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[2016] ZAGPPHC 173
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Firstrand Bank Limited v Muthen and Another (21180/2015) [2016] ZAGPPHC 173 (31 March 2016)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Not
reportable
Not
of interest to other Judges
CASE
NO:
21180/2015
31/3/2016
In
the matter between:
FIRSTRAND
BANK
LIMITED
Applicant
and
THEODOR
CLAUDE
MUTHEN
First Respondent
DEBORAH
MUTHEN
Second Respondent
J
U D G M E N
T
MAKGOKA,
J
[1]
This is an opposed application for summary judgment. The
applicant seeks, as against the first and second respondents,
payment
of R2 429 659.15, interest and costs, as well as an order declaring
two of the respondents' properties to be specially
executable. The
application results from a credit facility agreement concluded
between the applicant and the respondents during
2008. The National
Credit Act 34 of 2005 (the Act) is applicable to the agreement. The
credit facility was secured by a mortgage
bond in favour of the
applicant over the respondents' properties. The respondents utilised
the credit facility and drew sums of
money from it.
[2]
Subsequent thereto the respondents experienced financial problems.
During August 2014 the first respondent applied for debt
review. The
applicant made a counter-proposal, and a final debt restructuring
agreement was reached. The counter-proposal by the
applicant, which
was accepted by the respondents, reads:
'...
you are informed that none of the existing respective rights and
obligations of the original credit agreement/loan agreement
are
waived or amended. All rights and obligations remain fully
enforceable in the event that the consumer is in default of an agreed
rearrangement proposal.
If
you are in default of this Facility, then the Bank may withdraw the
Facility and cairn immediate repayment of the full outstanding
balance, or terminate your Facility without affecting any of its
other rights.'
[3]
The monthly installment due in terms of the facility agreement as at
September 2014 was R23 517.38. As a result of the restructuring
agreement, the respondents had to pay R19 357.39 after September
2014. In October and November 2014, the respondents only made
payments of R15 707.59 and R5 250, respectively. The respondents did,
however, make extra payments in the subsequent months up
to January
2015.
[4]
On 9 February 2015 the applicant issued a certificate of balance in
the outstanding amount of R2 429 659. 15, and launched the
application the present application, on 24 March 2015. The applicant
alleges that the first respondent failed to comply with his
obligations in terms of the debt restructuring agreement. On that
basis, the applicant asserts that the full outstanding amount
in
terms of the facility agreement has become due and payable. It seeks
payment of that amount in this application. The respondents
say that
they were not in default when the application was launched, as they
had made up for the shortfalls in payment by making
extra payments in
the months subsequent to October and November 2014.
[5]
In my view, there is no merit in this argument, and it is mentioned
only to be dismissed. The respondents did not make payments
in terms
of the restructuring agreement, as illustrated in para 4 above. In
the very first two months of the re-structuring agreement,
the
respondents failed to make payments in the agreed amount, and
they were accordingly
in
default of that agreement.
In the circumstances the applicant
was entitled to claim
the full outstanding balance. As correctly argued by Ms
Riley,
counsel for the applicant, the indulgences granted by the
applicant to the respondents in not proceeding with legal action once
default occurred, did not amount to a waiver of applicant's rights in
terms of the facility agreement.
[6]
Having reached that conclusion, I turn now to the respondents'
contention based on s 86(10) of the Act. The argument is that,
given
that they were in debt review, the applicant could only commence
legal proceedings against them after giving them notice
of
termination of debt review in terms of s 86(10) of the Act. That
section provides that before a credit provider proceeds to
enforce a
credit agreement against a consumer who has applied for debt review,
that should be preceded by a notice in terms of
which the consumer
and his/her debt counselor is informed that the credit provider is
cancelling the agreement.
[7]
In reply, the applicant says that it is entitled to proceed against
the respondent in terms of s 88(3) of the Act. That
section
provides:
'Effect
of debt review or re-arrangement order or agreement'
(1)
...
(2)
...
(3)
Subject to section 86(9) and (10), a credit provider who receives
notice of court proceedings contemplated
in section 83 or 85, or
notice in terms of section 86(4) (b) (i), may not exercise or enforce
by litigation or other judicial process
any right or security under
that credit agreement until -
(a)
The consumer is in default under the credit agreement; and
(b)
One of the following has occurred:
(i)
(ii)
The consumer defaults on any obligation in terms of a re
arrangement agreed between the consumer and credit providers,
or
ordered by a court or the Tribunal.
[8]
The
applicant
places
reliance
on
the
judgment
of
the
Constitutional
Court
in
Ferris
v
FRB,
[1]
in which
it
was
held, among
others, that
s
88(3)(b)(ii) does not require
further
notice -
it merely
precludes a credit provider from enforcing a debt under debt
review
unless
among
others, the
debtor
defaults on
a
debt-restructuri
ng
order.
[2]
Furthermore,
the bank
was
entitled,
in terms of
s88
(3)
(b) (ii) to enforce the
loan on
the basis
of the breach of the debt-restructuri
ng
order.
[3]
[9]
The only different between the
Ferris
matter and the present
one, is that in the former, there was a debt restructuring order in
place and in the present matter there
is only an agreement. As is
clear from the reading of s 88(3)(b)(ii), provision is also made in
the event the consumer defaults
on 'the terms of a re-arrangement
agreed
between the consumer and credit providers
...'
(my
underlining for emphasis)
[10]
The upshot of the above is that the conclusions reached by the
Constitutional Court in the
Ferris
matter, are
apposite, and apply equally, to a situation where the consumer is in
default of a debt restructuring agreement, as is
the case here. There
are no further defences raised to the applicant's claims. In order to
stave off summary judgment, the defendant
has to disclose a
bona
fide
defence. This means a defence set up
bona fide
or
honestly, which if proved at the trial, would constitute a defence to
the plaintiff's claim
(
Bentley Maudesley
&
Co.
Ltd v "Carburol"( Pty) Ltd
and Another
1949 (4) SA 873
(C);
Lombard
v
Van
der
Westhuizen
1953 (4) SA 84
(C) at 88).
There is no such defence disclosed in the present matter.
[11]
I am quite aware of the 'drastic' nature of the remedy of summary
judgment as it allows judgment to be entered against a defendant
without evidence. On the other hand, the court would be remiss in its
duties if unmeritorious defences, clearly devoid of any
bona
tides,
stand in the way of a plaintiff who is clearly entitled to
relief. The ever-increasing perception that any defence, whatever its
merits, is sufficient to stave off summary judgment, is misplaced and
not supported by the trite general principles developed over
many
decades. See for example the well-known decision of
Maharaj
v Barclays
National
Bank
Ltd
(supra). See also generally,
Herb
Dyers (Pty) Ltd v Mohamed and Another
1965 (1) 31
(T) at 31H-32A-B;
Caltex Oil (SA) Ltd
v Webb and
Another
1965 (2) SA 914
(N) AT 9160-H;
Arend
and
Another
v Astra
Furnishers
(Pty)
Ltd
1974 (1) SA (C) at 303F-H;
Shepstone
v
Shepstone
1974 (2) 462 (N) at 467A-H and
Breytenbach v
Fiat SA (Edms) Bpk
1976 (2) 226 (T).
[12]
Recently the Supreme Court of Appeal (the SCA) restated the purpose
of summary judgment procedure in
Joob
Joob
Investments
(Pty) Ltd
v
Stocks Mavundla Zek Joint Venture
2009 (5) SA 1
(SCA). At
paras 31 and 33 the following is stated:
'[31]
[l]t was intended to prevent sham defences from defeating the rights
of parties by delay, and at the same time causing great
loss to
plaintiffs who were endeavouring to enforce their rights.
[33]
Having regard to its purpose and its proper application, summary
judgment proceedings do not hold terrors and are 'drastic'
for a
defendant who has no defence. Perhaps the time has come to discard
these labels and to concentrate rather on the proper application
of
the rule, as set out with customary clarity and elegance by Corbett
JA in the
Maharaj
case at 425G-426E.'
[13]
In the result the applicant is entitled to summary judgment. However,
given the fact that the respondents had, as at the launching
of the
application, made up for the arrears, I am not inclined to grant the
order declaring the properties executable at this stage.
[14]
Accordingly, summary judgment is granted against the respondents,
jointly and severally, the one paying the other to be absolved,
for:
A.
1. Payment in the amount of R2 429 659.15;
2.
Interest on the above amount at the rate of 8.50% plus 1.00% per
annum compounded monthly and calculated from 5 February 2015
to date
of payment;
3.
Costs of the application on an attorney and client scale.
B.
The prayer for declaration of the
respondents' properties to be specially
executable
is postponed
sine die.
____________________
T.
M. Makgoka
Judge
of the High Court
Date
of hearing:
23 February 2016
Date
of judgment: 31 March
2016
For
the applicant:
Adv. M Riley
Instructed
by:
Rorich Wolmarans &
Luderitz Inc.
For
the respondent: Adv. M Joubert
Instructed
by:
Muthray and Associates
Inc.
[1]
Ferris
and another v FirstRand Ltd
2014
(3) SA 39 (CC).
[2]
Para 14.
[3]
Para 18.