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[2017] ZAKZPHC 60
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Ngcongo v Roets t/a Debt Rescue and Others (7521/17P) [2017] ZAKZPHC 60 (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
ERIC
GUGULETHU
NGCONGO
Applicant
(ID
No.: […])
and
NEIL
ROETS (NCRDC474) t/a DEBT
RESCUE
First
Respondent
DIRECT
AXIS SA (PTY)
LIMITED
Second
Respondent
OLD
MUTUAL FINANCE (PTY)
LIMITED
Third
Respondent
NEDBANK
LIMITED
Fourth
Respondent
CONSUMER
FRIEND t/a
MARKHAMS
Fifth
Respondent
FINANCE
27
Sixth
Respondent
HTN
ATTORNEYS t/a BOODLE INSTANT LOANS
Seventh
Respondent
AFRICAN
BANK
LIMITED
Eight
Respondent
FIRSTRAND
BANK
LIMITED
Ninth
Respondent
ABSA
BANK
LIMITED
Tenth
Respondent
JUDGMENT
Delivered on: 22 September 2017
BEZUIDENHOUT,
J
[1]
Applicant, during April 2016, made application in terms of
section
86(1)
of the
National Credit Act 34 of 2005
to first respondent, a
debt counsellor, to have himself declared over indebted. A copy
of such application is not attached
to these papers. On 25
April 2016 first respondent issued a Form 17.1 to all creditors of
applicant notifying them and all
registered credit bureaus in terms
of
section 86(4)(b)(i)(ii)
of the
National Credit Act, that
applicant
had applied for debt review on 23 April 2016.
1.1 Form 17.1 grants credit
providers five days to respond if the details provided by applicant
were not correct. If they
did not do so it would be accepted
that the information was correct.
1.2 On the same day, 25 April
2016, first respondent also issued a notice in terms of Form 17.2 of
the
National Credit Act which
states
inter alia
:
“
This
notice serves to advise you that:
(b)
the abovementioned consumer’s application for debt review was
successful the debt obligations are in the process
of being
restructured.”
1.2.1 It also advised all credit
bureaus to list the consumer (applicant) within 5 days of this
notice, as having applied for debt
review.
1.3 The application was made on
23 April 2016. On 25 April 2016 the notice in terms of Form
17.1 was sent out allowing the
credit providers five days to respond
thereto. On the same day, thus without allowing the credit
providers any opportunity
to respond thereto within the five days,
Form 17.2 was sent that the application for debt review was
successful and that applicant’s
debt obligations were being
restructured. Credit bureaus were advised that he had applied
for debt review.
[2]
The application to be declared over indebted and restructuring of the
debt was never submitted to the magistrate’s court
nor
confirmed by any court in terms of
section 87(1)
of the
National
Credit Act 34 of 2005
, nor was any restructuring agreement agreed to
between all the parties and signed by them attached to the papers.
2.1 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.”
2.1.1
The debt counsellor having received an application and finding that
the debtor is over indebted, must issue a proposal restructuring
the
debt, and issue and file this at the magistrate’s court for a
hearing. If the court agrees it will make 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.
2.1.2
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.
2.1.3
Until the magistrate’s court has thus made an order approving
the over indebtedness and restructuring no declaration
of over
indebtedness has occurred, nor any restructuring.
2.1.4
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.
2.1.5
Applicant seeks an order that he no longer be declared to be over
indebted and that the credit bureaus remove his name from
their
records.
Over
Indebtedness
[3]
Applicant is seeking an order that this court finds that he is no
longer over indebted. He has however, for the reasons
set out
below, not made a full disclosure of the total amount of his debt and
repayments and it is therefore impossible to determine
whether he is
still over indebted or not.
3.1 Applicant states in
paragraph 4 of his affidavit that he began to make payments to his
creditors as per annexure “B”
and lists his creditors.
Annexure “B” is Form 17.1. There is no indication
as to how much was paid to each
creditor, or how much is owing.
3.2 In paragraph 11 of his
affidavit he sets out the creditors who, according to him, he made
arrangements with to pay directly
and the monthly payments made to
them. The total monthly repayments amounts to R4,275.00.
The affidavit fails to set
out how applicant’s payments were
restructured by first respondent.
3.3 In paragraph 6 he avers,
that first respondent informed him to make payments to his creditors
in a total monthly amount of R4,200.72.
He once again refers to
annexure “B”, Form 17.1, which only sets out a list of
creditors but does not set out the total
amount outstanding nor what
the amount payable to each of them would be.
3.4 Applicant contends that his
financial position has improved substantially and he can now make
payments direct to his creditors
in the amount of R4,275.00 per month
which is only R75.00 per month more than that which he was instructed
by first respondent
to pay.
3.5 From the papers it is not
clear what the outstanding amounts to the various creditors are and
why he is now in a position to
pay them direct when the total amount
payable is only R75.00 per month more than that which first
respondent had informed him to
pay.
3.6 There is also no indication
as to what the exact amounts are which must be paid monthly to each
of the credit providers and
whether applicant is in a position to pay
such and if not whether the credit providers are in agreement to
accept any other amount.
He states in paragraph 11:
“
As a result, I have tried to contact my creditors
to arrange to pay them directly pending the application herein.
I confirm
that I am already paying the following outstanding
creditors directly and that the monthly payment amounts are as
follows:”
There is no indication that he
did in actual fact contact them nor that they had agreed to accept
any other payment, and whether
these payments are less than the
actual monthly payments.
3.7 On this basis alone the
application must fail.
Legal
Position
[4]
The procedure adopted by first respondent was also incorrect as far
as the following is concerned.
4.1 Forms 17.1 and 17.2 were
been sent on the same day without allowing the necessary period to
respond in terms of Form 17.1.
4.2
Section 24(10)
provides that
after completion of an assessment the debt counsellor sends Form 17.2
to the bureau. How could this have been
done when the credit
providers were not given any opportunity to respond as both Forms
17.1 and 17.2 were sent on the same day.
4.3
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.
4.4 No such document is attached
and it does not appear from the papers that any arrangement had been
made by the debt counsellor
which was accepted by all the parties.
4.5 The requirements of the
National Credit Act have
therefore not been complied with. No
declaration of over indebtedness and restructuring of the debt could
have come into
operation until an application was issued and filed at
the magistrate’s court and confirm the over indebtedness and
rescheduling.
[5]
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”.
[6]
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.
6.1 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.
[7]
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.
7.1 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.
7.2 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.
7.3 Until
a magistrate has ruled thereon there is only an application pending,
and no declaration of over indebtedness and restructuring.
[8]
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.
8.1 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.
8.2 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.
8.3 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.
8.3.1 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.
8.3.2 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.
8.4 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.
8.5 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.
[9]
The position therefore appears to me to be follows:
9.1 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.
9.2 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.
9.3 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.
9.4 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.
9.5 The
debt counsellor must notify the credit bureaus accordingly.
9.6 The
relevant credit bureaus must then remove such consumer’s name
from the relevant records.
[10]
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.
[11]
The application is dismissed.
________________
BEZUIDENHOUT,
J
Date of
hearing
:
17 August 2017
Date
delivered
:
22 September 2017
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