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[2017] ZAKZPHC 59
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Mhlongo v De Beer and Others (7521/17P) [2017] ZAKZPHC 59 (22 September 2017)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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SAFLII
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IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 7521/17P
Reportable
In
the matter between
NONDUMISO
REBECCA
MHLONGO
Applicant
(ID
No.: […])
and
BEATRICE
DE BEER
(NCRDC111)
First
Respondent
HOME
CHOICE (PTY)
LIMITED
Second
Respondent
NEDBANK
LIMITED CREDIT
CARD
Third
Respondent
ALTECH
AUTOPAGE CELLULAR (PTY) LIMITED
Fourth
Respondent
CONSUMER
FRIEND
Fifth
Respondent
MR.
PRICE – HOME
STORE
Sixth
Respondent
AFRICAN
BANK
LIMITED
Seventh
Respondent
HTN
ATTORNEYS
Eighth
Respondent
STANDARD
BANK OF SOUTH AFRICA - OVERDRAFT
Ninth
Respondent
JUDGMENT
Delivered on: 22 September 2017
BEZUIDENHOUT,
J
[1]
Applicant applied in terms of
section 86(1)
of the
National Credit
Act, 34 of 2005
to first respondent, a debt counsellor, to be
declared over indebted. The application was made during
September 2013 and
Form 17.2 was completed by the debt counsellor on
16 May 2014 and sent to the various parties. The declaration of
over indebtedness
was never made an order of court and was not done
in terms of
section 87(1)
of the
National Credit Act.
[2
]
Applicant now seeks the following relief:
1.
That she be declared no
longer over indebted and under debt review.
2.
That the Credit Bureau
remove the debt review status from applicant’s credit reports.
3.
That the debt counsellor
provides Form 17.W confirming that applicant is being declared to be
no longer over indebted.
[3]
Applicant alleges that at the time that she made the application to
first respondent she was indebted to the following credit
providers:
1.
Homechoice (Pty)
Ltd
R872.69
2.
Nedbank Ltd –
Credit Card
R6,930.59
3.
Altech
Autopage
R550.76
4.
Woolworths
R345.90
5.
Mr Price
Home
R1,798.02
6.
Exact
R2,240.51
7.
African Bank
Ltd
R43,863.17
8.
Homechoice (Pty)
Ltd
R11,005.45
9.
HTN
Attorneys
R322.96
10.
Standard
Bank
R3,978.32
11.
Bruma Finance (Pty)
Ltd
no amount indicated.
3.1
This information provided by her corresponds with that listed on Form
17.2 which was sent by first respondent on 16 May 2014.
[4]
Her current monthly nett salary is R7,821.80 and her total
expenditure is R4,360.00 which leaves her with a surplus of
approximately
R3,300.00.
4.1 She indicates in paragraph 7
of her affidavit that she paid off all the debt to the credit
providers listed except for African
Bank. She is at present
paying an amount of a R1,000.00 per month to African Bank.
Settlement letters have only been
attached in respect of Woolworths
and Bruma Finance. It is only her averment that the others
except African Bank have been
paid in full but that no settlement
letters have as yet been received. I will accordingly for
purposes of this application
accept that they have all been settled
in full as there is no indication on the papers which were served on
all the respondents
that it is incorrect.
[5]
Applicant is of the opinion that she is no longer over indebted and
can afford to pay an increased monthly payment directly
to the credit
provider. As already mentioned the only debt due is to African
Bank and it is not apparent therefrom from the
said papers how much
the actual payment should be and whether the payment of R1,000.00
being made by her per month is in accordance
with what the monthly
payment is.
[6]
It has been submitted that Annexure “E” to the founding
affidavit, is a copy of the guidelines for the withdrawal
from debt
review, and it is apparent therefrom that a debt counsellor does not
have the statutory powers to terminate or withdraw
the debt review
process. Applicant therefore has no other option but to
approach the High Court because of its inherent jurisdiction
as it
cannot be done in the magistrate’s court which is a creature of
statute. There is nothing in the Act and regulations
which set
out what must be done in such a case.
[7]
Although not all the information has been provided the figures which
have been set out in Form 17.2, except for African Bank,
are not
large and if it is accepted that the application was made during May
2014 and that an amount of R2,000.00 has been paid
to the creditors
that these smaller amounts by now could be fully paid up. I
will therefore accept that she may not be over
indebted at this
stage.
[8]
The question that arises is, if she is no longer over indebted and
the application to declare her over indebted was never issued
and
filed at the magistrate’s court nor was an order to that effect
granted by the magistrate’s court, must this court
then grant
an order that she is no longer over indebted if there is no specific
provision in the Act to do so.
[9]
This restructuring was never confirmed by any court in terms of
section 87(1)
of the
National Credit Act 34 of 2005
, nor is any
restructuring agreement agreed to between all the parties attached to
the papers.
9.1 In
Nedbank
v National Credit Regulator
2011 (3) SA 581
(SCA) it was held at 598c:
“
In
terms of
s86(7)(c)
the debt counsellor may “issue a proposal”
that the magistrate’s court make certain orders. It is
not said
that he ‘must’ do so but, given his duty in
terms of ss(6) and his position as statutory functionary, he must
issue
the proposal.”
9.1.1 The debt counsellor having
found that the debtor is over indebted, must issue a proposal
restructuring the debt, and submit
this to the magistrate’s
court for a hearing and the granting of the necessary order. If
this is not done the debt
counsellor has failed to comply with his
duties and obligations in terms of the Act.
9.1.2 It is clear from
Nedbank
v National Credit Regulator
that there must be judicial oversight to declaring a person over
indebted and the restructuring of his/her debt.
9.1.3 Until the magistrate’s
court has thus made an order approving the over indebtedness and
restructuring no declaration
of over indebtedness has occurred.
9.1.4 Form 17.2 used by the debt
counsellor does not reflect the correct position as it fails to
incorporate the judicial oversight
required and that any application
for a declaration of over indebtedness and restructuring must be
approved by the magistrate’s
court. Form 17.2 is also
incorrect in stating that the application for debt review was
successful.
[10]
In terms of
section 86(1)
of the
National Credit Act a
consumer can
apply to a debt counsellor to be declared over indebted.
Section 86(4)
stipulates that on receipt of such an application the
debt counsellor must provide proof of receipt of the application and
notify
in the prescribed manner and form all credit providers listed
and every registered credit bureau.
Section 86(6)
stipulates a
debt counsellor who has accepted an application in terms of the
section must determine within the prescribed time
whether the
consumer is over indebted and if it is concluded that he is over
indebted then in terms of
section 86(7)(1)(c)
the debt counsellor may
issue a proposal recommending that the magistrate’s court make
either or both of the certain orders
as provided for in the said
section.
10.1
Section 24(9)
of the Act
further provides that any arrangements by a debt counsellor with a
credit provider must be reduced to writing and signed
by all the
credit providers, the debt counsellor and the consumer.
10.2 No such document is
attached and it does not appear from the papers that any arrangement
had indeed been made by the debt counsellor
which was accepted by all
the parties.
10.3 From the above it would
appear that the requirements of the
National Credit Act have
not been
complied with. No restructuring could have occurred before
either the credit providers, the debt counsellor and
the consumer in
a written document made arrangements therefore or in the event of no
such agreement an application was brought
to the magistrate’s
court to confirm the over indebtedness and rescheduling.
[11]
In terms of
section 86(1)
of the
National Credit Act a
consumer can
apply to a debt counsellor to be declared over indebted.
Section 86(4)
stipulates that on receipt of such an application the
debt counsellor must provide proof of receipt of the application and
notify
in the prescribed manner and form all credit providers listed
and every registered credit bureau.
Section 86(6)
requires a
debt counsellor who has accepted an application in terms of the
section to determine within the prescribed time whether
the consumer
is over indebted and if it is concluded that he is over indebted then
in terms of
section 86(7)(1)(c)
the debt counsellor may issue a
proposal recommending that the magistrate’s court make either
or both of the certain orders
as provided for in the said section.
The word “may” suggests that it is discretionary to issue
and file the application
at the magistrate’s court. As
set out in paragraph 2 above it is not discretionary and the word
“may” must
be read as “must”.
[12]
I have been referred to the unreported judgment of
Malesela
David Manamela v Hein Du Plessis t/a Debt Safe and 6 Others
in the Gauteng Division,
Pretoria
where
an order was granted that the applicant was no longer over indebted.
No details of the case is provided and in my view
is distinguishable
as will appear from this judgment.
12.1 I was
also referred to
Rougier
v Nedbank Ltd
Case No
27333/2010 South Gauteng, where it was held that it was ultra vires
for a debt counsellor to withdraw a debt review instituted
in terms
of
section 86(1)
of the Act. It is only instituted when the
application is filed and issued at court. That is the position
in the case
of business rescue applications as held in
Blue
Star Holdings v West Coast Oyster Growers
2013 (6) SA 540
(WCC). In my view the same principles apply.
[13]
What is the position in the present case? There is nothing in the Act
or its Regulations which sets out how, once an application
for a
declaration of over indebtedness has been submitted to a debt
counsellor who not yet issued and served such application at
the
magistrate’s court to be made an order of court, can be
stopped, or cancelled.
13.1 It
has been submitted that the guidelines of the withdrawal from debt
review provides certain options how such an application
can be
withdrawn but does not cater for this situation, and that only a High
court due to its inherent jurisdiction has the power
to declare a
consumer no longer over indebted. These are clearly guidelines and
not specific procedures.
13.2 It is
further submitted that it would be ultra vires for the debt
counsellor to withdraw the application. The application
is only
instituted once it is issued and filed at court. Prior to that
the debt counsellor only reaches a conclusion as to
over indebtedness
and prepares a restructuring of the debt. Debt review has not
yet been instituted. Once the application
is issued and filed
the debt review is instituted.
13.3 Until
a magistrate has ruled thereon there is only an application pending,
and no declaration of over indebtedness and restructuring.
[14]
What happens as in the present case when the debt counsellor sends
out notices 17.1 and 17.2 but fails in his/her duty to issue
and
serve the application at the relevant magistrate’s court.
14.1 The
issuing of the application at the magistrate’s court is the
date the application is instituted as thereafter various
factors may
cause the application to be adjourned.
14.2 The
debt counsellor must ensure that the over indebted consumer receives
the necessary assistance within a reasonable time
of receiving the
application for a declaration of over indebtedness and ensure that
the application is issued and filed at the
magistrate’s court
for its judicial oversight and approval and only when approved will
such an order ensue.
14.3 What
is a reasonable time? In the present case the application to the debt
counsellor was made during April 2016 and by August
2017 no such
application had been issued and filed at the magistrate’s
court. Sixteen (16) months later cannot be a
reasonable time
nor in the interest of the consumer or credit providers.
Section 86(10)
of the Act allows for a period of 60 days after which
a credit provider may apply to have the debt review terminated if
there was
no cooperation.
14.3.1 The
debt counsellor must obtain information from the consumer, assess the
application and prepare a restructuring of the
debt and draft the
necessary application to the magistrate’s court. In my
view a period of 90 days from the date of
the application for a
declaration of over indebtedness by the consumer to the debt
counsellor should be sufficient to do so and
to issue and serve the
application at the relevant magistrate’s court for its
decision.
14.3.2
If this is not done, the consumer cannot be prejudiced and wait
indefinitely for the debt counsellor to comply.
The consumer
and credit providers are being prejudiced, as there is no valid debt
rescheduling because the magistrate’s court
has not approved
such and made no order.
14.4 The
intention of the Act is to ensure that consumers who are over
indebted receive the necessary assistance within a reasonable
time.
They are in the majority of cases already in a vulnerable position.
14.5 If
the debt counsellor fails to issue and serve the application at the
magistrate’s court within 90 days after receiving
the
application, the consumer if he/she so wishes must after the expiry
of the 90 days be able to stop the whole process.
The consumer
can in such a situation at any time before the application is issued
and filed at the magistrate’s court inform
the debt counsellor
that he must not proceed with the application. The debt
counsellor must then inform the credit bureau
to remove the name of
the said consumer from all its records.
[15]
The position therefore appears to me to be follows:
15.1 A
debt counsellor after receiving an application from a consumer to be
declared over indebted must follow the process as set
out in the Act.
15.2 A
debt counsellor must within 90 days of receiving an application for a
declaration of indebtedness and restructuring from
a consumer issue
and file such application at the relevant magistrate’s court
for approval.
15.3 The
application for a declaration of over indebtedness and restructuring
is only instituted once it is issued and filed at
the magistrate’s
court. Until then it is merely a pending application.
15.4 If
this is not done by the debt counsellor, the consumer can after the
expiry of a period of 90 days and before the application
is issued
and filed notify the debt counsellor in writing not to proceed with
the application.
15.5 The
debt counsellor must notify the credit bureaus accordingly.
15.6 The
relevant credit bureaus must then remove such consumer’s name
from the relevant records.
[16]
As no application for a declaration of over indebtedness and
restructuring had been instituted there has not been any valid
declaration of over indebtedness. The relief as sought in the notice
of motion can therefore for the reasons set out above not
be granted.
[17]
The application is dismissed.
________________
BEZUIDENHOUT,
J
Date
of hearing
: 17
August 2017
Date
delivered
: 22
September
Appearances
:
For the
Applicant
:
Ms Dhoda
Instructed
by
:
Campbell Attorneys
011 616 2665
Ref:NC/alm/N1603
c/o Stowell & Co Attorneys
033 845 0500