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[2012] ZAGPPHC 285
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Firstrand Bank Ltd v Steenkamp (57664/2011) [2012] ZAGPPHC 285 (11 May 2012)
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE
NO: 57664/2011
DATE:11/05/2012
In
the matter between:
FIRSTRAND BANK
LIMITED
.............................................................
Plaintiff
and
STEENKAMP JACOBUS
PETRUS
.................................................
Defendant
JUDGMENT
MAKGOKA,
J:
[1]
This is an application for default judgment. In a simple summons, the
plaintiff alleges that the defendant has breached the
terms of a loan
agreement between the parties. The loan agreement was secured by a
mortgage bond in favour of the plaintiff over
the defendant’s
property. The plaintiff claims payment of a sum of R1 736 277.73,
together with finance charges and interest.
The plaintiff further
seeks an order declaring the defendant’s property executable
for the amount claimed and costs.
[2]
Summons was properly served on the defendant, on 12 October 2011. The
defendant has not entered an appearance to defend and
remains in
default. The loan agreement is a credit agreement envisaged in, and
subject to, the National Credit Act, 34 of 2005
(the NCA). The
defendant had applied for debt review in terms of s 86(1) of the NCA,
which was later terminated by the plaintiff
in terms of s 86(10) of
the NCA, and the plaintiff now seeks to enforce the credit agreement.
[3]
The issue for determination is whether the plaintiff, as a credit
provider, upon termination of debt review proceedings in terms
of s
86(10) of the NCA, is entitled to enforce or to cancel the credit
agreement, without having complied with s129 and s130 of
the NCA. In
Changing Tides (Pty) Ltd v Grobler & Another
1
Murphy J, although obiter, answered that question in the positive. A
contrary view was expressed by Legodi J in Toyota Financial
Services
and Van Biijon and First Rand Bank Ltd t/a Honda Finance v CC Owens
2
where the learned Judge held that a credit provider is not entitled
to terminate the consumer’s debt review in terms of s
86(10)
and enforce the credit agreement without having first met the further
requirements of s 130 as contemplated in s 129(1 )(b)(ii).
[4]
When this matter came up for hearing before me in the unopposed
motion court,
I
raised with counsel the issue of the divergent judgments. Counsel
urged me to prefer Murphy J’s judgment to that of Legodi
J. I
indicated to counsel that it would be undesirable for me to simply
ignore a judgment of this court, or prefer one over the
other,
without the benefit of full argument. I then requested counsel to
submit written submissions. It was then anticipated that
a Full Bench
would be constituted to consider these judgments and that this matter
would serve as one of the "test cases”.
The Full Bench is
yet to be constituted and in order to avoid any injustice to the
plaintiff, I have decided to deliver this judgment
on the preliminary
view I hold on this issue, which I succinctly set out.
[5]
The NCA prescribes a two-stage approach to debt enforcement, in
distinguishing between procedures that have to be complied with
before debt enforcement (s 129), and those that are to be applied in
court (s130). Section 86(10) provides for termination of a
debt
review. It is necessary to quote in full, the provisions of those
sections.
[6]
S 129 provides:
“
(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
payment 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 requirements set out in section 130."
[7]
S 130(1 )(a) provides:
“
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(9),
or section 129(1), as the
case may be;
(my
emphasis)
[8]
S 86(10) deals with termination of debt review. It provides:
‘
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 the National Credit Regulator, at any time
at least 60 business days after the date on which the consumer
applied for the debt review.”
[9]
Before I consider the effect of the relevant sections, I need to
dispose of one aspect. That is, the reference in s130 to a
notice ‘as
contemplated in section 86(9)’. Legodi J held (in paras 36, 37
and 38 of the judgment) as one of the premises
for the conclusion he
arrived at, that that reference (to s 86(9) and not s 86(10)) was
expressly made, and was deliberate, by
the legislature. I do not
agree. That reference is a patent error, as s 86(9) does not refer to
any notice, but deals with the
consumer’s right to apply to a
magistrate’s court, should his or her application be rejected
by the debt counsellor.
It has been held by a Full Bench of this
court
3
that the reference to s 86(9) is an obvious error and that it should
be a reference to s 86(10). (See also Changing Tides)
4
.
[10]
Once it is accepted, as one should, that the reference to s 86(9) in
s 130 should have been to s 86(10), it becomes clear then
that in
both s129 and s130, reference is made to a notice in terms of either
s 129(1) ors 86(10), as being pre-requisite for the
enforcement of a
credit agreement. If either notice, depending on the circumstances,
has been given, what remains for the credit
provider is to comply
with the “further requirements” in terms of s130.
[11]
The essence of Legodi J’s reasoning is encapsulated in
paragraphs 27 and 28 of the judgment:
"27.
Therefore, the provisions of sections 129 and 130 must be seen in the
context of the noble objective of the Act. Section
129(1) (a), unlike
the proceedings under section 86, provides a consumer with a wide
range of choice (sic) to make or alternatives
to resort to, the sole
purpose being, to resolve any dispute under the credit agreement.
28.
For example, unlike the proceedings under section 86, where only a
debt counsellor is involved, before approaching the court
under
section 129, a participative process by the parties to the credit
agreement is envisaged. The process out of the consumer’s
choice, can be facilitated either by a credit counsellor, alternative
dispute resolution agent, by consumer court or ombud with
jurisdiction. All of these people have their own expertise and some
special negotiating skills”.
[12]
The learned Judge clearly adopted a purposive interpretational
approach. However, in applying the purposive approach, care
must be
taken not to violate the legislature’s language employed in the
statute. Innes CJ said the following in Dadoo Ltd
and Others v
Krugersdorp Municipal Council
5
:
‘
Speaking
generally, every statute embodies some policy or is designed to carry
out some object. When the language employed admits
of doubt, it falls
to be interpreted by the Court according to recognized rules of
construction, paying regard, in the first place
to the ordinary
meaning of the words used, but departing from such meaning under
certain circumstances, if satisfied that such
departure would give
effect to the policy and object contemplated. But there must, of
course, be a limit to such departure. A Judge
has authority to
interpret, but not to legislate, and he cannot do violence to the
language of the lawgiver by placing upon it
a meaning of which it is
not reasonably capable, in order to give effect to what he may think
to be the policy or objective of
the particular measure’.
[13]
The starting point in the interpretation of a statutory provision
remains an endeavour to ascertain the intention of the legislature
from the words used in the enactment. Those words must be accorded
their ordinary, literal, grammatical meaning and a court may
depart
from that meaning only where to do so ‘would lead to an
absurdity so glaring that it could never have been contemplated
by
the legislature, or where it would lead to a result contrary to the
intention of the legislature, as shown by the context or
by such
other considerations as the court is justified in taking into account
...’ (See Venter v Rex
1907 TS 910
- 915: Randburg Town Council
v Kerksay Investments (Pty) Ltd
1998 (1) SA 98
(SCA) at 107B-G).
[14]
The clear and plain language of s129(b)(i) and (ii) envisages two
distinct pre-requisites for enforcement of a credit agreement:
delivery of either s 129(a) or s 86(10) notice, and secondly
compliance with “further requirements in terms of s 130",
which are: (i) proof that the consumer had been in default for at
least 20 business days, and (ii) that 10 business days had lapsed
after delivery of a notice contemplated in s 86(10) or s 129(1). The
use of the words ‘as the case may be’ clearly
envisages
different and distinct considerations as to which section, (129(1
)(a)(i) or s86(10)), should be applicable in giving
notice.
[15]
In para 29 of the judgment Legodi J states the following:
‘‘
Now,
if a credit provider under section 86(10) was to be entitled upon
termination of debt review proceedings, to either enforce
or cancel
the credit agreement without compliance with the provisions of
sections 129 and 130, the consumer would, in my view,
be
disadvantaged by not been given the opportunity to make a choice
under section 129(1)(a)\
[16]
With respect, I do not see how the consumer is disadvantaged. In
terms of s 129(1 )(a), the consumer is restricted in his choice.
He
or she can refer the credit agreement to either of the entities
mentioned in the section. In other words, he or she is not entitled
to refer the dispute intermittently to one entity after the other,
should the dispute not be resolved by the one earlier chosen
by him
or her.
[17]
By parity of reason, a consumer who avails himself or herself of the
provisions of s86(1) by referring the matter to a debt
counsellor,
has thereby exercised the options afforded to him or her in s 129(1
)(a), and is in the same position he would have
been, had a notice in
terms of s129 been given to him or her, as a debt counsellor is one
of the entities to which the consumer
may refer a credit agreement,
the other entities being the alternative dispute resolution agent,
consumer court, or ombud with
jurisdiction. Put differently, by
availing himself or herself of the provisions of s 86(1) the consumer
is deemed to have availed
himself or herself of the single option he
would have exercised, had he received a notice in terms of s 129.
Should that process
(of debt review) be validly terminated, he or she
does not have the right to refer the credit agreement to the other
entities.
[18]
Flowing from the above reasoning, on Legodi J’s interpretation
of the relevant sections of the NCA, the s 129 notice
to be given to
the consumer (after termination in terms of s86(10)), would
necessarily have to exclude a debt counsellor as an
option to which
the consumer could refer the credit agreement. It has to be so as the
very termination of the debt review is preceded
by the consumer
having referred the credit agreement to a debt counsellor.
Necessarily therefore, the s 129 notice, under those
circumstances,
would be different to what is envisaged in the section, lest an
absurdity results.
[19]
I think Legodi J’s concerns are adequately addressed by reading
s 86(10) in conjuction with s 86(11) which provides that
a credit
provider who has given notice to terminate the debt review and
proceeds to enforce the agreement, a magistrate court (or
a High
Court)
6
hearing the matter, may order that the debt review resumes on any
conditions the court considers to be just in the circumstances.
In
Collett v Firstrand Bank
7
the Supreme Court of Appeal pointed out that s 86(11) tempers the
right of the credit provider to terminate the debt review.
[20]
To sum up: I think it is manifestly clear on a plain reading of ss
129, 130 and 86(10) that they mean what they say: before
enforcement
of a credit agreement a credit provider must give notice in terms of
either s129 or s 86(10), as the case may be. The
credit provider is
therefore not obliged, after having terminated the deb review in
terms of s 86(10), to give the consumer a notice
in terms of
s129(1)(a).
This
view finds support of the learned authors of Guide to the
National
Credit Act,
Issue
3 at p12-25 where the following is stated:
"A
credit provider wishing to terminate a pending debt review and
institute proceedings in court to enforce the credit agreement
against a consumer who is in default need only give the consumer
notice of termination of the review, as required by
section 86(10)
,
before proceeding to court. In such instances it is not necessary for
a
section 129(1)
(a) notice to precede litigation, as is clear from
section 129(1)
(b) which stipulates that a credit provider may not
commence any legal proceedings before first providing to the consumer
a notice
as contemplated in
section 129(1
)(a) or
section 86(10)
’T.
[21]
For these reasons I prefer Murphy J’s obiter view. The final
word would obviously be left to the Full Bench if and when
constituted.
[22]
The plaintiff has met the jurisdictional requirements for the
exercise by it of its rights in terms of
s 86(10).
Those are:
(a)
the defendant is in default of the credit agreement being reviewed;
(b)
at least 60 business days have elapsed from the date on which the
defendant applied for debt review;
(c)
at least 10 business days have elapsed since the plaintiff delivered
the
s86(10)
notice prior to the institution of these proceedings to
enforce its rights in terms of the agreement.
[23]
Furthermore, the plaintiff has complied with the directives of the
Full Bench of this division as laid down in FirstRand Bank
Ltd v
Folscher and Another, and Similar Matters
8
,
with regard to the authorization of a writ of execution of the
immovable property. I am satisfied that the plaintiff is entitled
to
judgment. Costs are sought on an attorney and client scale as
provided for in the agreement.
[24]
In the result default judgment is granted against the defendant for:
1.
Payment of the sum of R1,736,277.73;
2.
Interest on the amount in 1 above at the rate of 7.45% per annum
from 31 August 2011 to date of payment;
3.
The property described as Erf 27, BRACKENHURST, Registration Division
IR, the Province of Gauteng, measuring 1478 square meters
and held
under Deed of Grant No. T68630/2007 subject to the conditions
contained therein, is declared executable;
4.
Costs on an attorney and client scale.
TM
MAKGOKA
JUDGE
OF THE HIGH COURT
DATE
HEARD : 14 DECEMBER 2011
JUDGMENT
DELIVERED : 11 MAY 2012
FOR
THE PLAINTIFF: ADV J H MOLLENTZE
INSTRUCTED
BY : BICCARI BOLLO MARIANO INC,
PRETORIA
NO
APPEARANCE FOR THE DEFENDANT.
1
Case
number 9226/2010
2
Case
number 31752/2011
3
African
Bank Ltd v Myambo NO and Others
2010 (6) SA 298
(GNP) at 311G.
4
Above,
para 25.
5
1920
AD 530
at 543
6
As
per
Mercedes Benz Financial Services South Africa (Pty)
Ltd v Dunga
2011 (1} SA 374
(WCC).
7
2011
(4) SA 508
(SCA)
8
2011 (4) SA 314
(GNP).