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[2016] ZAGPPHC 820
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Absa Bank Limited v Hurwitz; In re: Absa Bank Limited v Hurwitz (82515/2014) [2016] ZAGPPHC 820 (6 September 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, PRETORIA
CASE
NO: 82515/2014
DATE:
6 SEPTEMBER 2016
In
the matter between:
ABSA
BANK
LIMITED
................................................................................................
Applicant
And
D
HURWITZ
............................................................................................................
Respondent
In
re:
ABSA
BANK
LIMITED
...................................................................................................
Plaintiff
And
D
HURWITZ
...............................................................................................................
Defendant
JUDGMENT
1.
In this matter, the applicant seeks a declarator that it has
fully complied with the requirements of section 129 (1
)
(
a) of the National Credit Act 34 of 2005 (“NCA”)
ahead of the trial that has been set down for hearing some time next
year. In the alternative, it seeks leave, in terms of section 130 of
the NCA, to serve a section 129 notice on the respondent at
his
attorneys offices (being his chosen domicilium address) or in such
manner as stipulated by the Court.
2.
Following
the breach of a mortgage agreement between the parties, the applicant
sought to exercise its right to enforce the agreement
and delivered a
notice to the respondent on 29 May 2012 in accordance with section
129(5) of the NCA to the mortgaged property
which had been chosen by
the respondent as his domicilium address.
3.
Thereafter, the applicant instituted action against the
respondent under case number 34552/2012 (“ the prior action”).
When the respondent failed to enter an appearance to defend, default
judgment was obtained against him on 26 October 2012. This
was later
rescinded as it emerged that the service of the summons had been
defective and the applicant withdrew the action and
issued a new
summons under the current case no 82515/2014 on the same cause of
action and in respect of the same debt.
4.
The
respondent has, in its plea, disputed the validity of the section 129
notice which was served by the applicant in prior action
instituted
against the respondent for the purposes of the current proceedings,
averring that the applicant has not complied with
its obligations in
terms of sections 129 and 130 in respect of the current action,
alternatively the notices are of no force and
effect, further
alternatively are irrelevant to the current action.
5.
The
respondent has not, however, disputed receipt of the section 129
notice served on him prior to the launching of the prior action.
In
that notice, the applicant was informed of his rights to refer the
credit agreement to a debt counsellor alternatively a dispute
resolution agent, Consumer Court or Ombud with jurisdiction prior to
action being instituted against him so that the parties can
attempt
to resolve the dispute under the agreement or develop and agree a
plan to bring the arrears under the agreement up to date
as required
in terms of section 129.
6.
In
view of this dispute on the pleadings, in order to avoid the
unnecessary postponement of the trial, the applicant wishes the
Court
at this stage to determine the validity of its prior notice and, in
the event of it being held that it does not constitute
compliance in
respect of the current matter, to grant it leave to serve a further
notice as contemplated in section 129(1) (a)
of the NCA or that the
court make directions in terms of section 130(4)(b)(ii) as to what
steps should be taken before the matter
can resume.
7.
The
application is necessary as in terms of section 130 (4)(b)(i) of the
NCA the Court is obliged to adjourn the proceedings which
may not
resume until there has been compliance with section 129(1).
8.
In
support of its application, the applicant has relied upon an
unreported judgment in this division of First Rand Bank Limited
v
Phiri 2013 JDR 068(GNP) which held that there is nothing to preclude
a court to grant such relief ahead of the trial to avoid
the
unnecessary postponement of the trial where section 129(1) was not
complied with.
9.
The
respondent sought to distinguish this case and disputed the
applicant’s entitlement to seek relief at this stage on the
basis that:
9.1.
Compliance
with the provisions of section 129 is a substantive issue on the
pleadings which only the trial Court can decide;
9.2.
The
applicant has, by delaying some 18 months before reinstituting the
action, indicated its election not to institute action and
waived its
right to rely on the section 129 notice served on the respondent
prior to the institution of the prior action which
was withdrawn; and
9.3.
The failure
of the applicant to give the respondent the requisite notice has
deprived the applicant of exercising his rights under
sections 85 and
86 of the NCA to obtain debt restructuring prior to action being
instituted which, once instituted, it is precluded
in terms of
section 86(2) from exercising despite the provisions of section
130(4)(b). As such, the relief sought in the alternative
is
incompetent and meaningless.
9.4.
It is
further averred that any attempts to declare that the respondent is
entitled to debt restructuring as contemplated in any
newly issued
notice to get around this lacuna, despite the issuing of the summons
in contravention of section 129(1) and the plain
meaning of section
86(2), would be tantamount to legislating and would be
unconstitutional.
10.
Much
of the Court’s time was taken up with the last two arguments
which appeared to highlight a lacuna in the applicable legislation
which was ultimately unnecessary in view of the amendment to section
86 (2) by the National Credit Amendment Act 19 of 2014 published
in
GG37665 of 19 May 2014 which came into operation on 13 March 2015 as
per GG38557, which has, when read together with the Supreme
Court
Appeal decision of Nedbank Ltd v The National Credit Regulator and
Another
2011 (3) SA 581
(SCA), remedied this apparent lacuna.
THE
APPLICABLE LEGISLATION.
11.
Section
129 sets out the required procedures before a debt may be enforced in
any Court of law, with section 130 stipulating what
the Court
must
do in the event that such procedures are not complied with. These
sections provide respectively:
“
129.
Required procedures before debt enforcement
(1)
If the consumer is in default under a credit agreement, the
credit provider-
(a)
may draw the default to the notice of the consumer in writing
and propose that
the consumer refer the credit
agreement to a debt counsellor, alternative dispute resolution agent,
consumer court or ombud with
jurisdiction, with the intent that the
parties resolve any dispute under the agreement or develop and agree
on a plan to bring
the payments under the agreement up to date; and
(b)
subject to section 130(2). may not commence any legal
proceedings to enforce
the agreement before-
(i)
first providing notice to the consumer, as contemplated in
paragraph (a),
or in section 86(10), as the
case may be; and
(ii)
meeting any further reguirements set out in section 130.
(2)
Subsection (1) does not apply to
a
credit agreement that is subject to a debt
restructuring order, or to proceedings in a court that could result
in such an order.
(3)
Subject to subsection (4).
a
consumer may at any time before the credit
provider has cancelled the agreement remedy a default in such credit
agreement by paving to the credit provider 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.
(4)
A credit provider may not re-instate or
revive a credit agreement after- fa) the sale of any property
pursuant to-
(i)
an attachment order; or
(ii)
surrender of property in terms of section 127;
(b)
the execution of any other court order
enforcing that agreement; or
(c)
the termination thereof in accordance
with section 123.
(5)
The notice contemplated in subsection (1)(a) must be delivered
to the
consumer
-
(a)
by registered mail: or
(b)
to an adult person at the location designated by the consumer
.
(6)
The consumer must in writing indicate
the preferred manner of delivery contemplated in subsection (5).
(7)
Proof of delivery contemplated in
subsection (5) is satisfied by
—
(a)
written confirmation by the postal
service or its authorised agent, of delivery to the relevant post
office or postal agency; or
(b)
the signature or identifying mark of the
recipient contemplated in subsection
(5)(b).
130.
Debt procedures in a Court
(1)
Subject to subsection (2), a credit
provider may approach the court for an order to enforce a credit
agreement only if. at that
time, the consumer is in default and has
been in default under that credit agreement for at least 20 business
days and-
(a)
at least 10 business days have elapsed since the credit
provider delivered a
notice to the consumer as
contemplated in section 86(10). or section 129(1). as the case may
be;
(b)
in the case of a notice contemplated in section 129(1). the
consumer has-
(i)
not responded to that notice; or
(ii)
responded to the notice by rejecting the credit provider's
proposals:
and
(c)
in the case of an instalment agreement,
secured loan, or lease, the consumer has not surrendered the relevant
property to the credit
provider as contemplated in section 127.
(2)
In addition to the circumstances
contemplated in subsection (1), in the case of an instalment
agreement, secured loan, or lease,
a credit provider may approach the
court for an order enforcing the remaining obligations of a consumer
under a credit agreement
at any time if-
(a)
all relevant property has been sold
pursuant to-
(i)
an attachment order; or
(ii)
surrender of property in terms of
section 127; and
(b)
the net proceeds of sale were
insufficient to discharge all the consumer's financial obligations
under the agreement.
(3)
Despite any provision of law or contract
to the contrary, in any proceedings commenced in a court in respect
of a credit agreement
to which this Act applies, the court may
determine the matter only if the court is satisfied that-
(a)
in the case of proceedings to which sections 127, 129 or 131
apply, the
procedures required by those
sections have been complied with;
(b)
there is no matter arising under that credit agreement and
pending before the
Tribunal, that could result
in an order affecting the issues to be determined by the court; and
(c)
that the credit provider has not approached the court-
(i)
during the time that the matter was before
a
debt counsellor, alternative
dispute
resolution agent, consumer court or the ombud with jurisdiction; or
(ii)
despite the consumer having
-
(aa)
surrendered property to the credit provider, and before that property
has been sold;
(bb)
agreed to a proposal made in terms of section 129(1)(a) and acted in
good faith in fulfilment of that agreement:
(cc)
complied with an agreed plan as contemplated in section 129(1)(a): or
(dd)
brought the payments under the credit agreement up to date, as
contemplated in section 129(1)(a).
(4)
In any proceedings contemplated in this section, if the court
determines that-
(a)
the credit agreement was reckless as
described in section 80, the court must make an order contemplated in
section 83;
(b)
the credit provider has not complied with the relevant
provisions of this Act, as
contemplated in
subsection (3)(a), or has approached the court in circumstances
contemplated in subsection (3)(c) the court must-
(i)
adjourn the matter before it; and
(ii)
make an appropriate order setting out the steps the credit
provider must
complete before the matter may be
resumed;
(c)
the credit agreement is subject to a
pending debt review in terms of Part D of Chapter 4, the court may-
(i)
adjourn the matter, pending a final
determination of the debt review proceedings;
(ii)
order the debt counsellor to report
directly to the court, and thereafter make an order contemplated in
section 85(b); or
(Hi)
if the credit agreement is the only credit agreement to which the
consumer is a party, order the debt counsellor to discontinue
the
debt review proceedings, and make an order contemplated in section
85(b);
(d)
there is a matter pending before the
Tribunal, as contemplated in subsection
(3)
(b), the court may-
(i)
adjourn the matter before it, pending a
determination of the proceedings before the Tribunal; or
(ii)
order the Tribunal to adjourn the
proceedings before it, and refer the matter to the court for
determination; or
(e)
the credit agreement is either suspended
or subject to a debt re-arrangement order or agreement, and the
consumer has complied with
that order or agreement, the court must
dismiss the matter."(my
emphasis)
12.
Section 86 relied upon by the respondent
deals with debt restructuring and, prior to its amendment, provided:
“
86.
Application for debt review
(1)
A consumer may apply to a debt
counsellor in the prescribed manner and form to have the consumer
declared over-indebted.
(2)
An application in terms of this section
may not be made in respect of, and does not apply to, a particular
credit agreement if,
at the time of that application, the credit
provider under the credit agreement has proceeded to take the steps
contemplated in
section 129 to enforce that agreement
.”!,my
emphasis)
13.
However, subsection (2) was substituted
by section 26(a) of Act 19 of 2014 with the following:
“
(2)
An application in terms of this section may not be made in respect
of, and does not apply to, a particular credit agreement
if, at the
time of that application, the credit provider under that credit
agreement has proceeded to take the steps contemplated
in section 130
to enforce that agreement”(my
emphasis).
14.
The remainder of section 86 has been
left unchanged and goes on to provide:
“
(3)
A debt counsellor-
(a)
may require the consumer to pay an
application fee
,
not
exceeding the prescribed amount, before accepting an application in
terms of subsection (1); and
(b)
may not require or accept a fee from a
credit provider in respect of an application in terms of this
section.
(4)
On receipt of an application in terms of
subsection (1), a debt counsellor must-
(a)
provide the consumer with proof of
receipt of the application;
(b)
notify, in the prescribed manner and
form-
(i)
all credit providers that are listed in
the application; and
(ii)
every registered credit bureau.
(5)
A consumer who applies to a debt
counsellor, and each credit provider contemplated in subsection
(4)(b), must-
(a)
comply with any reasonable requests by
the debt counsellor to facilitate the evaluation of the consumer's
state of indebtedness
and the prospects for responsible debt
re-arrangement; and
(b)
participate in good faith in the review
and in any negotiations designed to result in responsible debt
re-arrangement.
(6)
A debt counsellor who has accepted an
application in terms of this section must determine, in the
prescribed manner and within the
prescribed time-
(a)
whether the consumer appears to be
over-indebted; and
(b)
if the consumer seeks a declaration of
reckless credit, whether any of the consumer's credit agreements
appear to be reckless.
(7)
If, as a result of an assessment
conducted in terms of subsection (6), a debt counsellor reasonably
concludes that-
(a)
the consumer is not over-indebted, the
debt counsellor must reject the application, even if the debt
counsellor has concluded that
a particular credit agreement was
reckless at the time it was entered into;
(b)
the consumer is not over-indebted, but
is nevertheless experiencing, or likely to experience, difficulty
satisfying all the consumer's
obligations under credit agreements in
a timely manner, the debt counsellor may recommend that the consumer
and the respective
credit providers voluntarily consider and agree on
a plan of debt re-arrangement; or
(c)
the consumer is over-indebted, the debt
counsellor may issue a proposal recommending that the Magistrate's
Court make either or
both of the following orders-
(i)
that one or more of the consumer's
credit agreements be declared to be reckless credit, if the debt
counsellor has concluded that
those agreements appear to be reckless;
and
(ii)
that one or more of the consumer's
obligations be re-arranged by-
(aa)
extending the period of the agreement and reducing the amount of each
payment due accordingly;
(bb)
postponing during a specified period the dates on which payments are
due under the agreement;
(cc)
extending the period of the agreement and postponing during a
specified period the dates on which payments are due under the
agreement; or
(dd)
recalculating the consumer's obligations because of contraventions of
Part A or B of Chapter 5, or Part A of Chapter
6.
(8)
If a debt counsellor makes a
recommendation in terms of subsection (7)(b) and-
(a)
the consumer and each credit provider
concerned accept that proposal, the debt counsellor must record the
proposal in the form of
an order, and if it is consented to by the
consumer and each credit provider concerned, file it as a consent
order in terms of
section 138; or
(b)
if paragraph (a) does not apply, the
debt counsellor must refer the matter to the Magistrate's Court with
the recommendation.
(9)
If a debt counsellor rejects an
application as contemplated in subsection (7)(a), the consumer, with
leave of the Magistrate's Court,
may apply directly to the
Magistrate's Court, in the prescribed manner and form, for an order
contemplated in subsection (7)(c).
(10)
(a)
If a consumer is in default under a
credit agreement that is being reviewed in terms of this section, the
credit provider in respect
of that credit agreement may, at any time
at least 60 business days after the date on which the consumer
applied
for
the debt review, give notice to terminate the review in the
prescribed manner to-
(i)
the consumer;
(ii)
the debt counsellor, and
(iii)
the National Credit Regulator; and
(b)
No credit provider may terminate an
application for debt review lodged in terms of this Act, if such
application for review has
already been filed in a court or in the
Tribunal.
(10)
If a credit provider who has given
notice to terminate
a
review
as contemplated in subsection (10) proceeds to enforce that agreement
in terms of Part C of Chapter 6, the court hearing
the matter may
order that the debt review resume on any conditions the court
considers to be just in the circumstances."
ISSUES
FOR DETERMINATION 15. On my analysis the essential issues for
determination are:
15.1.
Whether the service of the section 129
notice prior to the institution of the prior action serves as
sufficient compliance with
the section in respect of the current
proceedings;
15.2.
Whether this Court has jurisdiction to
determine the validity of the notice (which is final in effect) where
this is a substantive
issue on the pleadings which can only be
determined by the trial Court;
15.3.
Whether if the notice is found to be valid, the applicant has, by
withdrawing the prior action and waiting some 18 months before
reinstituting the action, waived its rights to rely thereon in the
current proceedings;
15.4.
Whether the applicant’s rights to debt review in terms of
section 86 of the NCA would be infringed by the re-service of the
section 129 notice which it is argued, on the basis of authority of
the Supreme Court of Appeal, precludes debt review in respect
of the
debt sought to be enforced as soon as a section 129 notice is served.
(Nedbank Ltd v The National Credit Regulator and another
2011(3) SA
581 (SCA)
16. I will deal with
each of these in turn.
THE COURTS
JURISDICTION TO CONSIDER THE VALIDITY OF THE PRIOR SECTION 129 NOTICE
IN THE CURRENT PROCEEDINGS AHEAD OF THE TRIAL
17. It is argued that
it is necessary to consider the validity of the prior notice both for
the purposes of considering the declaratory
relief sought but also as
a pre-requisite to considering the alternative relief in prayers 1
and 2 of the notice of motion. This
is because the court is not
empowered to grant the alternative relief sought in prayers 2 and 3
without making a final definitive
finding on prayer 1. This is on the
basis that the Court is not entitled to exercise its discretion in
terms of section 130(4)(b)(ii)
unless it makes a positive finding on
the issue in prayer 1 that there has been non-compliance with section
129 as if relief is
granted under prayer 1, there would be no need
for any relief under prayers 2 or 3. It is argued that this is an
issue that only
the trial court can decide.
18. I agree with the
former of these views. On a plain reading of subsection 130(4)(b),
the Court would only have discretion to
make directions as to what
steps should be taken to rectify the failure to comply with the
notice where it has “made a determination
that the credit
provider has not complied with the relevant provisions of this Act,
as contemplated in subsection (3)(a)”.
19. The respondent’s
latter argument that only the trial court can make such a
determination is premised on the assumption
that only the trial court
can decide an issue on the pleadings. Were this correct, this would
necessitate a hearing on the issue
by the trial court which, if it is
found that the prior notice is not valid, would require that the
matter be postponed to enable
compliance to take place.
20. This is the very
thing that the applicant wishes to avoid relying on the unreported
judgment of First Rand Bank Limited v Phiri
2013 JDR 068(GNP) which
held that there is nothing to prevent a party from approaching the
court prior to the hearing to give directions
as envisaged in section
130(4)(b)(ii). The Court stated:
“
[1
77
The respondent contended that the trial
court must grant an order giving directions for compliance. This
approach is in my view
not correct. The purpose of sec 130(4)(b) is
to ensure that there is compliance with sec 129. Section 130
envisages
a
postponement
of the matter if there was no compliance with sec 129. In my view
there is nothing that prevent(sic) a party to approach
the court
prior to the hearing of the matter to give directions as envisaged in
sec 130(4)(b)(ii). The legislators’ intention
could not have
been that only the trial court is empowered to postpone and give
directions in this regard or that the adjournment
of the matter
should be adjourned by the trial court. Such a narrow interpretation
of sec 130(4)(b) will not assist the credit
provider or the consumer
as it will only delay the process and cause further costs.”
21. Although this is
an eminently sensible approach, the respondent contended that this
was only permissible where the validity
of the notice given was not
an issue on the pleadings and accordingly the current matter was
distinguishable from that before the
Court in the Phiri matter, where
it was not.
22. The respondent
argues that although the application purports to be an interlocutory
one, the declaratory relief sought is final
in nature in that any
order as sought would “irreparably anticipate or preclude”
a decision on this issue by the trial
court which would not be
appealable. In this respect, reliance was placed upon the decision of
Pretoria Garrison Institutes v Danish
Variety Products (Pty) Ltd
1948(1) SA 839 A at 870 approved by the Supreme Court of Appeal in
Absa Bank Ltd v Mkhize and two similar
cases 2014(5) SA16 (SCA) at
[59] where it was held that:
.
[SJince the decision of this Court in
Globe and Phoenix GM Company v Rhodesian Corporation
(1932 AD 146)
the test to be applied has appeared with some certainty, whatever
difficulty must inevitably remain in regard to its application.
From
the judgments of Wessels and Curlewis JJA, the principle emerges that
a preparatory or procedural order is a simple interlocutory
order and
therefore not appealable unless it is such
as
to
“
dispose
of any issue or any portion of the issue in the main action or suit”
or, which amounts, I think, to the same thing,
unless it “irreparably
anticipates or precludes some of the relief which would or might be
given at the hearing”. The
earlier judgments were interpreted
in that
case
and
a clear indication was given that regard should be had, not to
whether the one party or the other has by the order suffered
an
inconvenience or disadvantage in the litigation which nothing but an
appeal could put right, but to whether the order bears
directly upon
and in that way affects the decision in the main suit’.
23.
An
interlocutory order is one
“
pronounced
by the court, upon matters incidental to the main dispute,
preparatory to or during the progress of, the litigation”{South
Cape Corp (Pty) Ltd v Engineering Management Services (Pty) Ltd
1977 (3) SA 534
(A) at 549; Betiane
v Shelly Court CC2011 (1) SA 388 (CC); Ivanov v North West Gambling
Board and Others
[2012] 4
All SA 1
(SCA)).
24. A distinction,
however, is drawn between simple interlocutory orders, on the one
hand, and interlocutory orders having a final
and definitive effect,
on the other, which are generally regarded as appealable. As was said
in the Pretoria Garrison Institutes
v Danish Variety Products (Pty)
Ltd case (supra) relied upon by the respondent, a “simple"
interlocutory order is a
preparatory or procedural order that does
not “dispose of any issue or any portion of the issue in the
main action or suif
or that “irreparably anticipates or
precludes some of the relief which would or might be given at the
hearing.”
25. It is trite that
any rule or order made in a civil suit or proceeding and having the
effect of a final judgment may be appealed
against (Durban’s
Water Wonderland (Pty) Ltd v Botha
[1999] 1 All SA 411
(A),
1999 (1)
SA 982
(SCA); Ndlovu v Santam Ltd
2006 (2) SA 239
(SCA)).
26. However, even this
distinction has become more fluid with the amendment to Section 18(2)
of the Superior Courts Act, which now
makes specific provision for
appealing interlocutory orders not having the effect of a final
judgment.
27. As Harms, Civil
Procedure in the Superior Courts states:
“
While
the classification of the order might at one time have been
considered to be determinative of whether it is susceptible to
an
appeal the approach that has been taken by the courts in more recent
times has been increasingly flexible and pragmatic. It
has been
directed more to doing what is appropriate in the particular
circumstances than to elevating the distinction between orders
that
are appealable and those that are not to one of principle”.
Phillips v South African Reserve Bank
[2012]
2 All SA 532
(SCA), (221/11)
[2012] ZASCA 38
(29 March 2012) at [26],
28.
However, although the statement by Schreiner JA in Pretoria Garrison
Institutes v Danish Variety Products (Pty) Ltd 1948(1)
SA 839 A at
870 relied upon by the respondent was approved by Ponnan JA in Absa
Bank Ltd v Mkhize and two similar cases 2014(5)
SA16(SCA) at [59],
the learned judge was at pains to point out that there was nothing to
preclude the court from giving directions
as to the further conduct
of the matter and in particular as to the steps to be taken to comply
with
section 129 before default judgment is
proceeded with, which he found were purely interlocutory and would
not be appealable. To
my mind his comments are directly in point:
“
[55]
Section 20(1) of the Supreme Court Act 59 of 1959 creates a right of
appeal to this court from a 'judgment or order
1
of the
high court. Whether a decision is appealable has been the subject of
detailed analysis in a number of cases over the years.
A
comprehensive re-examination of those cases would serve little
purpose. The salient principles to be distilled from those cases
appear in the judgment of Harms AJA in Zweni v Minister of Law and
Order
1993 (1) SA 523
(A). It was said there (at 532J-533A) that a
judgment or order is a decision which, as a general principle, has
three attributes:
first, the decision must be final in effect and not
susceptible to alteration by the court that made it; second, it must
be definitive
of the rights of the parties; and, third, it must have
the effect of disposing of at least a substantial portion of the
relief
claimed in the main proceedings.
[56]
What served before the high court
was
an
application for default judgment. A default judgment is a judgment
entered or given in the absence of the party against whom
it is made.
Ordinarily it arises for consideration in consequence of a failure to
enter an appearance to defend or where there
has been a failure to
file a plea. The high court was concerned with the former. It
postponed the application for default judgment
sine die (paragraph 1
of its order). Had the matter ended there, that order could not have
been described as one having any of
the attributes for appealability
laid down in Zweni. The order went further however.
[57]
In paragraph 2 of its order the high
court ‘afforded fAbsa] an opportunity to provide a notice to
the defendant as contemplated
in
section 129(1)
of the
National
Credit Act of 2005
through one or more of the mechanisms listed in
paragraph 65(2)(a) of the Act, and also by registered post directed
to the defendant's
chosen address’. And, in paragraph 4, which
to all intents and purposes is the logical corollary of paragraph 1,
the high
court granted Absa leave to, in due course, set down the
application for default judgment on notice to the defendant. The
remaining
orders are ancillary orders and thus warrant no independent
consideration.
[58]
There appear to be strong indicators in the judgment of the
high court that the
order that it proposed
issuing was neither definitive of the rights of the parties nor
intended to have the effect of disposing
of any portion of the relief
claimed in the main action. The high court held:
'[60]
I conclude, accordingly, that in the three matters before me there
has not been compliance with the procedures reguired by
section 129
of the Act, as a result of which I must adjourn these matters and
make appropriate orders as to the steps ABSA must
complete before
these matters may be resumed.
[71]
In the three cases before me I do not have all of the information I
have referred to above. But given the exigencies of the
occasion, I
propose to work around that.
[77]
I propose in these cases to leave all options provided by section
65(2) of the Act open. One or more of the other alternatives,
including delivery by hand to the address (if not into the hands of
the consumer), may be found more convenient, or more likely
to
generate a successful application to resume the proceedings,
depending on the information available to ABSA concerning the
consumers in question, and depending on the administrative capacity
and manpower available to ABSA to service these matters.'
1591
To my mind paragraph 2 of the order, on which the present debate
turns, did not render what would otherwise have been a non-appealable
order (paragraph 1). appealable. For, it amounted to no more than a
direction from the high court, before the main action could
be
entered into,
as to
the
manner in which the matter
should
proceed. Being a preparatory or procedural order that was incidental
to the main dispute, it fell into what has been described
as the
general category of ‘interlocutory’,
(my
emphasis).
29. After quoting the
statement by Schreiner JA in Pretoria Garrison Institutes v Danish
Variety Products (Pty), Limited supra quoted
above, Ponnan JA went on
to add that the prior distinction between interlocutory orders, which
are not appealable, and final orders,
which are, is no longer
significant:
[60]
Of the term ‘interlocutory’
Corbett JA stated in South Cape Corporation (Pty) Ltd v Engineering
Management Services
(Pty) Ltd
1977 (3) SA 534
(A) at 549:
‘
In
a wide and general sense the term "interlocutory" refers to
all orders pronounced by the Court, upon matters incidental
to the
main dispute, preparatory to, or during the progress of, the
litigation. ’
Corbett
JA added:
‘
But
orders of this kind are divided into two classes: (i) those which
have a final and definitive effect on the main action; and
(ii)
those, known as "simple (or purely) interlocutory orders"
or "interlocutory orders proper", which do
not...
’
That
distinction, according to Harms JA (Zweni at 534B-D), is now of
little
conseguence.
He explains that ‘the practical implication of s 20(1) is that
the real distinction is between a “judgment
or order" on
the one hand and a decision (conveniently called a “ruling”)
which is not. It is no longer necessary
or conducive to clear
thinking to consider, in this context, whether a decision is a simple
interlocutory order
’
.(my
emphasis)
30. With this in mind,
the learned judge considered the facts before him and held:
[61]
In the present case the ‘main
suit’ or 'main action’ is Absa's claim. An order such as
that in paragraph 2 is,
I conceive, a ‘preparatory or
procedural order’ which does not bear upon or in any way affect
the decision in the main
action. In Tropical (Commercial &
Industrial) Ltd v Plywood Products Ltd.
1956 (1) SA 339
(A) at 344
Centlivres CJ held:
'As
the order made by the trial Judge "decided no definite
application for relief" and
was
merely a direction as to the manner in which the case should
proceed it
was
not an order in the legal sense,
vide
Dickinson's case, supra. Not being an order in the legal sense, it
was not an order which fell within the meaning of the words
"judgment
or order" in sec. 2 (c) of the Act.'
In
Dickinson & another v Fischer’s Executors
1914 AD 424
,
which is referred to with approval by the learned Chief Justice,
Innes CJ stated (at 427):
'But
every decision or ruling of a court during the progress of a suit
does
not amount to
an order. That term implies that there must be a distinct application
by one of the parties for definite relief. The
relief prayed for may
be small, as in an application for a discovery order, or it may be of
great importance, but the Court must
be duly asked to grant some
definite and distinct relief, before its decision upon the matter can
properly be called an order.
A trial Court is sometimes called upon
to decide questions which come up during the progress of a case, but
in regard to which
its decisions would clearly not be orders. A
dispute may arise, for instance, as to the right to begin: the Court
decides it, and
the hearing proceeds. But that decision, though it
may be of considerable practical importance, is not an order from
which an appeal
could under any circumstance lie, apart from the
final decision on the merits.'
[62]
In this matter the high court is yet to
delve into the merits of the case or pronounce on Absa’s
entitlement to judgment.
That remains for another day. To that end
Absa has been granted leave to set down the application for default
judgment on notice
to the defendant. All that has occurred for the
present is that, not being satisfied with the service effected by
Absa, the high
court has directed that certain further steps be
taken. It has not been suggested that those additional steps are so
onerous as
to bar Absa from obtaining default judgment in due course.
In that, Lewis JA and I appear to be at one. For, implicit in my
learned
colleague’s dismissal of Absa’s appeal on the
merits, seems to me to be an acceptance that Absa can indeed comply
with
paragraph 2 of the high court’s order and in due course
move it for judgment.
[63]
The order does not amount to a refusal
of default judgment, nor does it directly bear upon or dispose of any
of the issues in main
action, it thus cannot be said that it is
tantamount to a dismissal of Absa’s action (contra Durban City
Council v Petersen
1970 (1) SA 720
(N) at 723). It may be that the
order of the high court causes Absa some inconvenience but as Harms
AJA, with reference to South
Cape Corporation supra, pointed out
(Zweni at 533B-C): ‘The fact that a decision may cause a party
an inconvenience or place
him at a disadvantage in the litigation
which nothing but an appeal can correct, is not taken into account in
determining its appealability’.
[64]
Accepting that this order is appealable
could result in a situation where virtually every refusal to enter
default judgment, including
those for want of proper service, would
be appealable. That 'would indeed open the door to the “fractional
disposal”
of actions and the “piecemeal hearing of
appeals’” (Levco Investments (Pty) Ltd v Standard Bank of
SA Ltd
1983 (4) SA 921
(A) at 928H). In seeking and obtaining leave
to appeal to this court, no consideration was given by Absa or the
high court as to
whether the order
was
indeed appealable. Thus the fact that
the
high
court granted leave carries the matter no further, since its power to
do so arises only in respect of ‘a judgment or
order"
within the meaning of that expression. In truth the matter
was
approached as if an appeal lies against
the reasons for judgment. It does not. Rather, an appeal lies against
the substantive order
made by a court. (Western Johannesburg Rent
Board & another v Ursula Mansions (Pty) Ltd
1948 (3) SA 353
(A)
at 355.)
[65]
It follows in my view that as the order
of the high court is not 'a rule or order having the effect of a
final judgment' within
the meaning of that expression, this court
lacks jurisdiction to entertain the appeal. I am thus constrained to
hold that the appeal
must be struck off the roll with
cosfs.”(my emphasis)
31. Accordingly, when
viewed in context, the approval by the Supreme Court of Appeal of the
statements of Schreiner JA, far from
supporting the argument advanced
by the respondent, served to refute it. What the applicant seeks in
this case is to have the court
make a determination as to the
validity of the prior notice in the current proceedings and in the
event that it is found that the
prior notice was is not valid, to
seek directions as to the further conduct of the matter similar to
those given by the court a
quo in the aforementioned matter which
would not be appealable as it would not be dispositive of a
substantial issue in the main
action.
32. In the
circumstances, I do not believe that the fact that the issue of non-
compliance with the NPA was not an issue in the
pleadings in the
Phiri matter, in any way distinguishes it from the current situation
and either way, this court, is empowered
to make an determination as
to the validity of the section 129 notice and give directions as to
the adjournment of the proceedings
and the service of the notice
prior to the matter being permitted to resume. I thus agree with and
am bound by the approach taken
by the North Gauteng High Court in the
aforementioned matter.
33. In any event, in
so far as it is contended that any declarator made or directions
given would in effect be dispositive of an
issue on the pleadings
where the validity of the prior notice is challenged, there is
nothing to preclude the court from considering
an issue on the
pleadings ahead of the trial where this would be convenient.
34. In effect the
Court is asked to make a determination of the matter on a separated
issue in advance of the hearing to ensure
that should the applicant’s
contentions be found to be wrong concerning the validity of the prior
notice, it can remedy the
defect prior to the hearing as contemplated
in section 130 and avoid the unnecessary postponement of the matter
on the date of
the trial.
35. I believe that the
fallacy in the respondent’s argument is that only the trial
court can decide issues defined in the
pleadings and the parties may
not approach the court prior to the hearing to seek make a finding of
an issue on the pleadings or
give directions which would be
definitive and final in effect. The parties often do so and indeed,
the court in so- called “interlocutory
proceedings" often
do make orders that are final in effect which are, because of this,
appealable. One need only consider
an application to determine a
special plea ahead of a trial (Labuschagne v Labuschagne; Labuschagne
v Minisiter van Justisie
1967 (2) SA 575
(A);Smit v Oosthuizen
1979
(3) SA 1079
(A); Constantia Insurance Company Ltd v Nohamba
1986 (3)
SA 27
(A); Carolskraal Farms (Edms) Bpk v Eerste Nasionele Bank van
Suider- Afrika Bpk
[1994] ZASCA 23
;
1994 (3) SA 407
(A) at 415B -416DJ or separately
determine an issue on the pleadings that would dispose of the need to
determine the other issues
(Van Streepen &Gems (Pty) Ltd
Transvaal Provincial Administration 1987(4) SA 569 (A); Marsay v
Dilley 1992(2) SA 944 (A); SA
Eagle Versekeringsmaatskappy Bpk v
Harford 1992(2)SA786 (A) at 792C-Hj or to consider an exception to a
pleading which would, if
upheld, be final in effect and appealable
(Elgin Brown and Hamer (Pty) Ltd v Industrial Machinery Suppliers
(Pty) Ltd
[1993] ZASCA 55
;
1993 (3) SA 424
(A); Trakman NOvLivshitz
1995 (1) SA 282
(A) at 289 l-J).
36. Indeed, should a
party not take an exception upfront and wait for the trial court to
decide the issue, even if the exception
is upheld, that party may be
penalized for unnecessarily incurring trial costs that should
properly have been avoided. Similarly,
where an issue decisive of the
matter could be separated out and determined upfront, where a party
fails to do so, it could also
be penalized for unnecessarily
incurring trial costs on the other issues that, by virtue of such a
finding, did not need to be
decided.
37. These procedures,
aimed at the efficient administration of justice, entitle the parties
to approach the court in advance of
the hearing for declaratory
relief, to determine whether the claim is valid in law or a separated
issue and thereby avoid the unnecessary
incurrence of costs.
38. It is trite that
in terms of Rule 33(4) an application for separation and to determine
a separated issue may be made prior to
the trial on notice, setting
out the grounds for it (Sibeka v Minister of Police
1984 (1) SA 792
(W)).
39. Although the
respondent contends that the issue of the validity of the prior
section 129 notice may not be determined as a separated
issue as no
formal application for separation has been brought, the court may
order a separation mero motu, without an application
from any party
where the Court deems it to be convenient to do so (Hotels, Inns and
Resorts SA (Pty) Ltd v Underwriters at Lloyds
1998 (4) SA466 (C);
Berman & Fialkov v Lumb
[2002] 4 All SA 432
(C),
2003 (2) SA 674
(C) par 17, Haupt t/a Soft Copy v Brewers Marketing Intelligence
(Pty) Ltd
2005 (1) SA 398
(C) 427).
40. Indeed, Rule 33(4)
as presently formulated provides that an application for separation
made by any party must be ordered unless
it appears that the
questions cannot conveniently be decided separately.
41. The word
'convenient in the context of the sub-rule is not used to convey the
notion of facility, or ease, or expedience. As
Harms op cit puts it:
“
[i]t
appears to be used to convey the notion of appropriateness; the
procedure would be convenient if, in all the circumstances,
it
appeared to be fitting, and fair to the parties concerned\
42. As to what
convenient means, the following quotation is instructive, although it
dealt with the rule in its initial form:
“
The
basis of the jurisdiction is convenience - the convenience not only
of the parties but also of the Court. The advantages and
disadvantages likely to follow upon the granting of an order must be
weighed. If overall, and with due regard to the divergent
interests
and considerations of convenience affecting the parties, it appears
that the advantages would outweigh the disadvantages,
the Court would
normally grant the application. When deciding an application under
the sub-rule, the Court is not called upon to
give a decision on the
merits. But it must consider the cogency of the point concerned,
because unless it has substance a separate
hearing would be a waste
of time and costs. So, the Court should not grant an application for
a separate hearing “unless
there appears to be a reasonable
degree of likelihood that the alleged advantages would in fact
result’.
( see: S
v
Malinde
[1990] 4 All SA 45
(A),
1990 (1) SA 57
(A) 68)
43. Thus, even if the
relief sought is not regarded as strictly speaking interlocutory
because it is an issue on the pleadings (which
I refute), in my view
it is convenient that this issue be separately determined. Although
section 33(4) was not expressly invoked,
I agree with the applicant
that the application brought is pre-emptive in nature and the Court
is entitled to invoke the provisions
of section 33(4) mero motu where
this is convenient.
44. I can see no
prejudice to the respondent in determining this issue upfront. The
respondent has not disputed proper delivery
of the prior notice as
required in terms of section 129(5) of the NCA and the Constitutional
Court in Sebola v Standard Bank of
South Africa Limited 2012 (5)SA142
(CC); on the contrary I am told that he admitted receipt of the prior
notice under oath in his
application for rescission of the default
judgment that had been granted pursuant to the prior action (which is
not before me)
and has implicitly admitted receipt of the notice in
paragraph 25.2.1 of his plea in the current matter. As the respondent
has
not denied proper delivery of the notice, the issue of its
validity is simply one of law for which no oral testimony is
necessary.
And even if the respondent’s general denial of these
averments in paragraph 25.1 of his plea can be construed as denying
receipt of the prior notice when read with paragraph 25.2, that issue
would be academic should the Court direct that a new notice
be sent
to the respondent, which is what I propose to do.
45. It must be
remembered that it is incumbent upon the courts to protect both the
rights of a debtor, but also those of a creditor
against a
recalcitrant debtor seeking to delay the matter. Justice delayed is
justice denied and I am in agreement that it seems
a little pointless
to require the applicant to await the hearing where the court would
be required to consider the question of
the validity of the prior 129
notice upfront before the hearing could continue, where another Court
could equally as well determine
this issue.
46. I intend
therefore, to consider the validity of the prior notice both for the
purposes of considering the declaratory relief
sought and, in the
event that the prior notice is found to be bad, to consider the
alternative relief sought.
47. Although the
respondent has also contended that its dispute as to the validity of
the prior notice goes beyond the question
as to whether the notice
served in the prior action serves as sufficient compliance with the
mandatory provisions in section 129
of the NCA and also goes to the
quantification of the amount claimed which can only be determined by
the trial court after hearing
oral testimony and cross-examination on
this issue, I do not believe that this is a bar to my determining the
validity of the prior
notice.
48. The respondent
contends that the validity of the prior notice can only be properly
determined by the trial court because the
notice is not only a notice
in which the respondent’s rights are required to be set out,
but is also a statement of the extent
of his indebtedness which, so
it is argued, it is implicit in section 129 must be a true and
accurate reflection of such indebtedness
which can only be determined
by the trial court.
49. I do not agree.
The fact that the respondent has disputed the accuracy of the amount
sought in the notice and the interest rate
charged is not a basis for
challenging the validity of the notice; it is a defence that he can
raise at the trial by disputing
the amount sought. Upholding the
validity of the notice would in no way prejudice his right to dispute
the amount claimed and to
lead oral evidence thereon at the trial.
50. However, I believe
that a notice that does not set out the full amount of the arrears
prior to the institution of the action
would not be sufficient as it
would preclude the respondent from exercising his rights to pay the
arrear amount set out in the
notice and thereby reinstate the
agreement under section 129(3), which is an aspect that I will deal
with below.
THE
VALIDITY OF THE PRIOR NOTICE
51. The plain intent
of section 129 is to facilitate dispute resolution without recourse
to the Courts and it has been accepted
by the Courts that despite the
fact that the section has been poorly drafted with section 129 using
the word “may”,
suggesting that the sending of a section
129 notice may not be obligatory, because of the prescriptive nature
of section 130 prescribing
that the matter shall not continue unless
such a notice is sent, it has been accepted by the courts that this
is a mandatory requirement
before any action to enforce a credit
agreement may be taken or proceeded with (Nedbank Ltd v The National
Credit Regulator and
Another supra at para [8]).
52. I agree with the
applicant that a notice in accordance with section 129 “is not
related to a particular case number but
rather to a specific cause of
action and precedes the institution of action and perforce, a case
number"’. However,
the difficulty, as I see it, in
allowing the applicant to rely on the prior notice in respect of
proceedings launched some 18 months
later is not so much one of
waiver, as argued by the respondent (which I will deal with
separately), but rather whether such notice
can in reality achieve
the purpose and intent of the NCA not only to engage the services of
a debt counsellor to facilitate the
consensual resolution of the
matter without recourse to the courts, but also to afford the debtor
the opportunity to reinstate
the credit agreement by paying the
arrears and reasonable costs due.
53. This latter right,
although not focused on by the respondent, was the subject of a
recent Constitutional Court judgment in Nikata
v Firstrand Bank
Limited and others (CCT73/15)
[2016] ZACC 12
;
2016 (6) BCLR 794
(CC);
2016 (4) SA 257
(CC) (21 APRIL 2016), to which I was not referred by
counsel as I assume it was not yet reported.
54. In terms of
section 129(3), the consumer is entitled to pay the arrears and
thereby reinstate the agreement and prevent the
invocation of the
acceleration clause in the agreement. As 18 months have elapsed since
the last notice was sent, the arrears would
have substantially
increased since the sending of the last notice where interest is
capitalized as is the norm with credit agreements.
This means that
the payment of the arrear amount of R49 590.72 reflected in the prior
notice (together with costs) would in no
way enable the respondent to
reinstate the agreement and avoid the invocation of the acceleration
clause in the agreement. The
respondent is substantially prejudiced
hereby as the certificate of balance currently relied upon reflects
the total outstanding
balance and not the arrears due as at the date
of reinstitution of the action.
55. Whilst the debate
whether the respondent would also have to pay the costs incurred by
the applicant in seeking enforcement of
the agreement is not relevant
to the current matter, the Courts interpretation of the purpose of
the NCA in the Nkita matter (supra)
is instructive. Cameron J stated
that:
“
[53]
I have had the benefit of reading the judgment of my colleague,
Moseneke DCJ. We agree on this fundamental premise: in interpreting
section 129(3), we must bear in mind the NCA’s aims. The
statute tells us what they are, and how they are to be achieved.
It
aims to protect consumers by “promoting equity in the credit
market by balancing the respective rights and responsibilities
of
credit providers and
consumers'We
also agree that the statute’s
express objectives mean that the correct interpretation of section
129 is one that strikes an
appropriate balance between the competing
interests of parties to a credit agreement. That is what this Court
has previously held.(
I have
omitted the references in this extract and in the further extracts
from the judgment quoted hereafter.)
56. Cameron J went on
to explain that the main purpose of section 129 was to avoid the
harsh consequences of the invocation of acceleration
clauses found in
most credit agreement stating that:
[59]
Historically, creditors to whom
properties were mortgaged were entitled contractually to refuse late
payment of home loan instalments.
Only payment of the full
outstanding accelerated amounts (not just the arrears) would save a
mortgagor’s property. Section
129(3) has drastically changed
this. Justly so. It offers a consumer in dire circumstances a
lifeline. It spares consumers the
harshness of that era of
debtor-unfriendly laws. It protects consumers who face the sale in
execution of their properties by allowing
them to reverse the credit
provider's
election to foreclose. But it does so on conditions. The consumer
must fulfil the requirements for reinstatement. Simply
bringing
arrear bond instalments up to date is not enough.
[60]
The provision is specifically designed
to counter the harsh effects of an acceleration clause. It makes good
sense - and just sense
- for the consumer to bear the responsibility
of initiating the process and taking the necessary steps, including
those required
to pay the enforcement costs. There is no suggestion
that the Bank
was
obstructive
or tried deliberately to frustrate reinstatement. There is no good
reason to exonerate Ms Nkata from the responsibility
the statute
places on her and instead impose it on the Bank.
[61]
This approach does not render the
statute’s protection of consumers nugatory - it simply sustains
the balance the statute
itself imposes. So whilst I agree with
Moseneke DCJ, that the statute must be interpreted purposively and
contextually
t
a degree of caution must be exercised in doing
so. That much we decided in Kubyana:
“
[LJegislation
must be understood holistically and, it goes without saying,
interpreted within the relevant framework of constitutional
rights
and norms. However, that does not mean that ordinary meaning and
clear language may be discarded, for interpretation is
not divination
and courts must respect the separation of powers when construing Acts
of Parliament. ” (footnotes omitted)
[62]
The purposes of the NCA are manifold.
While it aims to correct imbalances by providing additional rights
and protections to the
consumer, it also aims to ensure that South
Africa’s credit market becomes and remains “competitive,
sustainable, responsible
[and] efficient”. Sections 3(c) and
(g) outline the importance of “responsible borrowing”,
the “fulfilment
of financial obligations by consumers”,
and “discouraging . . . contractual default by consumers”.
These provisions
signal that the legislation must be interpreted
without disregarding or minimising the interests of credit providers
.
[63]
To borrow the words of Mhlantla AJ in
Kubyana:
“
It
deserves re-emphasis that the purpose of the [NCA] is not only to
protect consumers, but also to create a ‘harmonised system
of
debt restructuring, enforcement and judgment, which places priority
on the eventual satisfaction of all responsible consumer
obligations
under credit agreements’.” (Emphasis in original and
footnote omitted.)
[64]
In addition
—
“
[o]ne
of the main aims of the [NCA] is to enable previously marginalised
people to enter the credit market and access much needed
credit.
Credit is an invaluable tool in our economy. It must, however, be
used wisely, ethically and responsibly. Just as these
obligations of
ethical and
responsible
behaviour apply to providers of credit, so too to consumers. . . The
notion of a ‘reasonable consumer’ implies
obligations for
both credit providers and consumers. ”
(footnotes
omitted)
57.
In a separate dissenting judgment
Moseneke J also dealt with the purpose of the NCA and stated:
[92]
It is now expedient to undertake the
interpretive task. As I do, I acknowledge that my approach has drawn
generously from the cogently
reasoned judgment of the High Court. But
first, I remind myself of the overarching objects of the Act and the
narrower purpose
of section 129(3) and what it lays down.
[93]
Section 2 of the Act, somewhat
redundantly, enjoins us to interpret the provisions of the Act in a
way that gives effect to its
purposes. The purposes are described in
section 3. They are optimistic but sometimes in tension. They are
about credit markets
made up of credit providers and consumers of
credit. Section 3 makes the point that the legislation is meant to
advance both “social
and economic welfare". It hopes to
find a balance between the rigour of an “efficient, effective
and accessible credit
market and industry’’, often driven
by profit, and measures “to protect consumers” propelled
by social
good. It places a premium on "sustainable market
conditions”, but also helps access to credit. For now, I single
out
two poignant purposes
—
“
(d)
promoting equity in the credit market by balancing the respective
hghts and responsibilities of credit providers and consumers;
(e)
addressing and correcting imbalances in
negotiating power between consumers and credit providers. ”
[94]
The Act seeks to infuse values of
fairness, good faith, reasonableness and equality in the manner
actors in the credit market relate.
Unlike in the past, the sheer raw
financial power difference between the credit giver and its much
needed but weaker counterpart,
the credit consumer, will not always
rule the roost. Courts are urged to strike a balance between their
respective rights and responsibilities.
Yes, debtors must diligently
and honestly meet their undertakings towards their creditors. If they
do not, the credit market will
not be sustainable. But the human
condition suggests that it is not always possible - particularly in
credit arrangements that
run over many years or decades, as mortgage
bonds over homes do. Credit givers serve a beneficial and
indispensable role in advancing
the economy and sometimes social
good. They too have not only rights but also responsibilities. They
must act within the constraints
of the statutory arrangements. That
is particularly so when a credit consumer honestly runs into
financial distress that precipitates
repayment defaults. The
resolution of the resultant dispute must bear the hallmarks of
equity, good faith, reasonableness and equality.
No doubt, credit
givers ought to be astute to recognise the imbalance in negotiating
power between themselves and consumers. They
ought to realise that at
play in the dispute is not only the profit motive, but also the
civilised values of our Constitution.
[95]
On what I have just expressed, I am in
good company. This Court has before expressed itself on the purposes
of the Act. In Sebola,
in the context of section 129(1)(a) of the
Act, Cameron J observed that at the core of the Act is the objective
to protect consumers.
This protection, however, must be balanced
against the interests of credit providers and should not stifle a
“competitive,
sustainable, responsible, efficient [and]
effective . . . credit market and industry”. The Act, the Court
noted, replaces
the apartheid era legislation that regulated the
credit market, and infuses constitutional considerations into the
culture of borrowing
and lending between consumers and credit
providers.
[96]
The purposes of the Act are directly
attributable to the constitutional values of fairness and equality.
Sebola recognised that
the Act is at pains to create a credit
marketplace that agrees with our constitutional democracy both
through its purpose - to
promote “a
fair.
. . marketplace for access to consumer credit” - as well as
through the means that ought to be adopted to achieve these goals.
The tools for achieving the Act’s purposes include the
promotion of “equity in the credit market by balancing the
respective rights and responsibilities of credit providers and
consumers", and the development of “a consistent and
accessible system of consensual resolution of disputes arising from
credit agreements”. In sum, the Act is “a clean
break
from the past” and encourages dialogue between consumers and
credit providers.
[97]
Kubya sought to clarify the
interpretation of section 129(1) that was adopted in Sebola and had
been understood and applied in conflicting
ways in other courts. It
relied on Sebola to make the point that the provision aspires “to
facilitate the consensual resolution
of credit agreement disputes”.
[98]
In Ferris, the issue
was
whether a credit provider could enforce,
without further notice, a credit agreement once the consumer breached
a debt restructuring
order in terms of section 86(7)(c)(ii) of the
Act. The Court recognised that Sebola stressed the means to be
employed in order
to achieve the purposes of the Act. It held that
the good faith negotiations required by section 86(5) in an
application for debt
review were aimed at the parties reaching an
agreement before the need for a debt restructuring order. Once the
order had been
granted, then the requirement for negotiations set by
section 86(5) became superfluous.
58.
Nugent AJ also expressed similar
sentiments in a judgment concurring with Cameron J:
“
[141]
When home loans are made against the security of a mortgage bond, the
agreement generally requires the borrower to repay the
loan, with
compounded interest, in monthly instalments. If the borrower fails to
pay an instalment the full amount then outstanding
becomes repayable
to the bank. Unless new arrangements are made with the bank it can be
expected that the borrower will not be
able to repay the debt and the
process for recovery will be set in motion. Demand will be made,
summons will be issued, judgment
will be taken, a writ of execution
will be issued, the property will be attached, and ultimately it will
be sold. At each point
in that process the bank will incur costs of
various kinds. That
was
the
form of the agreement in this case and those were the consequences
that followed upon default.
[142]
For good reasons eloquently expounded by
my colleagues, section 129(3) of the Act makes inroads upon the
ordinary right of the bank
to recover the loan upon default. The
borrower may at any time - from the time the default occurs right
until the eve of the sale
-
interrupt the process and restore the
earlier position. To do so he or she must fulfil three conditions:
(i) all amounts overdue
(the instalments required to have been paid
by that time) must be paid; (ii) the bank’s permitted default
charges (if any)
must be paid; and (iii) the reasonable costs
incurred by the bank until then in enforcing the agreement (if any)
must be paid.
[143]
I agree with my colleagues that
fulfilment of the conditions need not be communicated to the bank.
All that is required is that
they must be fulfilled, whereupon the
agreement is automatically reinstated by operation of law, by which
is meant the position
before default is restored.
[144]
The section affords powerful protection
to borrowers who fall into temporary distress (or carelessness) at
any time until the loan
is repaid. But it requires the borrower to
comply with its conditions if he or she is to have that protection.
The language in
which the conditions have been expressed is
straightforward, and I see nothing, in the context or its purpose,
not to construe
it for what it says. ”
59. Bearing these
sentiments in mind, it would be wrong to deprive the respondent of an
important lifeline that would enable him
to avoid the consequences of
his default and I am inclined to direct that a new section 129 notice
be sent to the respondent.
60. I am aware that
the applicant avers that the objections raised by the respondent are
but delaying tactics and that he does not
in fact wish to avail
himself of the substantial remedies afforded to him by section 129.
It points out that no attempt was made
by the applicant to avail
himself of the available remedies when the prior notice was served
and he has steadfastly refused to
avail himself of these remedies
although they have repeatedly been tendered to him. However, the
respondent’s stance has
not been that he does not want to avail
himself of these remedies but rather that he is precluded by virtue
of the provisions of
section 86(2) from doing so now that a section
129 notice has been dispatched and summons has been served on him.
61. As I will
demonstrate below, that difficulty has now been cured by the
amendment to section 86(2) when read with the findings
of the Supreme
Court of Appeal in Nedbank Ltd v The National Credit Regulator and
Another (supra). It is thus hoped that the respondent
will avail
himself of his rights to seek the assistance of a debt counsellor to
negotiate a way forward with the applicant or take
steps to pay the
arrears owing together with the requisite costs to reinstate the
agreement. Because this will play out before
the trial, should the
respondent not avail himself of his rights or have no intention of
doing so, he will not be permitted to
delay the trial.
62. This serves as
another cogent reason for having this issue determined in advance of
the trial as it has been fully appreciated
by the Constitutional
Court that whilst the NCA affords considerable protection to
consumers, this is not at the expense of the
rights of credit
providers to be paid and the Act should not be used as a mechanism by
dilatory consumers to avoid or delay having
to pay their debts.
WAIVER
63. The respondent
argues that as the summons in the original action was a nullity one
can only look at the summons in the current
action issued some 18
months later. As there is an inherent assumption that the summons
will be issued within a reasonable time
after the issue of the
notice, so the argument goes, the applicant has waived its right to
rely upon the notice to enforce the
agreement as, like in the case of
a breach of contract, the applicant must exercise his rights within a
reasonable time. (Becker
v Sunnypine Park(Pty) Ltd
1982 (1) SA 958
W
at 962 D/E-965C)
64. Because I have
found that the prior notice is not valid for the reasons set out
above, it is not strictly necessary for me to
decide the issue of
waiver. Nevertheless, I do not accept the respondent’s
argument. Firstly, the issuing of the notice is
evidence of the
applicant’s intention to exercise its rights to enforce the
credit agreement. It did not by withdrawing the
action indicate that
it no longer wished to exercise its rights; its abandonment of the
judgment did not evince an intention not
to enforce that right but
rather an acceptance that the service of the summons may not have
been valid.
65. Why it took 18
months for the applicant to again seek to enforce the agreement is
not clear but the only restriction in section
129 is that a creditor
is precluded from enforcing a credit agreement for 10 business days
after issuing the requisite notice to
avail the debtor if an
opportunity to avail himself of his rights set out in such notice. A
delay in enforcing a right does not
per se amount to a waiver.
(Zuurbekom Ltd v Union Corp Ltd[1947]
1 All SA 319
(A),
1947 (1) SA
514
(A)]Mahabeer v Sharma NO
1985 (3) SA 729
(A)).
66. However, I do
believe that there is some merit in the contention that to be
meaningful, the notice should be current and a notice
delivered on 29
May 2012 may not be meaningful in respect of an action instituted in
November 2014, particularly with regard to
the amount of the arrears
which if paid, would entitle the respondent reinstate the agreement
and avoid the invocation of the acceleration
clause as
aforementioned.
67. What remains to
consider, therefore, is whether, having found that the prior notice
does not constitute sufficient compliance
with section 129, the court
is permitted to enable the applicant to cure this defect by reissuing
a section 129 notice as contemplated
in section 130(4) in view of the
provisions of section 86(2) . I will demonstrate that this argument
is without merit in view of
the amendment to section 86(2) and the
view expressed by the Supreme Court of Appeal in the matter of
Nedbank Ltd v The National
Credit Regulator and Another (supra).
SEPARATION OF POWERS
AND CONSTITUTIONALITY OF SECTION 129 WHEN READ WITH SECTION 86(2) OF
THE NCA
68. The main argument
raised by the respondent to the issuing of a new notice is that this
would not help as once a notice has been
issued and a summons served,
as in this case, the respondent is ipso facto precluded from
exercising his rights as set out in such
notice. This was based upon
the original wording of section 86(2) which provided that a debtor
may not avail himself of debt review
if the credit provider has
proceeded to take steps contemplated in section 129 to enforce the
agreement. The respondent argues
that this means that once the
section 129 notice is issued, (or alternatively in the event that,
that notice is not found to be
valid, summons is issued), the debtor
is from that moment precluded from seeking debt review. Thus,
regardless of the provisions
of section 130(4)(b)(i) requiring that
the proceedings to be adjourned to afford the debtor an opportunity
to seek debt review
(which, it is argued, can be the only purpose for
requiring that the notice be issued) this can be of no consequence as
the issuing
of the notice itself constitutes the first step in
enforcement of the credit agreement which then precludes debt review.
69. Alive to this
difficulty the courts have hitherto tried to fashion their orders
under section 130(4)(b)(ii) to declare that
despite the wording of
section 86(2) and the issuing of the summons, the debtor’s
rights set out in the notice remain unaffected.
In this respect
reference is made to
the orders
made in Mkhize
(supra) and
Nedbank Ltd v Binneman and Thirteen Similar Cases
2012
(5) SA 569
(WCC) which stipulated that in addition to meeting the
requirements of section 129(1) (a) of the NCA, the notice required to
be
served must also draw the debtor’s attention to the fact
that
“
the defendant’s
rights in terms of the Act and in particular those contemplated in
section 129(1) (a) are unaffected by the
fact that action has already
been instituted,
”
(as
stated in Mkhize (supra)
at
para [38]) or that
“
the
defendant’s rights in terms of the Act remain unaffected by the
above direction"
(as
stated in Binneman (supra)
at
para [ 13]).
70. The respondent’s
counsel argued that in making such orders, the Courts were in effect
seeking to amend the legislation,
which, by virtue of the separation
of powers enshrined in the Constitution, the courts are not permitted
to do; legislation can
only be amended by the legislature.
71. Whilst I have a
great deal of sympathy for the pragmatic approach taken by the Courts
to deal with the apparent lacuna in the
Act, I agree with the
respondent’s counsel that the aforementioned discretion would
not encompass making directions purporting
to confer substantive
rights on the consumer to seek debt review within a period of 10
business days before the matter may be resumed
which are in direct
conflict with section 86(2).
72. The respondent’s
argument and these judgments, however, in this regard was prefaced
upon the wording of section 86(2)
prior to its amendment which now no
longer refers to section 129 but rather to section 130.
73. Prior to its
amendment effected by the National Credit Amendment Act
19
of 2014, it appeared that the debt review process, which, prior
to the decision of the Supreme Court of Appeal in Nedbank Ltd v The
National Credit Regulator and Another (supra) was viewed by some as
being akin to that envisaged in section 129, was available
only where
steps had not been taken to enforce the debt. Because the serving of
a section 129 notice was seen as the first mandatory
step required in
seeking to enforce a debt, there seemed little point in informing a
debtor of his rights set out in section 129
as, as soon as the notice
was served, he was deprived of these rights by the wording of section
86 (2). There also seemed little
point in adjourning the proceedings
in terms of section 130(4)(b) to ensure that such a notice be given
so that the debtor was
not deprived of his rights where the fact that
summons had been issued, meant that the debtor had already been
deprived of his
rights to debt review.
74. Prior to the
decision of the Supreme Court of Appeal in Nedbank Ltd v The National
Credit Regulator and Another (supra), this
was the subject of much
debate by the provincial divisions of our Courts. In Nedbank v
Motaung
[2007] ZAGPHC 367
(14 November 2007) the court interpreted
section 86(2) as meaning that once a section 129(1)(a) notice had
been sent to the debtor,
he was debarred from seeking debt review and
in Absa Bank Ltd v Prochaska t/a Bianca Cara Interiors 2009(2) SA 512
D at 519D, it
was held that once a section 129 notice had been sent,
the consumer was precluded by section 86(2) from applying to a debt
counselor
to be declared over-indebted. (See also Standard bank of
South Africa v Hales 2009(3) SA 315 D.)
75. In an attempt to
get over this difficulty, the parties in National Credit Regulator v
Nedbank Ltd and others 2009(6) SA 295
(GNP) agreed that the court
should make an order to the effect that the reference in section
86(2) to the taking of a step in terms
of section 129 to enforce a
credit agreement is a reference to the commencement of legal
proceedings mentioned in section 129(1)(b)
and does not include steps
taken in terms of section 129(1 )(a) to serve the requisite notice.
This was to make it clear that the
delivery of a section 129(1)(a)
notice does not constitute a bar to debt review as contemplated in
section 86(2).
76. However Du Plessis
J declined to make such an Order finding that, while section 129(1
)(a) envisages alternative dispute resolution
and a plan to bring the
arrears up to date, it does not envisage general debt restructuring
under sections 86 and 87 (at para 43).
He also found that in any
event, even steps in terms of section 197(1)(a) are preliminary to
debt enforcement and thus was not
satisfied that the parties were
correct in their interpretation.
77. The Supreme Court
of Appeal agreed and made it plain that once a section 129 notice is
served in respect of the particular debt
sought to be enforced, this
precludes debt review in respect of that debt but does not preclude
the debtor seeking debt review
in respect of the debtor’s other
debts ( Nedbank v The National Credit Regulator ( supra)).
78. In this respect
the Supreme Court of Appeal stressed that it is important to
distinguish the rights that a creditor has in terms
of section 129
from those conferred upon a debtor to seek debt review of his entire
indebtedness under sections 85 and 86 which
seeks, not only to
resolve the debtors difficulties with regard to the agreement sought
to be enforced, but rather, his entire
financial situation.
79. The court
explained that the purpose of the section 129 notice is markedly
different from the debt restructuring contemplated
in section 86 and
87. Section 129 is designed to afford the debtor the opportunity to
resolve the dispute or to develop a plan
to remedy his default of a
specific credit agreement prior to the enforcement of the agreement
and thereby avoid the risk of a
judgment being granted against him;
it does not contemplate a general debt restructuring as envisaged by
sections 86 and 87 of
the NCA. (See also BMW Financial Services (SA)
Pty ltd v Mudaly 2010(5)SA 618(KZD) para 12; BMW Financial Services
(SA) Pty ltd
v Donkin
2009 (6) SA 63
(KZD) par 10; National Credit
regulator v Nedbank Ltd and Others 2009(6) SA 295 (GNP) 319A which
had expressed a similar view.)
80.
In dealing with Du Plessis J’s
refusal to grant the declaratory relief sought, Malan JA stated as
follows:
[7]
The question posed by the Credit
Regulator has been and still is the subject of considerable academic
debate. Boraine and Renke
remarked that '[t]o interpret s 86(2) to
read that the delivery of the s 129(1)(a) notice to the consumer
means that the credit
provider has proceeded to take steps to enforce
the agreement (with the effect that no application for debt review
may be made)
would be nonsensical as it is proposed in the s
129(1)(a) notice that the consumer refer the matter to a debt
counsellor
1
.
[8]
Despite the use of the word 'may' in s
129(1) (a) the notice referred to therein is indeed a mandatory
requirement prior to litigation
to enforce a credit agreement This is
apparent when the subsection is read with ss 129(1)(b) and 130(1).
Section 129(1) has been
described as a 'gateway' or 'new
pre-litigation layer to the enforcement process'. Delivery of the s
129(1)(a) notice was said
to be a compulsory step 'devised by the
legislature in an attempt to encourage parties to iron out their
differences before seeking
court intervention' As such it was said to
give effect to the object of the NCA set out in s 3(h) by encouraging
'a consistent
and accessible system of consensual resolution of
disputes arising from credit agreements', and as such it is also
consistent with
s 3(i). This construction is the subject-matter of
the appeal by the Credit Regulator. It is not only the subject of the
academic
debate referred to but also of conflicting decisions^ An
analysis of the relevant provisions is thus required.
[9]
The notice required by s 129(1) (a)
refers to a specific credit agreement in respect of which the
consumer is in default. It must
'propose' that the consumer refer the
credit agreement to a debt counsellor, alternative dispute resolution
agent, consumer court
or ombud 'with the intent that the parties
resolve any dispute under the agreement or develop and agree on a
plan to bring the
payments under the agreement up to date'. The s
129(1)(a) notice deals with one credit agreement only and seeks to
bring about
a consensual resolution relating to that agreement. It
does not contemplate a general debt restructuring as envisaged by ss
86
and 87. As was stated by Wallis J in Mudaly's case, '[t]he
proposal is directed at achieving a situation where the consumer and
the credit provider, through the agency of the debt counsellor,
negotiate a resolution to the consumer's particular difficultiesunder
a particular credit agreement. It is a consensual process, the
success or failure of which will depend upon whether the parties
can
arrive at a workable basis upon which to resolve the issues caused by
the consumer's default.'
[10]
The scope ofs 86, on the other hand, is
general and deals with an application by a consumer to be declared
over-indebteded
L
It is concerned with the obligations under all the credit agreements
to which he is a party. A consumer is over-indebted if the
preponderance of the available information at the time the
determination is made, indicates that he will be unable to satisfy in
a timely manner all his obligations under all the credit agreements
to which he is a party having regard to his financial means,
prospects and obligations and the probable propensity to satisfy them
in a timely manner, as is indicated by his history of debt
repayment.
The application to be declared over-indebted or, as it is referred to
in the heading ofs 86, for debt review, is made
to a debt counsellor.
The outcome of this application may be an order of the ^magistrates'
court declaring one or more of the credit
agreements reckless or
rearranging one or more of the consumer's
obligations.
As I have said, the notice envisaged by s 129(1)(a) is specific and
refers to a particular credit agreement calling
on the parties to
resolve their dispute and agree on a plan to bring the payments up to
date. It is not directed at a declaration
of over-indebtedness at
all.
[11]
Section 86(2) states that an application
for debt review 'may not be made in respect of, and does not apply
to, a particular credit
agreement if, at the time of that
application, the credit provider under that credit agreement has
proceeded to take the steps
contemplated in s 129 to enforce that
agreement'. The section thus contemplates a debt review under which a
specific credit agreement
may be excluded. But even if a particular
credit agreement falls outside the scope of debt review a court may,
nevertheless, as
provided for by s 85. in any court proceedings 'in
which a credit agreement is being considered' and in which it is
alleged that
the consumer is over-indebted, refer that matter to a
debt counsellor forevaluation and a recommendation in terms of s
86(7) or
declare that the consumer is over-indebted and make any of
the orders contemplated in s 87. Moreover, a court may also, in terms
of s 83(1). in proceedings where a credit agreement is being
considered, declare it to be reckless and make any of the orders
provided for in s 83(2) and (3).
[12]
Section 86(2) uses the words 'has
proceeded to take the steps contemplated in section 129 to enforce
that agreement'. 'Enforce',
it seems, includes a reference to all
contractual remedies including cancellation and ancillary relief and
means the enforcement
of those remedies by judicial means. This seems
to be the meaning of the word where it is used in Part C of Ch 6.
Section 129 itself
is entitled 'Required procedures before debt
enforcement' and s 129(1)(b) expressly provides that legal
proceedings may not be
commenced 'to enforce' the agreement before
certain requirements are met.
[13]
The language of s 86(2), particularly
the plural 'steps contemplated in section 129' to enforce the
agreement, was considered by
Wallis J in Mudaly's case, who opined
—
'(t)hat
seems incompatible with it merely requiring the giving of notice
under s 129(1)(a), both because that is a single step and
because it
is not a step directed at enforcing the agreement, but at resolving
the problem occasioned by the consumer's default.
Consistently with
the language used, this must then be a reference to s 129(1)(b),
which refers to both the giving of notice and
meeting the
requirements in s 130.'
In
his view the relevant provision referred to in s 86(2) is s 129(1)(b)
since that elucidates the use of the plural 'steps'. However,
he held
that there was nothing in s 129(1)(b) to suggest that these steps
included the commencement of legal proceedings. The steps,
he said,
required by s 129(1)(b) prior to legal proceedings being commenced
include the giving of notice in s 129(1)(a); the giving
of notice to
terminate a debt review in terms of s 86(10); and meeting the further
requirements of s 130. The latter includes the
lapse of certain time
periods, followed by the failure of the consumer to remedy the
default or his not responding to the notice
or rejecting the credit
provider's proposals. Furthermore, where the credit agreement is an
instalment agreement, secured loan
or lease the credit provider may
seek an order enforcing the remaining obligations under the agreement
if the property has been
sold and the net proceeds were insufficient
to discharge all the consumer's obligations.
[14]
I do not agree with these conclusions.
One of the objects of the NCA is the provision of a consistent and
accessible system of consensual
dispute resolution. A notice in terms
of s 129(1) (a), however, does not exclude the resolution of a
dispute relating to a specific
credit agreement in this manner. The
purpose of a s 129(1)(a) notice is the resolution of a dispute and
the bringing up to date
of payments under a specific credit
agreement. While it is a 'step' prior to the
commencement of
legal proceedings it is also the first 'step' the credit provider
'has
proceeded to take ... to enforce that
agreement' (s 86(2)). It does not exclude
a
debt review save insofar as it relates to the particular
credit agreement
under consideration. Nor does
it exclude a general debt review pursuant to ss 83 and 85. Key to the
construction ofs 86(2) are
the words 'has proceeded to take the
steps' used in s 86(2). A 'step', amongst its meanings, includes 'an
actiop or movement which
leads to a result; one of a series of
proceedings or measures'^ To 'proceed' means 'to go on with an
action' and also 'with stress
on the progress or continuance of the
action' to 'go on or continue what one has begun; to advance from the
point already
reachedBy
the use of the words 'has proceeded' and 'steps’ an ongoing
process is indicated of which the s 129(1)(a) notice is the first
'step'.lt is the only step expressly mentioned in s 129 although the
other 'steps' or reouirements referred to in s 130 are incorporated
by reference.Section 129(1)(b)(i
)
makes it clear that the notice in terms of s 129(1)(a) is a
necessary
'step' before legal proceedings may
be commenced. It follows that by giving the notice envisaged by s
129(1)(a) the credit provider
'has proceeded to take the steps
contemplated in section 129 to enforce that agreement': a debt review
relating to that specific
agreement is thereafter excluded.
[15]
It follows that the court a quo was
correct in not granting the declarator prayed for in prayer 1.13 of
the notice of motion. ”(
my
emphasis and footnotes omitted)
81. But nothing
precludes the debtor from availing himself of his rights under
section 129 which, as was pointed out by the court,
are distinct from
those envisaged in section 86(2) on receipt of the notice. As was
pointed out by the learned judge, even once
the proceedings
contemplated in section 130 are instituted, there is nothing to
preclude the court from referring the matter to
a debt counsellor as
contemplated in sections 85, 86 and 87. Accordingly, there is nothing
contained in section 86(2) which precludes
the debtor from availing
himself of his rights to refer the particular credit agreement sought
to be enforced to a debt counsellor
as envisaged in section 129 and
thus no need for the courts to legislate to enable him to do so; a
fortiori since the amendment
to section 86(2) which now refers to
section 130 and not section 129 which makes it clear that the steps
taken to enforce the debt
do not refer to the delivery of a section
129 notice but rather to the issuing of a summons as contemplated in
section 130.
82. Such an amendment
was recommended in an article in the Potchefstroom Law Journal, "
The
Debt Cousellina Process-Closing the
Loopholes
in the
National Credit Act 34 of 2005
'
[2009] PER 23
on the
basis that enforcement commenced on the issuing of summons and not
the service of a
section 129
notice as was later found to be the case
by the Supreme Court of Appeal (supra). The learned authors took the
view similar to that
adopted by the Court in the Mkhize and Binnemann
matters (supra) and opined:
“
It
is submitted that enforcement commences upon the issuing and service
of a summons, after the credit provider has complied with
the
requirements set out in
section 129(1)
read with 130(1) of the Act.
Moreover, a section 129(1)(a) notice delivered to a consumer by
a
credit provider does not
constitute enforcement, as
the
heading to section 129 refers to "Required procedures before
debt enforcement". Section 129(1)(a) provides that if
the
consumer is in default under a credit agreement the credit provider
may draw the default to the notice of the credit provider
in writing
and propose that the consumer refer the credit agreement to a debt
counsellor, alternative dispute resolution agent,
consumer court or
ombud with jurisdiction, with the intent that the parties resolve any
dispute under the agreement or develop
and agree on a plan to bring
the payments up to date...
It
would therefore appear that the legislator's reference to section 129
in section
86(2)
is a reference to the commencement of legal proceedings mentioned in
section 129(1)(b) and that a consumer should not be precluded
from
applying for debt review in respect of the specific credit agreement
after receipt of
a
section
129(1)(a) notice. Section 129(1)(b)
provides that, subject to section 130(2) a credit provider may not
commence any legal proceedings
to enforce the agreement before first
providing notice to the consumer in terms of section 129(1)(a) or
section 86(10), as the
case may be, and complying with any further
requirements set out in section 130.
In
the case of Frederick v Greenhouse Funding (Pty) Ltd, the court
however found that the only step which a credit provider can
take in
terms of section 129, is the step in section 129(1)(a) namely, the
sending of the letter. The court rejected the argument
that the
sending of the letter is not a step to enforce the agreement and
found with reference to the matter of Nedbank Ltd v Motaung:
‘
If
section 86(2) is read to mean that the sending of the letter is not a
step under section 129 to enforce the agreement, then the
section is
rendered nugatory. In my view a proper interpretation must be
provided to the section. The section must be interpreted
so as to not
have an absurd result and so as to reflect commercial reality. Such
an interpretation would involve an interpretation
of Section 86(2) as
meaning that the sending of a letter constitutes a step contemplated
in Section 129 to enforce the agreement.
’
It
is submitted that the interpretation of the court does not take into
consideration the content of section 129(1) (a) namely that
the
credit provider may propose to the consumer that he refer the
relevant credit agreement to a debt counsellor. It does not make
sense to propose to the consumer to approach a debt counsellor and at
the same time also preclude the consumer from applying for
debt
review. As a matter of fact, it would therefore appear that the
interpretation the court attributes to section 86(2) actually
leads
to an absurd result. To clarify the uncertainty with regard to the
question as to when enforcement for the purposes of section
86(2)
commences, it is submitted that section 86(2) should be amended by
substituting the words 'section 129' with 'section 130'.
83. After quoting
section 130, the article goes on to state that before a creditor can
commence with enforcement proceedings, section
129(1) read with
section 130(1) provides that the following preconditions must be met:
83.1.
A
section 129(1)(a) notice or a section 86(10) notice should have been
delivered to the consumer at least 10 business days prior
to
enforcement proceedings; and
83.2.
The
consumer is in default under that credit agreement for at least
20
business days, which two periods may run concurrently.
84. It was, however,
also stressed that a credit provider must additionally also comply
with the other requirements set out in section
130. So, for example,
section 130(3)(c)(i) precludes the court from determining a matter
unless it is satisfied, inter alia that
the credit provider has not
approached the court during the time that the matter was before a
debt counsellor. Additionally, in
terms of section 130(3)(c)(ii), the
credit provider is also prevented from approaching the court in
respect of a credit agreement
to which the Act applies, where the
consumer has taken and fulfilled any of the steps mentioned in
section 129(1)(a). Referring
to the matter of Absa Bank Ltd v
Prochaska t/a Bianca Cara Interiors
2009 (2) SA 512
(D), it was
stated that:
“
According to
the Prochaska case the NCA represents a radical departure from its
predecessor, the Credit Agreements Act (CAA), with
regard to the
notice in terms of section 129(1)(a). Whereas the CAA merely required
the credit receiver to notify the creditor
of his default by prepaid
registered mail, section 129(1)(a) requires the credit provider to
"draw the default to the notice
of the consumer in writing".
Section 129(1)(b) precludes the credit provider from commencing any
legal proceedings to enforce
the agreement before 'providing notice'
to the consumer in terms of section 129(1 )(a). Further to this, a
credit provider may
only approach a court for an order to enforce an
agreement if, inter alia at least 10 business days have elapsed since
a credit
provider 'delivered a notice', as contemplated in section
129(1 )(a) of the Act, to the consumer. According to the court in the
Prochaska case, the words emphasised cumulatively reflect an
intention on the part of the legislature to impose upon the credit
provider an obligation which requires much more than the mere
dispatching of the notice contemplated by section 129(1)(a) of the
Act, to the consumer in the manner prescribed in the Act and
Regulations. The credit provider is required, in my view, to bring
the default to the attention of the consumer in a way which provides
assurance to a court considering whether or not there has
been proper
compliance with the procedural requirements of section 129 and 130 of
the Act, that the default has indeed been drawn
'to the notice of the
consumer.”
85. This is in line
with the views expressed by the Constitutional Court in Sebola v
Standard Bank of South Africa Limited (supra),
where it was stressed
that it is incumbent upon a credit provider to establish that the
section 129 notice was correctly dispatched
by registered post to the
domicilium address provided by the debtor of the section 129 notice
particularly as the procedures set
out in section 129(1 )(a):
“
are
designed to help debtors to restructure
their debts, or find other relief, before the guillotine of
cancellation or judicial enforcement
falls”.
(at para[59])
86. It is also in line
with the provisions of section 129(7) which requires that the credit
provider establish that the notice was
indeed delivered as required
in terms of sub-section (5) to the domicilium address.
87.
If
it is not averred in the particulars of claim that this has been
complied with, the particulars of claim are excipiable. (Beets
v
Swanepoel {2010] JOL 26422
(NC);
unreported judgment of Moeng, AJ in
Nedbank Ltd v Simcha Properties 12 CC and others, case no 341/2014,
Free State Division, Bloemfontein
on 5 February 2015).
88. This all serves to
highlight the importance of a section 129 notice being delivered
before enforcement proceedings commence
and the courts ensuring that
the section is strictly complied with when exercising their
discretion under section 129(3)(a). This
fortifies my view that such
notice must be reasonably current to be meaningful. I thus believe
that it is of cardinal importance
that the proceedings be stayed to
afford the respondent the right to avail himself of his rights set
out in section 129 of the
NCA.
89. In this respect I
point out that if summons is issued without first issuing the
requisite notice, the proceedings are not a
nullity (as contended by
the respondent), but rather must be paused to issue the notice and
afford the debtor an opportunity to
exercise his rights set out in
section
129.
This has been confirmed by the Constitutional Court in the Sebola
matter (supra) at [53] where it was stated that section 129
and 130
need to be read together:
[54]First,
it is impossible to establish what a credit provider is obliged and
permitted to do without reading both provisions.
Thus, while section
129(1)(b) appears to prohibit the commencement of legal proceedings
altogether (“may not commence’’),
section 130 makes
it clear that where action is instituted without prior notice, the
action is not void. Far from it. The proceedings
have life, but a
court “must” adjourn the matter, and make an appropriate
order requiring the credit provider to complete
specified steps
before resuming the matter. The bar on proceedings is thus not
absolute, but only dilatory. The absence of notice
leads to a pause,
not to nullity. But to deduce this, it is necessary to read section
129 in the light of section 130. Section
129 prescribes what a credit
provider must prove (notice as contemplated) before judgment can be
obtained, while section 130 sets
out how this can be proved (by
delivery
):"(footnotes
omitted).
90. The suggested
amendment now having been effected, the respondent would not, by the
issuing of a fresh notice, be precluded from
exercising its rights
under section 129. Despite the fact that summons has already been
issued, I believe that the respondent would
have^HO^ywidow ~ period
after the issuing of such new notice to exercise his rights to
include this agreement in an overall debt
review of his position as
contemplated in sections 85-87.
91. This is because
section 129(1)(b) provides that, subject to section 130(2) a credit
provider may not commence any legal proceedings
to enforce the
agreement before first providing notice to the consumer in terms of
section 129(1)(a) and complying with any further
requirements set out
in section 130. Since the amendment to section 86(2), the debtor is
afforded 10 business days after the issuing
of a section 129 notice
to seek debt counselling and debt review in respect of the debt
sought to be enforced before summons is
issued. Once summons is
issued, in light of the judgment of the Supreme Court of Appeal
(supra), he loses the right to include
the debt sought to be enforced
in an overall debt review.
92. However, the
Supreme Court of Appeal has made it clear that notwithstanding the
service of a section 129 notice, nothing precludes
the court from
allowing the debtor to exercise his rights under section
and
to have a debt counsellor appointed to assist in restructuring his
debt or declare him over-indebted as contemplated in sections
85, 86
and 87. It need not legislate to do so and is empowered in terms of
the express provisions of the Act to do so.
93. Section 85
expressly permits the court to allow a credit agreement sought to be
enforced to a debt counsellor where it appears
that the debtor may be
over-indebted and provides:
85.
Court may declare and relieve over-indebtedness
Despite
any provision of law or agreement to the contrary, in any court
proceedings in which a credit agreement is being considered,
if it is
alleged that the consumer under a credit agreement is over-indebted,
the court may-
(a)
refer the matter directly to a debt
counsellor with a request that the debt counsellor evaluate the
consumer's circumstances and
make a recommendation to the court in
terms of section 86(7);
(b)
declare that the consumer is
over-indebted, as determined in accordance with this Part, and make
any order contemplated in section
87 to relieve the consumer's
over-indebtedness.
94. Similarly, nothing
precludes the debtor from bringing his arrears and costs up to date
as contemplated in section 129 to avoid
the invocation of the
acceleration clause in the agreement.
95. Since the
amendment to section 86(2) of the NCA, nothing precludes a debtor
from seeking debt review in respect of the indebtedness
referred to
in a section 129 notice which is now only precluded after the issuing
of summons.
96. However, where
summons is issued in breach of section 129 without first delivering a
valid section 129 notice, I believe that
the debtor would continue to
have the right to debt review until proceedings contemplated in
section 130 were validly instituted
after the requisite notice had
been delivered as contemplated in section 127(5) and a debtor cannot
be in a worse position where
a creditor has acted in breach of
section 129 by instituting proceedings contemplated in section 130
prior to issuing a valid 129
notice. The discretion conferred upon
the court in section 130(4)(b)(ii) is designed to remedy such default
and to put the debtor
in the position it was in had the requisite
notice been sent. That is the only way to meaningfully make sense of
section 86(2)
when read with sections 129 and 130 of the Act.
97. In Nedbank v The
National Credit Regulator ( supra) , Malan JA dealt with the purpose
of the NCA and expressed similar views
to those expressed by the
Constitutional Court in the Nikita matter stressing that:
[1]
The National Credit Act 34 of 2005 (the NCA) came into full force and
effect on 1 June 2007. The NCA is not an amendment of
previous
legislation dealing with consumer credit. It seeks to achieve much
more and replaces legislation that governed consumer
credit for more
than a quarter of a century. The objects are set out in s 3 and are
directed at providing protection for the consumer
and addressing
imbalances that exist between consumers and credit providers. The NCA
seeks -
‘
to
promote and advance the social and economic welfare of South
Africans, promote a fair, transparent, competitive, sustainable,
responsible, efficient, effective and accessible credit market and
industry, and to protect consumers, by -
(g)
addressing and preventing
over-indebtedness of consumers, and providing mechanisms for
resolving over-indebtedness based on the
principle of satisfaction by
the consumer of all responsible financial obligations;
(h)
providing for a consistent and
accessible system of consensual resolution of disputes arising from
credit agreements; and
(i)
providing for a consistent and
harmonised system of debt restructuring, enforcement and judgment,
which places priority on the eventual
satisfaction of all responsible
consumer obligations under credit agreements. ’
98.
Although he lamented the poor drafting
of the legislation, he stressed that the Act must be interpreted to
give effect to these
objects stating:
[2]
The NCA must be interpreted in a manner
that gives effect to these objects. Appropriate foreign and
international law may be considered
in construing the NCA.
Unfortunately, the NCA cannot be described as the ‘best drafted
Act of Parliament which was ever passed,’
nor can the draftsman
be said to have been blessed with the ‘draftsmanship of a
Chalmers’. Numerous drafting errors,
untidy expressions and
inconsistencies make its interpretation a particularly trying
exercise. Indeed, these appeals demonstrate
the numerous disputes
that have arisen around the construction of the NCA. The
interpretation of the NCA calls for a careful balancing
of the
competing interests sought to be protected, and not for a
consideration of only the interests of either the consumer or
the
credit provider."
99.
To achieve the purpose of the Act,
Section 130 referred to in section 86(2) can not be read in isolation
and must be considered
together with
section 130(4)(b). It is
only when there has been proper compliance with section 129 that any
proceedings can be regarded as having
been instituted for the
purposes of section 86(2). Section 86(2) must thus be interpreted to
only preclude debt review where valid
proceedings have been
instituted under section 130. This would not amount to legislating in
breach of the separation of powers
between the courts and the
legislature enshrined in the Constitution; on the contrary such power
is expressly provided for in the
legislation which empowers the Court
alone to determine whether there has been compliance with section
129(1) and to give directions
as to that steps should be taken to
ensure compliance.
100. Although where a
creditor has instituted action as contemplated section 130(1) in
breach of the mandatory provisions of section
129 (1), the
proceedings are not in fact a nullity and need not, in view of the
provisions of section 130(4) (b) be re-instituted,
they are for all
intense and purposes regarded as a nullity until there is compliance
with section 129(1).
101.
In this respect, the views expressed by Jafta J in the Nkata matter
are apposite. There, Jafta J, who concurred with Moseneke
J but on
different grounds, expressed the view that where the requisite notice
is not sent and the proceedings are instituted in
conflict with the
Act, the proceedings are, despite the findings of the Constitutional
Court in the Sebola matter (supra), a nullity
and thus no costs can
be reasonably
incurred which it can be said are
required to be settled before a debtor who has been served with a
section 129 notice may reinstate
the agreement. He found that:
“
[166]
.........
This is so because the action does not
require payment of costs
incurred
in irregular proceedings or as a result of invalid judgments. On the
authority of Motala and Changing Tides, the default
judgment granted
by the registrar
was a
nullity.
[167]
Here the Bank commenced the legal action
at a time when it
was
not
permitted to do so. Section 130(1) prohibits the commencement of
legal proceedings before the expiry of 10 business days from
the date
of delivery of notice in terms of section 129(1). The High Court held
that the Bank failed to deliver the requisite notice
and the
correctness of this finding was not challenged in this Court.
[168]
It is compulsory for any credit provider
to comply with section 129 s(1) before instituting legal proceedings.
In Sebola, Cameron
J said:
“
Section
129(1)(a) requires a credit provider, before commencing any legal
proceedings to enforce a credit agreement, to draw the
default to the
notice of the consumer in writing. It has been described as a
‘gateway’ provision, or a ‘new pre-
litigation
layer to the enforcement process’. Although section 129(1)(a)
says the credit provider ‘may’ draw
the consumer’s
default to his or her notice,section 129(1)(b)(i) precludes the
commencement of legal proceedings unless notice
is first given. So,
in effect, the notice is compulsory." (Footnotes omitted and
emphasis added.)
[169]
Parliament has considered compliance with section 129(1) to be
so
important that it deemed it necessary to
preclude a court from adjudicating the dispute until the court itself
is satisfied that
there was compliance. Notably, it is the court that
must be satisfied and nobody else. This signifies that legal
proceedings to
which the Act applies must be determined by the court
only.
[1701
Furthermore, section 130(3) precludes a court from deciding the case
unless it is satisfied that the notice reguirements in
section 129
have been complied with. Section 130(3) provides:
“
Despite
any provision of law or contract to the contrary, in any proceedings
commenced in a court in respect of a credit agreement
to which this
Act applies, the court may determine the matter only if the court is
satisfied that
—
(a)
in the case of proceedings to which
sections 127, 129 or 131 apply, the procedures required by those
sections have been complied
with.”
[171]
If it appears to the court that the credit provider has not complied
with section 130(3)(a) or that it is not positively satisfied
that
there was compliance, the court must
—
(a)
adjourn the matter before it; and
(b)
make an appropriate order setting out
steps the credit provider must complete before the matter may be
resumed.
f1721
Later in Kubvana. we reaffirmed the principle that the Court is
precluded from deciding a matter unless it is satisfied that
the
procedures stipulated in sections 129 and 130 are met. We said:
“
The
text of this section reveals that in the event of the consumer being
in default of her repayments of the loan, the credit provider
is
obliged to draw the default to the attention of the consumer. The
section prescribes that the notice given to the consumer must
be in
writing. It further stipulates what the notice must contain. The
notice must propose the options available to the consumer
who is in
financial distress and unable to purge the default. It must point out
that, at the election of the consumer, the credit
agreement may be
referred to a debt counsellor, dispute resolution agent, consumer
court or ombud. The purpose of the referral
must also be stated in
the notice.
The
purpose of the referral is to resolve whatever disputes may have
arisen from the credit agreement and also to agree on a plan
to cure
the default and bring the payments up to date. Furthermore, the
section makes reference to section 130 which governs the
institution
of litigation for enforcing credit agreements. Section 129(1) lays
down two conditions which must be met before the
credit provider may
institute litigation. In peremptory terms, the section declares that
legal proceedings to enforce the agreement
may not commence before
—
(a)
first providing notice to the consumer;
and
(b)
meeting further requirements set out in
section 130. ”
[1731
Here the legal fees claimed by the Bank arose in circumstances where
the Bank had acted in breach of the Act in a number of
respects.
First, it failed to give notice as required by section 129 (1) read
with section 130(1). Second, it sought and obtained
a default
judgment from the registrar of the High Court, something that is
incompatible with section 130(3) which requires such
matters to be
determined by the court. Third, the Bank sought and obtained the
default judgment without satisfying the Court on
compliance with
section 129 . Fourth, the Bank caused a writ to be issued, an
attachment to be effected and Ms Nkata’s home
to be advertised
for sale in execution on account of an invalid judgment. Fifth, the
Bank opposed Ms Nkata’s application
for the rescission of that
judgment.
[174]
The High Court declared:
“
The
non-compliance with section 129 (1) also leads to the conclusion, in
my opinion, that default judgment was ‘erroneously’
sought and granted within the meaning of rule 42(1) (a) (see Buys v
Changing Tides 17 Pty Ltd NO & Others [20131ZAWCHC 150).
Compliance with section 129(1) is a substantive legal prerequisite
for the valid institution of legal proceedings on a credit
transaction to which the Act
applies
....................................................
[
]
.....
It is apparent from the High Court’s
statement that had the request for
the
default judgment been placed before a court, that court could not
have been satisfied that there was compliance with section
129(1)
read with section 130(1). In that event, the Court could not have
granted the default judgment
because
it would not have been competent for it to do so, in light of the
peremptory language of section 130(3). That section proclaims
that a
court may determine a matter to which the Act applies only if the
court is satisfied that there was compliance with section
129. Thus
the exercise of the court's competence or jurisdiction is deferred
until compliance is achieved.
[176]
This is the backdrop against which the
reasonableness of the legal fees claimed by the Bank must be
assessed. In my view, it cannot
be said that costs incurred when the
Bank acted in breach of the Act were reasonable costs contemplated in
section 129(3). This
section envisions costs incurred in legitimate
proceedings. If the High Court had set aside the default judgment
during the first
application for rescission, the legal fees in
question would have fallen away...
[177
]
....
In view of the fact that the Bank was
not entitled to issue the summons,
those
costs were not reasonable. This is because the entire process, from
the stage the summons was issued up to the attachment
and advertising
the sale, was tainted by non-compliance with various provisions of
the Act. "(footnotes omitted and emphasis
added)
102. Although this was
not an approach that found favour with all the other members of the
Constitutional Court and would seem to
conflict with the dictum in
Sebola (supra) which held that proceedings instituted in conflict
with section 129 are not a nullity
but are merely paused, I believe
that they are of some relevance as to the meaning of the phrase in
section 86(2) as amended precluding
debt review where the credit
provider “has proceeded to take the steps contemplated in
section 130 to enforce that agreement”.
That, in my view, can
only mean, in the words of the court a quo quoted by Jafta J, “the
valid institution of legal proceedings”.
103. Thus although I
agree that the proceedings may not strictly speaking be a nullity,
section 86(2) must be read as only precluding
debt review once valid
proceedings have been instituted or continued under section
130
once the court is satisfied that there has been compliance with
section 129. This, I believe, also has a significant bearing on the
question as to who should bear the costs incurred when seeking relief
in terms of section 130(b)(ii).
COSTS
104. It is trite that
costs should follow the result. In this respect, in so far as the
applicant has not been successful in obtaining
the declaratory relief
sought in prayer 1, the costs should follow that result (Pretoria
Garrison Institutes v Danish Variety Products
(Pty) Ltd supra; Union
Government v Gass
1959 (4) SA 401
(A) 413;Gamlan Investments (Pty)
Ltd v Trilion Cape (Pty) Ltd
1996 (3) SA 692
(C)).
105. In addition, in
so far as the alternative relief sought in prayers 2 and 3 are in
essence sought as an indulgence to afford
the applicant the
opportunity to cure the fact that it instituted proceedings in breach
of section 129, the applicant should also
bear the costs that can
reasonably be said to be wasted because of the application (Macdonald
Forman & Co v Van Aswegen
1963 (2) SA 150
(0)155; Badenhorst v
Balju, Pretoria Sentraal
1998 (4) SA 132
(T) 142j.
106. Such costs should
include the costs of reasonable opposition, depending on the
circumstances, provided that it was not vexatious
or frivolous
(,Meintjies v Administrasieraad van Sentraal-Tvl
1980 (1) SA 283
(T);
Genn v Rudick Holdings (Pty) Ltd
1983 (2) SA 69
(W) 72; Iveta Farms
(Pty) Ltd v Murray
1976 (1) SA 939
(T); Manwood Underwriters (Pty)
Ltd and Others 3
rd
floor, “4 on Anslow", Anslow
Crescent, Bryanston, Johannesburg;
109.2.
Directing that proof hereof as contemplated in section 129(7)(b)
of the NCA be provided before the proceedings may be resumed in
terms
of section 130 of the NCA.
109.3.
Ordering the applicant to pay the costs of the application.
S.M
WENTZEL
ACTING
JUDGE OF THE HIGH COURT, GAUTENG DIVISION, PRETORIA
DATE
HEARD: 2 June 2016
DATE
OF JUDGMENT: 2 September 2016
Applicants
Attorneys: Hack, Stupel &Ross; Counsel for the applicant: Ulrike
Lottering
Respondents
Attorneys: Peterson, Hertog & Associates; Counsel for the
Respondent: Anthony Bishop 3
rd
floor, “4 on Anslow”,
Anslow Crescent, Bryanston, Johannesburg;
109.2.
Directing that proof hereof as contemplated in section 129(7)(b)
of the NCA be provided before the proceedings may be resumed in
terms
of section 130 of the NCA.
109.3.
Ordering the applicant to pay the costs of the application.
S.M
WENTZEL
ACTING
JUDGE OF THE HIGH COURT,
GAUTENG
DIVISION, PRETORIA
DATE
HEARD: 2 June 2016
DATE
OF JUDGMENT: 5 September 2016
Applicants
Attorneys: Hack, Stupel &Ross;
Counsel
for the applicant: Ulrike Lottering
Respondents
Attorneys: Peterson, Hertog & Associates;
Counsel
for the Respondent: Anthony Bishop