought to be separate from the application for condonation, although
it may be binded in the same volume.  Reference could
and should
have been made in the condonation application to the record without
the necessity of attaching the record to the application
for
condonation.  As a consequence of this nonsensical manner of
compiling the record, the index merely reflects the whole
of the
application which served before the Court
a
quo
as
“annexure ‘BL2’”, with the pages indicated as
“24 - 111”.  The index does not differentiate

between the respective affidavits and annexures which form part of
the application, neither by descriptions thereof, nor by page

numbers. This added to the frustration of having to deal with a
record of which the annexures have not been clearly marked.
[102] As long back as in
Van
Der Merwe v Kgalokwane
1977
(3) SA 106
(O) this Court expressed its strong disapproval and
rejection of a record with similar defects, at 107 E - 108 G:
“
Dit
is vir my duidelik dat die betrokke prokureur hom geensins aan die
vereistes van voormelde Hofreël gesteur het nie. Wat
hy toe
gedoen het was eenvoudig net om fotostatiese afdrukke van die
pleitstukke, die landdros se redes vir uitspraak, kennisgewing
van
appèl en al die ander dokumente, ter saaklik of nie, wat in
die oorspronklike omslag is, te maak. Hierdie is toe voor
die
getuienis in die oorkonde gebind en gepagineer 1 tot 43. Slegs
hiervan is 'n inhoudsopgawe gemaak. Die getuienis word net aangedui

as beginnende op bl. 44 en geen poging is aangewend om 'n
in-houdsopgawe daarvan te maak nie.
Wanneer
daar verder na die oorkonde gekyk word dan blyk dit duidelik dat dit
nie deur die prokureur as juis ingevolge Hofreël
50 (7)
(c)
gesertifiseer is nie. In al die fotostatiese afskrifte is die 10de
reël ook nie genommer nie. Die landdros se redes is ook
nie
oorgetik nie, dit is eenvoudig met al die deurhalings en
verbeterings, wat die landdros in sy handskrif aangebring het,
gefotostateer.
Die stuk is onooglik en onnet en is nie die
verrigtinge van 'n Hooggeregshof waardig nie. Dit is egter nie al
nie. Sommige van
die gefotostateerde stukke is òf onleesbaar
òf moeilik leesbaar. Dit het blykbaar die betrokke prokureur
ook nie
gehinder om sulke stukke voor ons te lê nie, of hy was
onverskillig daaromtrent, want selfs die Appèlhof het alreeds

'n ernstige waarskuwing geuiter ten opsigte van hierdie soort van
fotostatiese afskrifte.
In
die saak van
Estate
Woolf
v
Johns,
1968 (4) SA 492
(AA), laat OGILVIE THOMPSON, A.R., soos hy toe
was, hom op bl. 493 die volgende ontval, nl.:
‘
I
pause here to remark that, while the Registrar was, of course,
entirely correct in refusing to accept the record because it was
out
of time, in terms of
Rule 5
(4)
(b)
,
he would, in the exercise of his powers under
Rule 5
(14), also have
been fully entitled to refuse to accept the record because of the
state of the exhibits. These, comprising some
200 pages of the
record, contained a large number of photostats, most of which were
badly and untidily reproduced, and many of
which were illegible. I
may also add that some of the photostat copies of the letters annexed
to the application for condonation
presented by the defendant's
attorneys were smudgy to a degree for which counsel for the estate
could offer no explanation and
but apologise.
Photostatic
reproduction, when neatly and clearly done, can no doubt be very
useful; but there has, in recent years, been a noticeably
increasing
tendency to include poor photostats in the records and documents
presented to this Court. This must cease. In this connection,
it is
necessary to repeat what was said by RUMPFF, J.A., delivering the
judgment of the Full Court in
Lafrenz (Pty.) Ltd
. v
Dempers
,
1962 (3) SA 492
(AD) at p. 497H, viz:
'There
has been a tendency lately, as far as the condition of records is
concerned, not to comply properly with the requirements
as are laid
down in the Rules of this Court, and I think a note of warning should
be sounded. Slackness on the part of those who
are responsible for
the state of the records may no longer be condoned.'
Practitioners
and litigants would do well to take note that records and other
documents, and in particular photostats, which do
not conform to the
required, and generally well recognised, standards are not to be
tolerated.’
Selfs
in die saak van
S
. v
Haarmeyer
,
1971 (3) SA 43
(AA),
het Appèlregter JANSEN op bl. 45 die volgende gesê:
‘
Alvorens
die aansoek te behandel is, is dit egter nodig om te verwys na die
aard van die afskrifte van die stukke vir ons gebruik
ingedien.
Elkeen van die bundels bestaan uit faksimilees van 100 bladyse
tikskrif, deur 'n fotografiese proses verkry. Plek-plek
is die
reproduksie onduidelik en word die lees daarvan bemoeilik; 'n
onegalige, vlekkerige verdonkering aan die onderpunt van menige

blaaie dra daartoe by en is boonop onooglik. In
Estate
Woolf v Johns
,
1968 (4) SA 492
op bl. 493, is reeds gese:....’
Dan
haal die geleerde Regter die aanhaling aan wat ek reeds aangehaal
het. Hy gaan dan verder op bl. 46 om te sê:
‘
Desondanks
was daar sedertdien verskeie kere aanleiding daartoe in hierdie Hof
om misnoeë oor die toestand van afskrifte uit
te spreek.
…Voortgesette verontagsaming van die Reëls en vermanings
in hierdie verband kan lei tot 'n strenger benadering
deur hierdie
Hof in die toekoms.’
…
In
die lig van al hierdie gebreke in die oorkonde …  is ons
nie bereid om die appèl vandag aan te hoor nie en
sal die
appèl van die rol verwyder word.”
[103]
Although we opted to hear the appeal instead of striking it from the
roll, we cannot condone or accept terribly bad condition
of the
record. Our disapproval of the attorney`s failure to have complied
with his duties regarding the compilation and perusal
of the record,
will therefore be embodied in an appropriate order as to costs in
this regard.
Order:
[104]
In the circumstances the following order is made:
1.
The
appellant`s application for condonation is granted, the appellant to
pay the costs thereof.
2.
The appeal
against the first order made by the Court
a
quo
, is
dismissed.
3.
The appeal
against the second order made by the Court
a
quo
, is
upheld and this order is set aside.
4.
The order
of the Court
a
quo
is
consequently amended to read as follows:
“
The
application is dismissed, with costs.”
5.
The
appellant is ordered to pay the costs of the appeal.
6.
All of the
aforesaid costs orders against the appellant are to be paid by the
appellant
de
bonis propriis.
7.
The
appellant is not entitled to claim any of the legal fees or legal
costs from the first respondent, neither of the proceedings
in the
court
a
quo
,
nor of the appeal.
8.
The
appellant`s attorney of record is not entitled to charge the
appellant any fees or costs for the compilation and the perusal
of
the record.
9.
The
appellant`s attorney of record is requested and ordered to serve a
copy of this judgment and order on the first respondent in
terms of
the Court Rules and to file the sheriff`s return of service as proof
thereof in the court file within three weeks from
the date of this
order. The costs of the said service are to be costs in the appeal.
_______________
C. VAN ZYL, J
I
concur:
_______________
M.H. RAMPAI, J
On
behalf of  Appellant:
Adv L Collins
On instructions of:
Jordaans Rijkheer
Attorneys
BLOEMFONTEIN
On
behalf of Respondent:     Adv S Tsangarakis
On instructions of:
Hill, McHardy &
Herbst Ing.
BLOEMFONTEIN