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[2015] ZAKZDHC 33
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Standard Bank of South Africa Limited v Harilall (6565/2014) [2015] ZAKZDHC 33 (9 April 2015)
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IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL DIVISION,
DURBAN
Case No: 6565/2014
DATE: 09 APRIL 2015
In the matter between:
THE STANDARD BANK OF SOUTH AFRICA
LIMITED
...................................................
Plaintiff
And
MARLENE
HARILALL
.........................................................................................................
Defendant
JUDGMENT
THATCHER AJ:
[1] On 6 February 2008, the plaintiff,
the Standard Bank of South Africa Limited, a registered credit
provider, concluded an instalment
sale agreement with the defendant,
Marlene Harilall, in terms of which the former sold to the latter a
2008 Dodge Caliber [2…..]
In terms of the contract, the
defendant was to repay the principal debt and interest in 60 monthly
instalments commencing on 31
March 2008 with the final instalment to
be paid on 5 February 2013.
[2] On 22 February 2011, the
magistrates’ court at Verulam granted a debt restructuring
order in favour of the defendant and
her husband, to whom she is
married in community of property, in terms of which she and her
husband were to pay the plaintiff a
restructured amount of R3 258,14
per month. That debt restructuring order was granted after
opposition from the plaintiff.
[3] On 28 November 2011, and despite
the existence of the debt restructuring order, the plaintiff brought
an action in this court
under case number 13296/2011. In that
action, the plaintiff alleged that it had, in accordance with section
86(10) of the National
Credit Act, terminated the debt review
process. On 26 January 2012, a plea was delivered on behalf of the
defendant by her attorneys,
Booysen & Co. Inc. In that plea it
was denied that the plaintiff was not aware of the debt review
application and order. On
the same day, Booysen & Co. Inc
addressed a letter to the plaintiff's attorneys in that action (who,
I must mention, are not
the attorneys in this action.) That letter
stated as follows:-
“We fail to understand why you
are proceeding on this matter. This is a debt review order and your
client is receiving payments
in terms thereof. Kindly note that our
legal fees are being debited against the payments made to your
client.”
[4] It is common cause that from
January 2012 to May 2012, the defendant, as she and her attorneys had
indicated to the plaintiff,
did not pay the instalments due to the
plaintiff under the debt restructuring order. The plaintiff applied
for an expedited trial
date and the trial was set down for hearing on
11 June 2012. On 29 May 2012, shortly before the trial, the
plaintiff withdrew
the action and tendered to pay the defendant’s
costs incurred by her in opposing it
[5] On 13 August 2012, the plaintiff
launched a second action in this court under case number 8272/2012
against the defendant alleging
that the defendant had breached the
debt restructuring order of 22 February 2011.
[6] On 24 August 2012, Booysen &
Co. Inc. on behalf of the defendant, addressed a letter to the
plaintiff’s attorneys
in the action under case number
13296/2011 in which they confirmed that the defendant’s bill of
costs had been taxed in the
amount of R7 358,80. The defendant’s
attorneys confirmed that an amount of R14 627,44 had been withheld
from the plaintiff
in order for her to pay her legal fees in the
action which the plaintiff had withdrawn shortly before the trial
date. The letter
advised of R7 241,64 being paid into the
plaintiff’s account, being the difference between the amount of
R14 627,44 which
had been withheld and the taxed legal costs of R7
385.80. The letter also noted that the plaintiff had brought a new
action under
case number 8272/2012 and called upon the plaintiff to
withdraw that action before further costs were incurred.
[7] On 23 April 2014, the plaintiff
gave notice of the termination of the debt restructuring order, and
on 5 June 2014 brought this
action, the third, against the defendant,
based upon her alleged breach of the debt restructuring order.
Attached to the particulars
of claim was an annexure “D”,
alleged to be evidence of her breach. On the face of it, annexure
“D” shows
the transactions from 1 January 2014 to 15 May
2014 among which are four instalments of R3 258,14 apparently paid on
the 28th of
each of the months of January to April 2014 inclusive.
[8] Unsurprisingly, in her plea in this
action the defendant raised a special plea of lis alibi pendens,
contending that there was
pending before the court the plaintiff’s
action under case number 8272/2012. On 15 October 2014, the
plaintiff delivered
a notice of withdrawal of the action under
8272/2012 and accordingly the defendant, understandably, did not
persist with the special
plea at the trial.
[9] On 12 January 2015, and in the
absence of a tender by the plaintiff to pay the defendant’s
costs incurred in opposing
the action under case number 8271/12, the
defendant launched an application for an order that the plaintiff pay
her costs in that
action. One month later, the plaintiff tendered to
pay those costs and that application did not proceed.
[10] In this action before me, the
defendant raised a number of defences, namely:-
(a) as at the date of institution of
the present action, the defendant was not in default of the debt
rearrangement order and neither
had she been in arrears in March
2014;
(b) it was impossible for the defendant
to pay the monthly instalments from January 2012 in terms of the debt
restructuring order
because:-
(i) the plaintiff launched an
unmeritorious action against the defendant which the defendant, with
the help of attorneys, was obliged
to defend;
(ii) she was obliged to pay legal fees
to those attorneys to defend that litigation;
(iii) she was required to divert money
payable to the plaintiff under the debt restructuring order in order
to pay those legal expenses;
(iv) the plaintiff's conduct in
launching that unmeritorious litigation rendered the plaintiff liable
for its consequences;
(c) it is not open to the plaintiff,
two years after the non-payment of four instalments in 2012, to base
an action upon that non-payment,
more especially when the defendant
was not in arrears at the time of the institution of the action;
(d) if the plaintiff was not prepared
to accept that the defendant could hold back the payment of the
instalments for the purpose
of paying legal fees, there was a duty on
the plaintiff to speak out, and from its silence it must be inferred
that the plaintiff
accepted that arrangement and the plaintiff cannot
now mount a claim against the defendant based upon the non-payment of
those
instalments.
Whether the Defendant was not in
default of the Debt Restructuring Order when this action was
instituted
[11] Ms Olsen, who appeared for the
defendant, argued that the plaintiff's payment history as reflected
on page 40 of exhibit A
read with the defendant's payment ledger,
exhibit B at page 187, evidenced that at the date of the institution
of this, the third
action, the defendant was not in breach of the
debt restructuring order. It was the plaintiff's case that between
22 February
2013 and 14 November 2014, the instalment due under the
debt restructuring order was R3 258.14. Between those dates the
defendant
made ten payments of between R3 841.48 and R3 841.56 so the
difference between the instalments due and the payments made each
month
was approximately R583.34 so that as at 14 November 2013, the
defendant's total overpayments amounted to R5 833.40. Between 28
November 2013 and 13 February 2014, the defendant made three payments
of R4 258.08. The difference between the instalment due
and the
payment made each month was R999.94 so that there was a total
overpayment during this period of R2 999.82. The two overpayments
added together totalled R8 833.22 so that as at 13 February 2014, the
defendant had overpaid in that amount. The two instalments
reflected
on A40 on 28 February 2014 and the 28 March 2014 total R6 516.28
which amount is less than the amount by which the defendant
had
already overpaid so that the overpayment covered that amount.
Moreover the defendant's records reflected a payment on 14 March
2014
of R4 258.08. However that amount was only credited by the plaintiff
on 28 August 2014. On the face of it therefore the
defendant was not
in arrears in terms of the debt restructuring order when this action
was instituted.
[12] On the face of it, the defendant
was not in breach of the debt restructuring order when this action
was instituted. However
I do not have to make a finding in this
regard because of the decision by the Constitutional Court in the
case of Ferris v FirstRand
Bank Ltd 2014(3) SA 39 (CC). At page 44G,
the following is stated:
“Mr and Mrs Ferris breached the
debt-restructuring order. Once the restructuring order had been
breached, FirstRand was entitled
to enforce the loan without further
notice. This is clear from the wording of the relevant sections of
the Act. Section 88(3)(b)(ii)
does not require further notice –
it merely proves a credit provider from enforcing a debt under debt
review unless, among
other things, the debtor defaults on a debt
restructuring order.”
The court concluded that an original
credit agreement is enforceable without further notice if the debt
restructuring order is breached.
[13] It is common cause that the debt
restructuring agreement was breached by the defendant’s failure
to pay the instalments
due for the months January to May 2012
inclusive. I am bound by the decision of the Constitutional Court in
Ferris v FirstRand
Bank Ltd (supra). The plaintiff was accordingly
entitled to enforce the debt under review unless any of the other
defences raised
on behalf of the defendant succeeds. it is those to
which I now turn.
Impossibility of performance
[14] The defendant in her plea pleaded
impossibility in the following terms:-
“9.2
The defendant was entitled to withhold
payments to the plaintiff for the period January to May 2012 on the
grounds that the plaintiff
had made it impossible for the defendant
to perform under the agreement as amended by the debt restructuring
order by wrongfully
instituting action against her, and impossibility
of performance created by one party releases the other from the
reciprocal obligation."
[15] Where a defendant seeks to rely on
impossibility of performance, he or she bears the onus of
establishing the impossibility.
Emadyl Industries CC v Formex
Engineering
2012 (4) SA 29
(E) at 34B-C
[16] As I understand it, for the
defence of impossibility to succeed, it must be objective
impossibility, not subjective impossibility.
World Leisure Holidays
(Pty) Ltd v Georges
2002 (5) SA 531
(W) at 534H. It is not open to a
party to plead impossibility of performance because in a commercial
situation, through changed
financial circumstances the payment has
become difficult, expensive or unaffordable. Unibank Savings and
Loans (formerly Community
Bank) v ABSA Bank
2000 (4) SA 191
(W) at
198D-E.
[17] In any event, if the impossibility
is subjective impossibility, the defendant has not discharged the
burden which rests upon
her to establish that impossibility. She
failed to place any evidence before the court that the institution of
the action under
case number 13296/11 rendered it impossible for her
to maintain the payments in terms of the debt restructuring order.
The defendant
had succeeded in persuading a magistrate's court that
she was over indebted. It is probable therefore that the financial
circumstances
of the defendant were constrained and that any
unforeseen, additional, expenses with which she was subsequently
saddled would place
her under further financial strain. However she
placed no evidence before the court of her finances in January 2012.
The court
order declaring her to be over indebted was made on 22
February 2011, nearly one year earlier. It may well be that the
defendant’s
financial circumstances had either not changed
since the order was made on 22 February 2011 or that her financial
circumstances
had deteriorated further. Whatever the position, it
was incumbent upon her to place evidence before the court as to what
her personal
financial circumstances were in January 2012 that
rendered it impossible for her to comply with the debt restructuring
order.
She did not place any evidence before the court on this
aspect. She has therefore not discharged the burden which rests upon
her
to establish impossibility.
[18] Accordingly the defence of
impossibility must fail.
Whether the Plaintiff can rely in this
action on the non-payment of four instalments in 2012
[19] Ms Olsen submitted that the
plaintiff had continued, since May 2012, to accept regular payments
from the defendant after she
had breached the debt restructuring
order. By so doing, she contended, the plaintiff had elected to
continue to treat the debt
restructuring order as binding. So, the
argument continued, the plaintiff could not rely upon the non-payment
of these four instalments
two years earlier, particularly when the
defendant was not in arrears at the time of the institution of the
action.
[20] The plaintiff, did not, by
electing to accept the instalments after the non-payment of the four
instalments in 2012, elect
to keep the debt restructuring order in
place. In August 2012, a short period after the defendant had
defaulted on the debt restructuring
order, the plaintiff instituted
an action in which it sought cancellation of the instalment sale
agreement. This conduct of the
plaintiff, far from constituting an
election to treat the debt restructuring order as binding, is
precisely the opposite. Thus
the acceptance by the plaintiff of
instalments in terms of the debt restructuring order after they
resumed in June 2012 cannot
in my view be regarded as the plaintiff
electing to abide by the debt restructuring order.
Whether the plaintiff consented to the
defendant withholding payments
[21] Ms Olsen argued that the failure
by the attorneys then acting for the plaintiff to respond to the
defendant’s attorneys
letter of 26 January 2012 advising them
of the defendant’s intention not to pay the instalments for
January 2012 to May 2012
must give rise to the inference that the
plaintiff accepted that arrangement. I do not think that this is the
case. The plaintiff’s
institution of the action in August 2012
under case number 8272/2012 gives the lie to this. In that action
the plaintiff specifically
relies upon the defendant’s default
in paying the instalments for January to May 2012 inclusive.
[22] I accordingly find that the
plaintiff is entitled to an order cancelling the contract and an
order that the defendant restore
possession of the vehicle to the
defendant.
[23] With regard to paragraph 3(b) of
the prayer to the particulars of claim, the rate of interest payable
on the debt is variable.
It is thus appropriate that in the
application envisaged in paragraph 3, evidence be set out of the rate
of interest which may
be claimed by the plaintiff. In those
circumstances I propose to amend the relief set out in paragraph 3(b)
to provide for this.
Costs
[24] There remains the question of
costs.
[25] The purposes of the National
Credit Act are set out in paragraph 3 of that Act. The relevant part
of that Act is the following:-
“3. Purpose of Act- The purposes
of this Act are 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 –
"(a) to (f) ...;
(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;
(i) providing for a consistent and
harmonized system of debt restructuring, enforcement and judgment,
which places priority on the
eventual satisfaction of all responsible
consumer obligations under credit agreements.”
[26] The defendant cannot be described
as a recalcitrant debtor intent upon avoiding her financial
obligations. When she found
herself in financial difficulty in 2011,
she sought the assistance of the Act and the Magistrate's Court in
order to restructure
her debts. That application was opposed by the
plaintiff and notwithstanding its opposition, on 11 February 2011,
such an order
was made on 22 February 2011. There is no evidence to
indicate that the defendant did not thereafter adhere to that debt
rearrangement
order. Some ten months later, on 28 November 2011, the
plaintiff brought an action against the defendant for the
cancellation
of the instalment sale contract and the return of the
vehicle. The defendant, understandably, was compelled to retain the
services
of an attorney to defend this action. Her attorney
addressed a letter to the plaintiff's attorneys (who I reiterate are
not the
plaintiff's attorneys in this action) on approximately 26
January 2012, advising that the plaintiff was receiving payments in
terms
of the debt restructuring order. It was in that letter that
the plaintiff was advised that no further payments would be made
because
the defendant would be paying her attorney to oppose the
plaintiff's action.
[27] It would appear that the defendant
did not have the courtesy of a response to that letter from the
attorneys then acting for
the plaintiff. I would have thought that
those attorneys, having received the letter, would investigate the
veracity of the allegations
made in the letter, and if they were
found to be correct, that action would no doubt not have continued
and the defendant would
not have incurred what for her were
significant legal costs. However no such investigation appears to
have been done. Instead,
on 17 February 2012, an application was
made to place the matter on the expedited trial roll and a date, 11
June 2012 was allocated
for the trial. After all the trial
preparation had been undertaken, the plaintiff withdrew its action
against the defendant on
29 May 2012, two weeks before the trial was
due to be held. The plaintiff can only have done so because it at
that stage realised
that its action was without merit. In the
meantime, the plaintiff had put the defendant to the expense of
instructing attorneys
to oppose its entirely unmeritorious action.
[28] It must be borne in mind that the
plaintiff is one of the four largest banks in South Africa. The
defendant, on the other
hand, is an individual who does not have at
her disposal the financial resources that the plaintiff can call
upon. Indeed, having
opposed the application for debt review, the
plaintiff and its then attorneys must have been acutely aware of the
defendant's parlous
financial situation. Notwithstanding this, no
endeavour was made by or on behalf of the plaintiff to investigate
the matter and
it was only after the defendant had incurred the
expense of preparation for trial that the plaintiff withdrew the
unmeritorious
litigation.
[29] If that was not enough, in August
2012 the plaintiff launched a second action, this time based upon the
defendant’s default
of the debt restructuring order occasioned
by the first, unmeritorious action. To compound this, on 5 June
2014, and while the
second action was still pending, the plaintiff
launched the third action which is now before the court. That second
action was
then withdrawn in October 2014 with no tender to pay the
defendant's costs. The defendant was compelled to incur the further
expense
of launching an application in this court for an order that
the plaintiff pay her costs in the second withdrawn action. It was
only a month later that the plaintiff deigned to tender those costs.
[30] Ordinarily, the unsuccessful party
is ordered to pay the successful party’s costs. A successful
party however may under
certain circumstances be ordered to pay the
costs of the proceedings, but this is a very unusual order, seldom
given. In Michael
v Linksfield Park Clinic (Pty) Ltd 2001(3) SA 1188
(SCA) the Supreme Court of Appeal stated as follows at page 1203J to
1204A,
paragraph [5]:-
“It is beyond question that the
circumstances of a case may warrant an order, in the exercise of the
Court’s discretion,
depriving a successful party of costs,
partially or entirely, and even warrant an order requiring the
successful party to pay the
unsuccessful party’s costs –
again, partially or entirely.”
[31] There are two general principles
with regard to questions of costs namely, that the court has a
judicial discretion as to costs,
and that the successful party
should, as a general rule, have his costs. Fripp v Gibbon & Co
1913 AD 354
at 357.
[32] This judicial discretion is to be
exercised in accordance with the principles laid down by Atkin, LJ in
the case of Ritter
v Godfrey
[1920] 2 KB 47
(CA) at page 60, quoted
with approval in Merber v Merber
1948 (1) SA 446
(AD) at 453. Atkin,
LJ stated as follows:
"In the case of a wholly
successful defendant, in my opinion, the Judge must give the
defendant his costs unless there is evidence
that the defendant (1)
brought about the litigation or (2) has done something connected with
the institution or the conduct of
the suit calculated to occasion
unnecessary litigation and expense or (3) has done some wrongful act
in the course of the transaction
of which the plaintiff complains."
[33] Where the plaintiff has been
wholly successful, the same principles must apply in considering the
appropriate costs order.
[34] The National Credit Act was passed
in order to assist over-indebted people by providing them with
temporary relief. A court
granted the defendant the temporary relief
the Act permitted, and she appears to have grasped the opportunity
afforded her. When
her attorneys advised the plaintiff's then
attorneys on 26 January 2012 that there was a debt restructuring
order that was being
complied with by the defendant, the plaintiff
did not dispute this. The plaintiff then instituted two actions
which it subsequently
withdrew. By withdrawing those actions, the
plaintiff must have regarded them as being without merit. In the
first case, the
plaintiff tendered to pay the defendant's costs
although, as is clear from the evidence, the defendant was still out
of pocket
after having her costs taxed. In the second case the
plaintiff made no such tender and the defendant was compelled to
incur more
legal costs to bring a High Court application before such
a tender was forthcoming. All of this conduct of the plaintiff
arises
from a single transaction, the instalment sale agreement it
concluded with the defendant, the transaction over which the parties
have been litigating since 28 November 2011 when the plaintiff
launched the first of two baseless actions against the defendant
arising from the instalment sale agreement. This conduct of the
plaintiff arising from the instalment sale agreement constitutes
serious oppression of the defendant. In the circumstances, and in
the exercise of my discretion, I am of the view that it is
appropriate that the plaintiff pay the defendant's costs of this
action. I accordingly make an order in the following terms:
1. The cancellation of the instalment
sale agreement No. 600454770001 concluded between the plaintiff and
the defendant on 6 February
2008 is confirmed.
2. The defendant is directed to restore
to the plaintiff possession of a motor vehicle being a 2008 Dodge
Caliber 2.0 CVT SX with
the engine number 8D563540 and the chassis
number IB3H348BX8D563540 to the plaintiff within five (5) days of the
service of this
order upon the defendant.
3. In the event of the defendant
failing to deliver the vehicle to the plaintiff within the
aforementioned period of five days,
the sheriff of the High Court is
authorised to attach the vehicle and to deliver it to the plaintiff.
4. The plaintiff is granted leave to
apply to this court on the same papers, supplemented insofar as may
be necessary, for an order
that the defendant pay to the plaintiff
such damages that the plaintiff may have suffered in an amount to be
calculated by subtracting
the current market value of the vehicle
from the balance outstanding in terms of the instalment sale contract
and taking into account
the rebate on unearned finance charges as
well as any interest which may be payable by the defendant to the
plaintiff in terms
of the instalment sale agreement referred to in
paragraph 1.
5. The plaintiff shall bear its and the
defendant's costs of this action.
Date of Hearing : 2 March 2015
Date of judgment: 9 April 2015
Counsel for Plaintiff: Adv. AJ
Schoeman
Instructed by : Hannes Gouws &
Partners Inc
Locally represented by Johnston &
Partners
25 Claribel Road, Morningside,
Durban
Tel: 031-3036011
Counsel for Defendant: Adv. LK Olsen
Instructed by : Booysen & Co Inc
1A Holwood Park
5 Canegate Road
La Lucia Ridge Office Estate
Umhlanga Rocks
Tel: 031-5361710