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[2015] ZAGPPHC 88
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Firstrand Bank Limited v Barrett and Another (81205/2014) [2015] ZAGPPHC 88 (17 February 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO: 81205/2014
DATE: 17 February
2015
IN THE MATTER
BETWEEN
FIRSTRAND BANK
LIMITED
.........................................................................................
Plaintiff
and
HARRY WILLIAM
BARRETT
.............................................................................
First
Defendant
MATILDA
BARRETT
.......................................................................................
Second
Defendant
JUDGMENT
LEGODI, J
[1] This is an
application for summary judgment in terms of which the plaintiff,
FirstRand Bank Ltd in addition to judgement sounding
in money, it
seeks an order declaring the property subject to mortgage bond be
declared especially executable. The property in
question is used as a
primary residence by the defendants. The application is opposed on
the following grounds. Firstly, that FirstRand
Bank has unlawfully
terminated the debt review process. Secondly, that the property in
question is a primary residence and no grounds
have been placed
before the court to declare such a property especially executable.
Lastly, that FirstRand Bank is fully aware
that the applicants are
over-indebted and that they were making payments in terms of the plan
and that any fault in not transmitting
payments to the FirstRand was
not the defendants’ fault.
[2] A background to
the dispute is necessary. On the 26 April 2014 the defendants applied
for a debt review. The debt counsellor,
Russel Dickson accepted their
application. He then made debt restructuring proposal in terms of
which First Rand Bank was to be
paid R3 987-95 per month. The first
estimated proposal was made in terms of section 86(7)(c), the
defendants having been found
to be over-indebted. The subsection
provides as follows:
“
(7)
If, as a result of an assessment conducted in terms of subsection
(6), a debt counsellor reasonably concludes that-
(a)...
(b)
...
(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.
[3] On the 1
September 2014 the debt counsellor filed an application in the
Magistrate’s court Springs in terms of which a
relief was
sought in the following terms:
“
1.
That the Applicant be granted leave in terms of
section 86
of the
National Credit Act 34 of 2005
to bring this application;
2. That the First
and Second Respondents be declared over-indebted as set out in
Section 79
of the National Credit 34 of 2005;
3. That the 1
st
and 2
nd
Respondents payments to the other Respondents be
re-arranged in the following manner:
(a) that the
period for payment in respect of each credit agreement with each
Respondent be extended and the amounts payable per
month be reduced
according, as per the draft Court Order annexed to this application;
and/or
(b) that such
rearrangement to be reviewed at the court’s discretion after a
period of time to be determined by the above
Honourable Court.
4. Ordering that
any Respondent who opposes this application be ordered to pay the
cost of this application.
5. Ordering that
the Debt Review process be reinstated in terms of section 86(11) in
so far as may be necessary in the event of
the above Honourable Court
finding that there has been any lawful termination of the debt review
process by any of the credit providers”.
[4] On the 27
November 2014, the application was dismissed and the defendants were
ordered to pay the costs of the application.
In the meantime, the
FirstRand Bank had issued a notices in terms of section 86(10) on the
3 and 7 October 2014 and summons on
the 10 November 2014. The present
application for summary judgement was launched after the defendants
entered appearance to defend
the action.
[5] The real issue
before me is whether the defendants have a bona fide defence to the
action, the crucial question being whether
FirstRand Bank unlawfully
terminated the debt review process. The contention was that FirstRand
Bank was prohibited in terms of
section 88(3), to enforce the credit
agreement between itself and the defendants. Subsection (3) of
section 88 provides as follows:
“
(3)
Subject to section 86(9) and (10), a credit provider who received
notice of court proceedings contemplated in section 83 or
85, or
notice in terms of section 86(4)(b)(i), may not exercise or enforce
litigation or other judicial process any right or security
under that
credit agreement until-
(a)
the consumer is in default under the credit agreement; and
(b) one of the
following has occurred;
(i) an event
contemplated in subsection 1(a) through (c); or
(ii) the consumer
defaults on any obligation in terms of a rearrangement agreed between
the consumer and the credit providers, ordered
by the court or the
Tribunal”.
[6] In terms of
section 86(4)(b)(i), on receipt of application for a debt review in
terms of subsection (1), a debt counsellor must
notify, in the
prescribed manner and form, all credit providers that are listed in
the application. Subsection (1) (a) through
(c) of section 88
referred to in subsection (3)(b)(i) thereof provides as follows:
“
(1)
A consumer who has filed an application in terms of section 86(1), or
who has alleged in court that the consumer is over-indebted,
must not
incur any further charges under a credit facility or enter into any
further credit agreement, other than a consolidation
agreement, with
any credit provider until one if the following events has occurred:
(a) The debt
counsellor rejects the application and the prescribed time period for
direct filing in terms of suction 86(9) has expired
without the
consumer having so applied;
(b) the court has
determined that the consumer is over-indebted, or has rejected a debt
counsellor’s proposal of the consumer’s
application; or
(c) a court
having made an order or the consumer and credit providers having made
an agreement re-arranging the consumer’s
obligations, all the
consumer’s obligations under the credit agreements as
rearranged are fulfilled, unless the consumer
fulfilled the
obligations by way of a consolidation agreement”.
[7] There are
therefore certain jurisdictional factors which FirstRand Bank was
required to meet before instituting legal action
against the
defendants who have applied for a debt review in terms of section
86(1): Firstly, that the defendants were in default
in terms of the
credit agreement and secondly, that the court in terms of section
88(1 )(b) has determined that the defendants
are not over-indebted or
that the court has rejected a debt counsellor’s proposal or the
defendants’ application. In
the present case, the court ruled
in accordance with paragraph (b) of section 88(1) only on the 27
November 2014. It means that
the FirstRand Bank prematurely proceeded
to issue a letter of termination of debt review in terms of section
86 (10) on the 3 October
2014; and prematurely issued summons on the
10 November 2014.
[8] This however
does not mean that the application for summary judgment must be
dismissed. In terms of section 130(4)(b)(i) and
(ii), in any
proceedings contemplated in this section, if the court determines
that the credit provider has not complied with the
relevant
provisions of the Act, as contemplated in subsection (3)(a) or has
approached the court in circumstances contemplated
in subsection
(3)(c), the court must adjourn the matter before it, and make an
appropriate order setting out the steps the credit
provider must
complete before the matter may be resumed. I therefore intend
invoking the provisions of section 130(4). There is
no need to deal
with the other issues raised in this matter.
[9] Consequently, an
order is hereby made as follows:
9.1 The application
for summary judgment is postponed sine die,
9.2 FirstRand Bank
Limited is hereby directed to comply with the statutory notice in
terms of the Act,
9.3 FirstRand Bank
Limited to pay the costs of the application for summary judgment.
M F LEGODI
JUDGE OF THE HIGH
COURT
FOR THE PLAINTIFF:
ADV. M RILEY
INSTRUCTED BY: HACK
STUPEL & ROSS
2
nd
Floor, Standard Bank Chambers
Church Square,
PRETORIA
REF: Mr D J
FRANCES/N PAGE/SA1943
TEL: 012 325 4185
FOR THE DEFENDANTS:
ADV. KERRY HOWARD
INSTRUCTED BY:
STANILAND ATTORNEYS
C/O N VAN DOMMELEN
ATTORNEYS
1319 Paul Street
MORELETTA PARK
PRETORIA
011 425 5557/074 910
2734
Matter heard on:12
FEBRUARY 2015
Judgment handed
down: 17 FEBRUARY 2015