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[2016] ZAFSHC 208
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Khohko v Nedbank Limited (4076/2016) [2016] ZAFSHC 208 (8 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 4715/2016
Reportable:
No
Of
interest to other judges: No
Circulate
to magistrates: No
In
the matter between:
NGAKA
DAVID
KHOKHO
Applicant
and
NEDBANK
LIMITED (of which MFC is
a
division)
Respondent
CORAM:
LEKALE,
J
JUDGEMENT:
LEKALE,
J
HEARD
ON:
24 NOVEMBER 2016
DELIVERED
ON:
8 DECEMBER 2016
BACKGROUND
AND INTRODUCTION
[1]
On or about 15 October 2013 the applicant and the respondent
concluded a written instalment sale agreement in terms of which
the
latter, as the seller, sold a 2013 Jaguar XF 2.0 i4 luxury motor
vehicle to the former. It was a term of the agreement that
applicant
would pay the purchase price, inclusive of VAT, by way of 71 equal
monthly instalments of R11 909,65 from 1 December
2013 to and
including 1November 2019.
[2]
Applicant, however, fell in arrears with monthly instalments and on
16 August 2016 respondent notified him of the default, as
required by
section 129 read with section 130 of the National Credit Act, 34 of
2005 ("the Act"), per registered post.
On 19 August 2016
the Post Office which serves the applicant's chosen postal address
dispatched the first notification to collect
the registered item in
question to him.
[3]
On 31 August 2016 the respondent issued summons against the
applicant,
inter alia,
notifying him of cancellation of the
contract and claiming the return of the vehicle purchased. The
summons was served per affixation
by placing a copy in the post box
at the applicant's chosen
domicilium citandi et executandi
on
5 September 2016.
[4]
Applicant only received the section 129 notice on 6 September 2016.
Summons was, in turn, only received by him on 23 September
2016
around 14h00 from a neighbour into whose post box it was placed.
Applicant immediately proceeded to prepare and draft a notice
of
intention to defend which he served on the respondent's attorneys at
about 15h45 the same day. He, unfortunately, could not
file the
original copy with the Registrar of this court until Monday the 26th
September 2016 because the relevant section had already
closed for
the day. Unknown to him, when he eventually filed with the Registrar,
judgment had already been entered against him
by default on 23
September 2016
[5]
On 26 September 2016, after entering appearance to defend with the
Registrar, the applicant phoned the respondent's employee
dealing
with litigations in Pretoria and informed her that he deposited R20
000, 00 towards clearance of arrears of R35 602, 00
on 24 August 2016
but was told to effect a further payment of R12 000, 00 that same day
and a further R3 000,00 together with his
October instalment of R12
000,00. He duly obliged but was caught by surprise on 4 October 2016
when the respondent's said employee
told him that the respondent's
local attorneys had already taken judgment by default and that they
had also issued a warrant of
delivery of the relevant motor vehicle.
[6]
Applicant proceeded to contact respondent's attorneys and learnt that
they were not longer interested in the settlement of the
arrear
amount but wanted the whole outstanding balance paid. Whilst talking
to the said attorneys the sheriff arrived with the
warrant to
repossess the motor vehicle but same was with his wife at Kroonstad
where she works.
[7]
Feeling that the matter was urgent as he stood to lose the vehicle,
applicant launched the instant application on an urgent
basis moving
for,
inter a/ia,
stay of the relevant warrant and rescission
of the default judgment.
[8]
Respondent filed opposing papers and on 6 October 2016 the motion was
postponed to 24 November 2016 with costs standing over
for
adjudication at a later stage.
[9]
The matter now serves before me for determination of the rescission
application and costs of the postponement only with the
parties,
effectively, being in agreement that, in law, service of an
application for rescission of judgment automatically stays
the
execution process.
ISSUES IN DISPUTE
[10]
The parties are at loggerheads over whether or not applicant has a
bona fide
defence to respondent's action with the respondent
effectively conceding, in argument, that applicant's explanation for
his default
in entering appearance to defend is acceptable and
plausible while the applicant, on his part, contends that the action
was instituted
prematurely and contrary to the provisions of section
129 of the Act insofar as summons was issued before he could receive
the
relevant letter of demand.
[11]
The dispute between the parties, further, extends to the question as
to whether or not, in law and equity, the applicant falls
to be
burdened with costs occasioned by the postponement on the 5th October
2016.
DEPOSITIONS AND
CONTENTIONS FOR AND ON BEHALF OF THE APPLICANT
[12]
In support of the application the applicant deposed to,
inter
alia,
the effect that he would be able to re-instate the relevant
credit agreement by paying the outstanding default charges and costs
of enforcing the agreement if the court were to rescind the impugned
judgment insofar as he has already cleared the arrears on
the account
save for applicable default charges and costs.
[13]
In argument on the papers and before the court the applicant,
inter
alia,
contends that it is patent from the founding affidavit that
he always intended to defend the matter because he prepared and
drafted
the notice of intention to defend immediately upon receipt of
the summons. It is, further, his submission that the respondent
issued
summons against him before the expiry of the ten(10) business
day period after delivery of the section 129 notice. According to
him
case law is to effect that the respondent was obliged to ensure that
the relevant notice, in fact, came to his attention, as
the
defendant, before it could issue summons.
[14]
In the applicant's view he was not afforded an opportunity to exhaust
the remedies provided by section 129(1) of the Act before
action was
instituted against him.
DEPOSITIONS
AND CONTENTIONS FOR AND ON BEHALF OF THE RESPONDENT
[15]
In opposition to the application, the respondent's Manager:
Specialised Support and Litigation deposed to,
inter alia,
the
effect that prior to launching the instant application on an urgent
basis the applicant did not engage the respondent's attorneys
and,
had he done so, the respondent would have given him an undertaking
not to sell the vehicle, as it usually does where the applicant
party
commits, with its consent, to a date for filing the rescission
application. In the respondent's view the urgency was self-made
insofar as the rescission application automatically suspends
enforcement of impugned judgments.
[16]
The respondent's position is, further, that section 129 notice was
sent to the applicant on the16th August 2016 but he failed
to respond
to the same and was still in arrears as at 31 August 2016 when
summons was issued. As at 4 October 2016, after further
payment of
R15 000,00, the applicant was still in arrears in the amount of R12
684,79.
[17]
In argument Mr Van Aswegen, for the respondent submits to,
inter
alia,
the effect that the novel relief of re-instatement of the
credit agreement provided for by sections 129(3) and 129(4) of the
Act
is not available to the applicant because the agreement was
cancelled before the applicant had cleared all the arrears. The
aforegoing
prevails because the high-water mark of the applicant's
alleged
bona fide
defence is that he can re-instate the
instalment sale agreement by paying arrears once the default judgment
is rescinded. In
his view the agreement was cancelled by way of
summons which,
inter alia,
communicated the cancellation to
the applicant.
[18]
In Mr Van Aswegen's understanding of the applicant's founding papers,
it is not the applicant's case that the cancellation
was 1n effectual
for what of compliance with section 129 and 130 of the Act. The
relevant issue, he contends, is only apparent
in replying papers and,
in law, the applicant stands and falls by what is contained in his
founding papers.
[19]
Mr Van Aswegen, further, reminds the court that according to the
Constitutional Court all that the credit provider, in the
position of
the respondent, has to do to satisfy the requirement "to
deliver" the section 129 notice in the context of
unforeseen the
credit agreement is to "aver and proof that the notice was
delivered to the consumer". The applicant's
assertion that
summons was issued prematurely is fallacious. Notice of cancellation
of the instalment sale agreement contained
in the summons reached the
applicant, on his own admission on 23 September 2016. More than 10
business days had, as such, elapsed
between delivery of the section
129 notice and the date on which cancellation of the agreement was
communicated to the applicant.
[20]
It is, further, contended for the respondent party that the
application should be dismissed with costs including reserved costs.
APPLICABLE LEGAL POSITION
[21]
An application for rescission of judgment, like an application for
leave to appeal, suspends the impugned judgment and its
execution.
(See
Uniform Rule of Court
49(11) and
Peniel
Development (Pty) Ltd and Another v Pietersen and Others
2014
(2) SA 503
(GSJ) at para [5])
[22]
The credit provider is, in terms of section 129 read with section 130
of the Act, obliged to prove that the section 129 notice
reached the
correct post office serving the address chosen by the consumer and to
aver that same was made available to the consumer
insofar as delivery
is effected when the document is made available to the consumer as
the recipient. Once the relevant averments
are apparent from the
credit provider's papers before the court, the default position is
that the section 129 notice was delivered
on the date it was made
available to the consumer. (See
Sebola and Another v Standard
Bank of South Africa and Another
2012 (5) SA 142
(CC) at par
[77])
[23]
Clause 14 read with clause 16 of the Instalment Sale Agreement
between the parties dated the 151 October 2013 effectively provides
for a section 129(1) notice to be send to the applicant, as the
consumer, before the agreement may be cancelled on grounds of default
by the respondent, as a credit provider, and only upon failure by the
applicant to respond to such notice within 10 business days.
(See
Clauses 14.2 and 16.1.4 of the Agreement in question)
[24]
Section 129(3) of the Act, before its amendment and as it stood when
it was considered by the Constitutional Court recently,
permitted "a
consumer, at any time before the credit provider has cancelled the
agreement, to re-instate a credit agreement
that is in default by
paying to the credit provider all amounts that are overdue. The
provision adds that the consumer must also
pay 'the credit provider's
permitted default charges and reasonable costs of enforcing the
agreement up to the time of re-instatement".
(See Nkata v First
Rand Bank
2016 (4) SA 257
(CC) at par [77])
[25]
In its amended form with effect from 13 March 2015 section 129(3) of
the Act provides that:
"A consumer may, at
any time before the credit provider has cancelled the agreement,
remedy a default in such credit agreement
by paying ... all amounts
that are overdue, together with the credit provider's prescribed
default administration charges and reasonable
costs of enforcing the
agreement up to the time the default was remedied."
[26]
Where there exists no proof that the section 129 notice reached the
correct post office, consumers are granted rescission of
the impugned
default judgment and the proceedings against them get adjourned in
terms of section 130(4)(b) of the Act to allow
the credit provider
"to rectify the omission in regard to the notice".
(See
Sebola and Another v Standard Bank of South Africa
and Another
(supra)
at par [81])
APPLICATION OF LEGAL
POSITION TO THE FACTS AND FINDINGS
[27]
The parties are, effectively, at variance on whether or not summons
was issued before 10 business days had elapsed from the
date of
delivery of the section 129 notice to the applicant, as the consumer.
The parties are
ad idem
that summons was issued on 31 August
2016 while the relevant notice was scanned at the correct post office
serving the applicant
on 19 August 2016. The notice in question was,
at the very earliest, made available for collection by the applicant
and, as such,
delivered when the first notification of its
availability was dispatched to him on the same date.
[28]
The 10 business day period after the delivery of the relevant notice
expired, at the very earliest, on 2 September 2016 if
one excludes
Saturdays and calculates the period from the 19th August 2016. In
terms of section 129(1)(b) read with section 130(2)
of the Act no
legal proceedings could, thus, be commenced in
casu
to enforce
the credit agreement between the parties before the 3rd September
2016.
[29]
Summons was, therefore, issued 3(three) days too early on common
cause facts insofar as it was issued on 31 August 2016. The
evidentiary burden was generally on the applicant party, as the
consumer, to adduce evidence showing that the relevant notice was,
in
fact, delivered to him later than the 19th August 2016 where he did
not, as the case is in the instant matter, agree with the
default
position in paragraph [28] above. The applicant deposed to the effect
that the notice in question was delivered to him
on 6 September 2016.
[30]
I am, however, satisfied that the default position prevails because
there exists no explanation whatsoever, on the papers,
as to why the
applicant only received such a notice on 6 September 2016 when the
notice notifying him of its availability was,
admittedly, first
dispatched to him on 19 August 2016. The applicant, further, conceded
in argument before the court that, in line
with the generally
accepted practice of South African Post Office, the relevant notice,
as a registered item, could not reasonably
possibly have been
delivered to his place by the relevant post office serving his area
as alleged in his papers. He attributed
the mistake to the haste
involved in preparing the motion on an urgent basis. Rejecting his
evidence in this regard as unacceptable
and including Saturdays in
the calculation of the relevant period, the 10 business day period
contemplated in section 130(2) of
the Act expired on 31 August 2016
at the very earliest for the respondent. Even on this generous
calculation of the relevant period
summons was clearly issued one (1)
day too early.
[31]
On the preceding findings alone the application stands to succeed in
order to afford the applicant an opportunity to avail
himself of
consumer rights provided by section 129 of the Act. (See
Sebola
and Others v Standard Bank of South Africa and Another
(
supra)
at par [81].
[32]
The respondent's position is that the applicant has no
bona fide
defence because he was notified of cancellation of the credit
agreement when he received summons on 23 September 2016, while he
received the section 129 notice on
6
September 2016. In the respondent's view the applicant can, as such,
not revive the agreement by paying outstanding costs because
the
agreement was already cancelled as at 23 September 2016.
[33]
I am, however, satisfied from the reading of the relevant clauses of
the credit agreement which, in any event, accord with
the Act, that
the determinative date for the purposes of sections 129 and 130 of
the Act is the date on which summons is issued
and not the date of
service or receipt of the same by the consumer. In my judgment
cancellation of the contract, which is communicated
through premature
summons, is not efficacious for the purposes of section 129(3) of the
Act for it is unilateral, by its very nature,
and takes place when it
is effected and not when it is communicated. In the instant matter it
is expressly clear from the particulars
of claim that cancellation
purportedly took place before summons was issued insofar as summons
served,
inter alia,
to notify the applicant of the same
ex
post facto.
Such cancellation is, as such, as premature as the
summons itself.
[34]
It is contended for the respondent party that the issue of
prematurity of summons in relation to section 129 notice is not
apparent
ex facie
the applicant's founding papers and is only
contained in his reply. In the respondent's view the appellant must
stand and fall by
his papers and the issue must,
stricto
senso,
not be entertained by the court. I am, however, persuaded by the
papers that the issue in question is properly before the
court
insofar as the dates on which the relevant notice was dispatched and
summons was issued are all apparent from the launching
papers.
COSTS
[35]
The applicant prays for punitive costs against the respondent. I am,
however, not satisfied that there exists cause for such
a special
costs order to be made regard being had to the fact that the
respondent was clearly, in law, entitled to oppose the application
in
circumstances where, in its view, there existed no urgency entitling
the applicant to jump the queue for the matter to be heard
out of
turn.
[36]
I am, further, persuaded by undisputed facts before me that in the
light of the fact that the applicant was in arrears as at
the date of
the default judgment, the respondent, at least, had cause, in law and
equity, to oppose the application.
[37]
As far as reserved costs are concerned, I am satisfied that it is
only fair to saddle the applicant with the same regard being
had to
the prevailing legal position as per Uniform Rules of Court.
ORDER
[38]
In the result the application for rescission of judgment is granted
with costs.
[39]
The applicant is ordered to pay the costs relating to the
postponement of the 6
th
October
2016.
_____________
L.
J. LEKALE, J
On
behalf of the applicant: In person
C/O
Rampai Attorneys
Bloemfontein
On
behalf of the respondents: Adv. W. A. van Aswegen
Instructed
by:
Mcintyre
& Van der Post
BLOEMFONTEIN