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[2014] ZAFSHC 23
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Standard Bank of South Africa Limited v Du Toit and Another (1481/2012) [2014] ZAFSHC 23 (6 March 2014)
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IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 1481/2012
In
the matter between:
THE
STANDARD BANK OF SOUTH AFRICA
LIMITED
..........................................
Plaintiff
and
STEPHANUS
DAVID WESSEL DU
TOIT
............................................................
First
Defendant
(I.D.:
8[…]
MONA
DU
TOIT
..................................................................................................
Second
Defendant
(I.D.:
8[…])
(Married
in community of property)
HEARD
ON:
18 FEBRUARY 2014
JUDGMENT
BY:
C. REINDERS, AJ
DELIVERED
ON:
6 MARCH 2014
[1]
On 11 April 2012 the Plaintiff issued summons against the 1st and 2nd
Defendants for:
“
1.
Payment of the sum of R 371 672,39.
2.
Interest on the sum of R371 672,39, together with interest on the sum
of R0 - 180 000.00 at the rate of 8.00% per annum and interest
on the
sum of R 180 000.00 - 371 672.39 at the rate of 9.00% per annum
compounded monthly in arrear from 15 March 2012 to date
of payment.
3.
Monthly insurance premiums from 15 March 2012 on the sum of R 235,20
to date of payment.
4.
An order declaring:
ERF
1508 ODENDAALSRUS (EXTENSION 2) DISTRICT ODENDAALSRUS, PROVINCE FREE
STATE, MEASURING 644 SQUARE METRES, HELD BY DEED OF TRANSFER
NUMBER T
20555/2008, to be specially executable.
5.
Cost of suit on an attorney and client scale.”
[2]
Hereafter the Plaintiff applied for summary judgment, which
application was dismissed on 2 August 2012. Defendants filed their
plea on 19 September 2012.
[3]
During the Rule 37-conference held on 17 January 2014 the parties
noted that the issues to be decided are “as contemplated
in the
pleadings”. However, at the commencement of the proceedings I
was informed by Mr Olivier, on behalf of the Plaintiff,
that the
parties agreed that all allegations in the particulars of claim are
admitted safe for the question whether the Plaintiff’s
termination of the Defendants’ debt review under Section 86(10)
of the National Credit Act 34 of 2005 (The NCA) was premature.
Mr
van Rensburg on behalf of the Defendants confirmed same. The latest
transaction record of the outstanding amount due by
Defendants in
respect of the bond (R452 674,94 on 18 February 2014) was handed up
by Mr Olivier with Mr van Rensburg admitting
the correctness of the
contents thereof. I have marked it as “Exhibit A”, whilst
the Defendant handed up a bundle (containing
inter alia the
pleadings, opposition to the summary judgment application and
documentation pertaining to the application for debt
review by the
Defendants) which I have marked as “Exhibit B”.
[4]
Section 86(10) of the NCA reads as follows:
“
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 give notice to terminate the review in the
prescribed manner to-
(a)
the consumer
(b)
the debt counsellor; and
(c)
the National Credit Regulator,
at
any time at least 60 business days after the date on which the
consumer applied for the debt review.”
[5]
It is thus clear from sec 86(10) that the following prerequisites for
termination of the debt review by the credit provider
should exist:
The consumer must be in default under the credit agreement that is
being reviewed; notice of termination of the debt
review should be
given by the credit provider to the consumer, the debt counsellor and
the National Credit Regulator and least
60 business days should have
expired from the date on which the consumer applied for debt review
before the said notice can be
given.
[6]
In casu
the Defendants were in default with their repayments under the bond
and by reason of their failure to pay any or all of the agreed
instalments, the whole of the outstanding amount became due. In
par 10 of the Plaintiff’s Particulars of Claim it is
averred
that
“
(t)he
defendants have failed to timeously and punctually perform their
obligations under the terms and conditions of the said mortgage
bonds
by falling into arrears with the monthly instalments, and which
arrears, the Defendants despite demand fails and/or refuses
and/or
neglects to pay.”
As
per the submissions made to me by Mr Olivier, and confirmed by Mr Van
Rensburg, this fact was not in issue. Mr van Rensburg conceded
that
the Defendants were in arrears with their repayments but submitted
that they fell behind as phrased by him “due to the
process”,
hinting that the defendants had fallen in arrears by virtue of the
fact that they had made an application for debt
review and accrued
debt counsellor fees and legal costs as a consequence thereof. Mr van
Rensburg argued that the Defendants had
voluntarily applied for debt
review before the Plaintiff issued summons. Although the latter fact
is undisputed, it is also common
cause that the Defendants were in
arrears with the monthly instalments of the mortgage agreement at the
time when the Plaintiff
gave notice in terms of sec 86(10) of the NCA
and whilst the debt review was still pending. This is evident from
the Defendants’
opposition to the summary judgment application
where it is stated in par 3.15 as follows:
“
The
initial bond repayments were made since 30 January 2010 until 28 May
2011. At this point we ran into financial trouble. It is
therefore
that no payments were made for June to August 2011 and that we
applied for debt review in June 2011.”
The
Defendants then gave an exposition of the monthly payments that they
proceeded to make in the amount of R1526,78, being less
than the bond
instalment of R3364,98. That the Defendants were in default in terms
of the mortgage bond on 23 November 2011 cannot
be disputed.
[7]
It is common cause that the Defendants applied for debt review on 29
August 2011. On 23 November 2011, 62 business days after
the
application for debt review, the Plaintiff gave notice of termination
of the debt review to the Defendants (per registered
post), the debt
counsellor and the National Credit Regulator (both via e-mail).
[8]
Mr van Rensburg argued that the Plaintiff was “actively
involved in the debt review within the sixty day period”
due to
the fact that the application for debt review was opposed by the
Plaintiff, and that the position would have been different
had the
Plaintiff not “participated” in the debt review
proceedings. I cannot agree with Mr Van Rensburg. There is
no
indication in sec 86(10) that the Plaintiff is precluded from
terminating the debt review in the event of any involvement in
the
pending debt review within the prescribed 60 day period.
[9]
According to Mr van Rensburg the Plaintiff did not act in good faith
by issuing summons against the Defendant after being involved
in the
debt review proceedings opposing the application thereof, and thus
the Plaintiff did not have the right to terminate the
debt review.
Whilst it is true that the defendant could have raised the
Plaintiff’s failure to act in good faith as a request
to the
court not to grant summary judgment, it does not follow that the
Plaintiff could for the same reason not terminate the debt
review and
issue summons. No request for a resumption of the review process as
is envisaged in Sec 86(11) of the NCA was made by
Defendant. (
Collett
v Firstrand Bank Ltd
2011 (4) SA
508
(SCA) par [17])
[10]
The question as to when a credit provider is entitled to terminate a
debt review was extensively dealt with by the Supreme
Court of Appeal
in
Collett
,
supra
. It
was confirmed that a credit provider may terminate a debt review in
terms of Sec 86(10) of the NCA even after a matter has
been referred
to the magistrate’s court (par [6] and [14] at 511E-F and
517B-D). The court articulated per Malan JA at par
[12] (516 D-E):
“
It
is not that the credit provider is ‘derailing’ the
process when he terminates the debt review: it is the consumer
that
is in breach of contract, not the credit provider.”
[11]
Mr van Rensburg pressed hard upon me to consider the aim of the NCA
and also the Constitution when deciding the matter. Indeed,
the
overriding purpose is to protect consumers from a relatively
unbrindled freedom of contract. Credit providers also have rights,
and the balance is struck by a push/pull tension between the consumer
and credit provider. However, not only are the interests
of consumers
and credit providers at stake when determining where the balance
should be struck, but also the national economic
interest which is
affected by consumers borrowing and over- or underspending and credit
providers’ ability to recover debts.
(
Firstrand
Bank Ltd v Mvelase
2011 (1) SA 470
(KZP))
[12]
I am bound by the decision of the SCA as stated in
Collet
,
supra
and
cannot find otherwise as that the Plaintiff was acting within their
rights to terminate the debt review in terms of Sec 86
(10) of the
NCA and issue summons against the Defendants.
[13]
Plaintiff prayed for an order permitting execution of the judgment to
be levied against the defendant’s immovable property.
Such an
order is ordinarily sought and granted in mortgage-bond cases
contemporaneously with, and ancillary to, the order granting
judgment
sounding in money, and should be entertained by the court. (
Absa
Bank v Petersen
2013 (1) SA 481
(WCC))
[13]
The Defendants pleaded that the premises is their primary residence
and I am therefore obliged to do a judicial oversight of
all the
relevant circumstances as is envisaged in rule 46(1)(a)(ii) and
Gundwana v Steko Development and
Others
2011 (3) SA 608
(CC) before
granting the defendant’s immovable property specially
executable.
[14]
Mr van Rensburg submitted that there is no allegation by Plaintiff in
the summons that the immovable property is the only property
belonging to the defendants, thereby suggesting that the defendant
might have other immovable or movable property available for
sale in
execution to satisfy the judgment debt. In the application for debt
review the debt counsellor indicated in par 7.7 as
follows:
“
I
must reiterate that the Consumers informed me that they have no other
means and/or assets to realize in order to reduce and/or
clear their
debt…”
[15]
Apart from the submissions by Mr van Rensburg as stated in par [6]
and [14], no other facts were placed orally before me as
to why
execution against the property should not be granted.
[16]
However, par 2.8 of Defendant’s plea contained facts which were
taken into account by me in reaching a conclusion as
to why execution
against the immovable property should follow or not: the property is
the Defendants’ primary residence;
the Defendants would be left
with a financial burden; the property is valued at “more than R
700 000,00”; the Defendants
had made an offer to the Plaintiff
which is still pending; selling the property on an auction would
prejudice the Defendants and
Plaintiff failed to engage in other
means to recover outstanding amounts.
[17]
That the mortgaged property is the Defendant’s primary home, is
not in itself a reason to deny the mortgagee’s
contractual
right to realise its security. As was stated by Binns-Ward J in
Absa
Bank v Petersen
,
supra
at par 37:
“
Indeed,
by giving the property in security the defendant voluntarily derogate
from the extent of his full dominium over the property
in favour of
the bank. He did so for his own benefit and upon an undertaking in
favour of the bank that, if he defaulted in his
payment obligations
to the bank, the full amount owed by him would become immediately due
and payable, and the property given as
a security could be sold to
realise the funds to settle the debt.”
[18]
From Exhibit B (p46) it is clear, with respect, that the Defendants
are not indigent. The gross salary of the First Defendant
is
indicated as R 25 059,41, with no submission before me that this
amount has been reduced. Surely it is possible that the
Defendants
would be able to obtain accommodation by renting a place even if not
suitable to their needs, and that they would not
be left completely
homeless. It was confirmed by Mokgoro J in
Jaftha
v Schoeman and Others; Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC) at 162 F that a sale in execution should
ordinarily be permitted where there has not been an abuse of court
procedure. It
was not argued, nor can it be derived in any way, that
there was an abuse of court procedure
in
casu
.
[19]
The averment that the Defendants would be left with a financial
burden is in conflict with the averment that the property worth
more
than R 700 000,00, taking into account that the amount owing to the
Plaintiff is R 452 674,94. One can only wonder why the
Defendants did
not attempt to market the property and place this information before
court. As for the averment that selling the
property on a forced sale
would prejudice the Defendants, it is also without substance, because
it would defeat the purpose of
having the immovable property as
security. As far as the “pending” of an offer and the
Plaintiff’s failure to
engage in other means to recover the
outstanding amounts is concerned, it has already been considered and
confirmed by me that
the Plaintiff acted within its rights to
terminate the debt review and institute litigation. More than a year
has lapsed since
the Defendants had filed their plea and opposition
to summary judgment, and due to the fact that no new information was
placed
before me for consideration, the inference drawn by me is that
these were the only circumstances relied upon by the Defendants.
[20]
In considering the payment history of the defendants up until the
hearing, it is clear that the Defendants endeavoured to make
payments
on a regular basis and that the legal costs contributed to the
outstanding amount and the arrears of R42 258,66 (120
days+).
However, the balance owing on the mortgage bond (R 452 674,94)
exceeds the amount of the loan (R 355 000,00)
by almost R 100
000,00. If the defendants were attempting to obtain the money owing
from another source, I would have expected
such information to be
placed before me at the hearing, but in the absence thereof I have no
other inference to draw as that the
Defendants would not be able to
pay the arrears. In fact, in opposing the application for debt review
the Plaintiff indicated that
the Defendants proposal for repayment
was not fair, just and rational. The plaintiff as a financial
institution has a legal right
and obligation towards clients whose
money is being utilised to fund mortgage bonds, to minimise its
losses. As Froneman
J articulated in
Gundwana
,
supra
, at
626 par [54]:
“
It
must be accepted that execution in itself is not an odius thing. It
is part and parcel of normal economic life.”
[21]
Taking all the above relevant factors into account, it leaves me to
conclude that the Plaintiff is entitled to an order declaring
the
immovable property specially executable.
[22]
No submissions were made before me regarding the prayer for payment
of insurance premiums. I am thus not willing to grant such
a prayer
as it appears from Exhibit A that monthly insurance premiums are
being debited. As far as costs are concerned Mr van Rensburg
conceded
that cost should follow the cause. I find no reason to deviate
therefrom, safe that I find no reason to award costs on
an attorney
and client scale.
[23]
In the premises the following order is made:
1.
Payment in the amount of R 452 674,94.
2.
Interest on the said amount calculated from 18 February 2014 as
follows:
On
the first R 180 000,00 at 8,00% per annum.
On
the balance at 9,00% per annum.
3.
An order declaring:
ERF
1508 ODENDAALSRUS (EXTENSION 2) DISTRICT ODENDAALSRUS, PROVINCE FREE
STATE, MEASURING 644 SQUARE METRES, HELD BY DEED OF TRANSFER
NUMBER T
20555/2008, to be specially executable.
4.
Cost of suit.
C. REINDERS, AJ
On
behalf of Plaintiff: Adv J Olivier
Instructed
by:
Hugo
& Bruwer Attorneys
BLOEMFONTEIN
On
behalf of Defendants: Adv HCJ Van Rensburg
Instructed
by:
Van
Pletzen Lambrecht Attorneys
BLOEMFONTEIN
/sp