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[2017] ZAFSHC 148
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Firstrand Bank Limited t/a Wesbank v Bergh (4304/2014) [2017] ZAFSHC 148 (25 August 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 4304/2014
In
the matter between
FIRSTRAND
BANK LTD t/a WESBANK
Applicant/ Plaintiff
and
MICHELLE
BERGH
Respondent/Defendant
CORAM:
NAIDOO, J
HEARD
ON:
2 MAY 2017
JUDGMENT
BY:
NAIDOO, J
DELIVERED
ON:
25 AUGUST 2017
INTRODUCTION
[1]
This matter came before me as a special case for adjudication in
terms of Rule 33 of the Uniform Rules of Court. The parties
agreed
upon and presented a written statement of facts, the details of which
I will elaborate on hereunder. I shall refer to the
parties as they
are cited in the summons. Mr J Els represented the
applicant/plaintiff and Mrs L Collins represented the
respondent/defendant
in this court.
[2]
The parties agreed with their identities, as cited in the summons as
well as the jurisdiction of this court. Other facts agreed
on are
inter alia, that on or about 14 December 2012, the plaintiff and
defendant entered into an into an instalment sale agreement,
as
categorised in section 8(4)(c) of the National Credit Act 34 of 2005
(NCA), in terms of which the defendant purchased a 2013
Nissan Livina
motor vehicle for a total amount of R263 607,84, payable in monthly
instalments of R3661.22, commencing 1 February
2013. Such payments
would continue for Seventy One (71) months thereafter and conclude on
1 January 2019. The agreement made provision
for the defendant to
apply for debt review, in the event that she should experience
financial difficulty or consider herself to
be over-indebted.
[3]
On 17 July 2014, the defendant served on the plaintiff an application
(for debt re-structuring) in terms of section 86(7), read
with
sections 86(8)(b), 87 and 79 of the NCA. A brief timeline of the
proceedings thereafter is as follows:
3.1
The plaintiff opposed the application on 23 July 2014, in terms of
section 86(7).
3.2
On 23 September 2014, the plaintiff issued summons against the
defendant
3.3
On 20 November 2014 the plaintiff filed its opposing affidavit in the
defendant’s debt-restructuring
application.
3.4
The defendant filed her replying affidavit in the application on 11
December 2014.
3.5
The application was set down for hearing on 6 February 2015, but was
postponed to 20 February
2015.
3.6
On 20 February 2015, the debt re-structuring application was
postponed sine die, pending the finalisation
of this action.
[4]
The questions of law in dispute between the parties and which this
court was called upon to adjudicate are:
4.1
Whether the plaintiff was entitled to send a notice in terms of
section 86(10) of the NCA, if
the defendant was in arrears with her
obligations in terms of the credit agreement for a period of more
than 60 business days after
her application for debt review, which
was made on 20 May 2014, and notification of which was given to the
plaintiff on 24 May
2014;
4.2
Whether the plaintiff was entitled to send the notice in terms of
section 86(10) whilst there
was an opposed debt restructuring
application pending;
4.3
Whether the plaintiff’s notice in terms of section 86(10) was
invalid and premature;
4.4
Whether the plaintiff’s summons is premature due to the fact
that prior to the issuing thereof,
there was already an application
pending in the Magistrate’s Court.
[5]
The plaintiff’s contentions are that the defendant breached the
credit agreement by failing to pay the monthly instalments
due to the
plaintiff, and that she remained in default by not paying a full
monthly instalment since April 2014. The defendant
was in default
under the agreement whilst she was under debt review, as a result of
which the plaintiff was entitled to send a
notice in terms of section
86(10) of the NCA, terminating the debt review, especially as 60
business days had elapsed from 20 May
2014, being the date on which
the defendant applied for debt review. The notice in terms of section
86(10) was sent on 2 September
2014. The plaintiff further contends
that it was entitled to terminate the debt review as this was prior
to the amendment of section
86 of the NCA, and at a stage when
section 86 permitted the termination of debt review, in spite of the
matter being referred to
a Magistrate’s Court for a debt re-
arrangement order. As a result, the plaintiff contends, its notice in
terms of section
86(10) was valid and effective, and that its summons
was not premature.
[6]
The defendant, for her part, contends that the plaintiff’s
notice in terms of section 86(10) was invalid,
of no force and effect
and was premature, as there was an application pending in the
Magistrate’s Court. Similarly, the issue
of the summons in this
matter was premature, as there was a pending application for debt
review in the Magistrate’s Court,
which was opposed by the
plaintiff, and which was not finalised. The NCA remained the same on
this issue, even after the amendment
thereto. The plaintiff was not
entitled to enforce the credit agreement, pending the finalisation of
the debt review application,
and pending default by the defendant
in terms of the debt restructuring order.
[7] Section 86(10)
originally read as follows:
“
If
a consumer is in default under a credit agreement that is being
reviewed in terms of this section, the credit provider in respect
of
that credit agreement may give notice to terminate the review in the
prescribed manner to-
(a)
the
consumer
(b)
the
debt counsellor; and
(c)
The
National Credit Regulator, at any time at least 60 business days
after the date on which the consumer applied for the debt review
”
[8]
Section 86(10) was amended by the National Credit Amendment Act 19 of
2014, and such amendment took effect on 13 March 2015.
The amended
section 86(10) reads as follows:
“
(a) If a consumer
is in default under a credit agreement that is being reviewed in
terms of this section, the credit provider in
respect of that credit
agreement may, at any time at least 60 business days after the date
on which the consumer applied for the
debt review, give notice to
terminate the review in
the prescribed manner to-
(i) the
consumer;
(ii) the
debt counsellor; and
(iii) the
National Credit Regulator; and
(b)
No
credit provider may terminate an application for debt review lodged
in terms of this Act, if such application for review has
already been
filed in a court or in the Tribunal.”
[9]
The plaintiff contends that section 86(10), prior to its amendment,
applies in this case and that it was not precluded from
terminating
the debt review in terms thereof. In this regard the defendant argues
that the Act has always required that the parties
act in good faith
in respect of debt review proceedings in order to find a way to
address the financial distress of the consumer.
The defendant further
contends that the plaintiff failed to act in good faith in this
matter, as the defendant’s notice in
terms of section 86 (7)
informing the plaintiff that an application was being made for a debt
re-arrangement order was served on
the plaintiff on 17 July 2014, and
such application was opposed by the plaintiff on 23 July 2014. The
plaintiff was thus aware
that there was an application for debt
re-arrangement pending in the Magistrate’s Court, but in spite
of this issued
summons against the defendant on 23 September 2014.
[10]
The plaintiff asserts that the aspect of good faith was not part of
the agreed facts between the parties which the court was
called upon
to decide. The issue between the parties is not one of good faith but
whether the summons was issued prematurely. Mr
Els argued that if
good faith were raised as an issue, the plaintiff may well have put
forward further arguments or explanations,
for example, the reason
for the late filing of its opposing affidavit in the debt
re-arrangement application. The raising of the
issue of good faith at
the stage of written and oral arguments is, therefore, prejudicial to
the plaintiff
[11] One of the
procedures that Uniform Rule 33, in terms of which the current matter
has been brought before this court, provides
for is
a
special case in the form of a written statement of facts agreed upon
by the parties to any dispute after institution of proceedings.
Subrule (1) and subrule (2) provide for the disposal of a case
without the necessity of leading evidence. There must be actual
agreement between the parties on the stated facts, at least for the
purposes of the special case. Subrule 1 makes it clear
that the
resolution of a stated case proceeds on the basis of a written
statement of
agreed
facts
.
[Erasmus
Superior Court Practice Pages B1-233/4.
See
also
Bane
v D’Ambrosi 2010(2) SA 539 (SCA) at 543 C-F
and
Mighty
Solutions v Engen Petroleum 2016(1) SA 621(CC) at 637/8].
[12]
In the Mighty Solutions case, the parties signed a joint practice
note, when the matter came before the High Court, in which
they
listed only two issues to be determined by the court. In its written
and oral argument before the Constitutional Court, the
applicant,
Mighty Solutions, raised a new issue of enrichment, which was not
raised in the practice note. The respondent, Engen,
argued that
Mighty Solutions went beyond the common-cause facts and issues agreed
in the joint minute, and introduced false and
misleading allegations,
which did not form part of the evidence in the High Court. Engen
further contended that the joint practice
note settled all the
common–cause facts and factual disputes between the parties,
and was signed by counsel for both sides.
The joint note was the
basis upon which the High Court adjudicated the matter. Mighty
Solutions argued that the joint practice
note was no more than a
guideline with regard to the common cause facts between the parties
and that it was not binding on the
Constitutional Court.
[13]
The Constitutional Court, in applying the Bane decision, held (at
para 63) that the joint practice note in the High Court was
not only
an agreement on facts, it was an agreement on the issues to be
decided by the High Court. The High Court regarded itself
as bound by
the note and confined itself to the two issues in it. The
Constitutional Court held that if it were to entertain anything
beyond the two issues (raised in the joint practice note), Engen
would be prejudiced as it had no opportunity to rebut the claim,
whether on the facts or the law. The court found that it was not in
the interests of justice to overturn the judgment of a lower
court on
the basis of an issue it was not asked to decide. This is precisely
the point that Mr Els raised on behalf of the plaintiff
in this
matter, arguing that the plaintiff did not have the opportunity to
reply to or rebut the allegations of failing to act
in good faith in
the debt review. In my view, his submissions were validly made, and
are fortified by the approach of the Constitutional
Court in this
regard. I accordingly align myself with the ruling of the
Constitutional Court.
[14]
As I indicated earlier in this judgment, the plaintiff argued that
section 86(10), as it was prior to being amended on 13 March
2015, is
applicable in this matter. The section was amended some six months
after the termination of the debt review and issue
of summons by the
plaintiff in this matter. Such amendment does not apply
retrospectively, in accordance with the presumption that
a statute
does not apply retrospectively unless the relevant legislation
expressly or by necessary implication provides otherwise.
Mr Els
referred me in this regard to
Kaknis
v Absa Bank Ltd 2017 JDR 0027 (SCA),
where the court dealt with the question of retrospectivity of another
section inserted by the National Credit Amendment Act, and
found that
the amendment does not apply retrospectively. There did not appear to
be any dispute from the defendant that the amendment
to section
86(10) does not apply retrospectively.
[15]
There have been a number of cases which dealt with the issue of
whether a credit provider may terminate a debt review while
there is
a pending application in the Magistrate’s Court. Many of these
decisions, emanating from the provincial divisions
of the High Court
conflict with each other on this issue. Both counsel referred to a
number of these cases. The matter that both
Ms Collins and Mr Els
also referred to, and which binds this court, is
Collett
v First Rand Bank Ltd 2011(40 SA 508 (SCA).
The
court undertook a thorough analysis of the relevant provisions of the
NCA and section 86 in particular. The court also discussed
some of
the conflicting decisions, and remarked at p516 C-F that
“
A
sounder approach is to recognise the express words of s 86(10),
which gives the credit provider a right to terminate the
debt review
in respect of the particular credit transaction under which the
consumer is in default, and only when he is in default,
at least 60
business days after the application for debt review was made. It must
be emphasised that it is only when the consumer
is in default that
the credit provider has this right. If he is not, the debt review
continues without the credit provider being
entitled to terminate it.
It is not that the credit provider is 'derailing' the process when he
terminates the debt review: it
is the consumer that is in breach of
contract, not the credit provider. If the consumer applies for
debt review before he
is in default the credit provider may not
terminate the process. But if the consumer is in default the consumer
is entitled to
a 60 business days' moratorium, during which time the
parties may attempt to resolve their dispute.”
The
court ultimately held that if the consumer is in default under the
credit agreement, the credit provider has the right to terminate
the
debt review even after the debt counsellor referred the matter to the
Magistrate’s Court for an order envisaged in section
86 (7)(c).
[16]
In this matter it is common cause or not in dispute that the
defendant was in default under the credit agreement, as full and
timeous payments of the monthly instalments were not received by the
plaintiff. The defendant remained in default for a period
of 60
business days after the date on which she applied for debt review.
The plaintiff thereafter terminated the debt review by
way of a
notice in terms of section 86(10). The plaintiff had, at that stage
complied with the requirements of section 86(10),
and validly
terminated the debt review. In view thereof, the plaintiff was
entitled to proceed to enforce the credit agreement
and did so by
issuing summons, again validly and in the proper time, against the
defendant. I note that although the defendant
has the option of
approaching the Magistrate’s Court for an order in terms of
section 86(11), to resume the debt review,
she has not invoked the
provisions of section 86(11). I cannot, therefore, see any reason to
deny the plaintiff its right to enforce
the credit agreement.
ORDER
[17]
In the circumstances, I make the following order:
17.1
The plaintiff was entitled to send a notice in terms of
section
86(10)
of the
National Credit Act 34 of 2005
, to the defendant, in
view of the defendant’s default in terms of the credit
agreement, and remaining in breach thereof for
a period of sixty days
after the date of application for debt review;
17.2
The plaintiff was entitled to send the notice in terms of 86(10),
although there was an application for a
debt restructuring order
pending in the Magistrate’s Court;
17.3
The plaintiff’s notice in terms of
section 86(10)
was valid and
timeously sent;
17.4
The summons issued by the plaintiff was not premature, and the
validity thereof was not affected by the pending
application in the
Magistrate’s Court.
17.5
The defendant is directed to pay the plaintiff’s costs.
________________________
S.
NAIDOO J
On
behalf of Plaintiff
:
Adv J Els
Instructed
by:
Symington & De
Kok Attorneys
169B Nelson Mandela Drive
Bloemfontein
(Ref: O Van
Tonder/RVS/1474954)
On
behalf of Defendant:
Adv L Collins
Instructed
by:
Jordaan Rijkheer Attorneys
46 Kellner Street
Bloemfontein
(Ref: PS du
Plessis/He13/0060)