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[2016] ZAFSHC 231
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Ngaka v Nedbank Limited (of which MFC is a division) (4715/2016) [2016] ZAFSHC 231 (8 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE D
I
V
I
SION,
B
LOEM
F
ONTE
I
N
Reportable:
NO
Of
interest to other Judges: NO
Circulate
to Magistrates: NO
Case
No.: 4715/2016
In
the matter between:
N
GAKA
DAV
I
D
K
H
OKHO
Applicant
and
NEDBANK
LIMITED (of which MFC is
a
division)
Respondent
CORAM:
LEKALE, J
JU
D
GE
M
E
N
T:
LEKALE, J
HEARD
ON:
24 NOVEMBER 2016
DE
L
I
VERED
ON:
8
DECEMBER 2016
B
ACKGROUN
D
AND
I
N
TROD
U
CTION
[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 26
th
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 alia,
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, m 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 thee 6
th
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 ineffectual
for want of compliance with sections 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 enforcing
the credit agreement is to
"aver
and
proof
that
the
no
t
i
ce
was
del
i
vered
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
B
ank
of
South
Africa
and
Another
2012 (5) SA142 (CC) at par [77])
[23]
Clause 14 read with clause 16 of the Instalment Sale Agreement
between the parties dated the 15th 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
i
n
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
defa
u
l
t 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
i
n
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
/eb