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[2012] ZAKZDHC 3
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Firstrand Bank v Raheman and Another (5345/2010) [2012] ZAKZDHC 3; 2012 (3) SA 418 (KZD) (10 February 2012)
1
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO.: 5345/2010
In the matter between
FIRST RAND BANK
….............................................................................
PLAINTIFF
and
NAGINE RAFUQ ABDYK RAHEMAN
…..................................
FIRST
DEFENDANT
KURSGEDA BANU ABDUL RAHEMAN
….........................
SECOND
DEFENDANT
______________________________________________________________
JUDGMENT
______________________________________________________________
MOKGOHLOA J
[1] The plaintiff instituted action
against the defendants for:
[1.1] payment of R220 858.82 together
with interest calculated daily on such amount at the rate of 8.65%
per annum and compounded
monthly from 29
th
April 2010 to
date of final payment;
[1.2] costs of suit on the attorney
and client scale;
[1.3] an Order declaring executable,
the mortgaged property more fully described as:
Erf 361, Trenance Manor, Registration
Division FU, Etheklwini Municipality, Province of KwaZulu-Natal, In
extent 458 (Four and Fifty
Eight) squire metres, held by Deed of
Transfer No.T42039/2008
be declared executable.
[2] The defendants admitted that they
failed to pay the necessary instalments in terms of the bond
agreement. They however raised
a special plea that:
[2.1] They were placed under debt
review on 8 January 2010 in terms of the provisions of the National
Credit Act 34 of 2005 (“the
Act”).
[2.2] On 15 February 2010 the debt
counsellor representing the defendants forwarded a proposal to the
plaintiff in regard to the
repayments of monies owed under the
mortgage bond.
[2.3] On 4 March 2010 the defendants
forwarded a revised proposal increasing the contribution to be made
by the defendants in respect
of monies owed to the plaintiff.
[2.4] The plaintiff did not object to
the revised proposal nor did the plaintiff make a counterproposal to
the suggestions of the
debt counsellor.
[2.5] The defendants proceeded to make
monthly payments to the debt counsellor in terms of the revised
proposal.
[2.6] An application to make the
proposal an Order of Court was instituted in the Durban Magistrates
Court. On 10 May 2010 the Court
made the following order:
That the joint estate of
the first and second respondents be declared to be over-indebted in
terms of section 79 of the Act;
that the first and
second respondents’ obligation to the third and seventh
respondents to arrange in terms of section 86
and 87 as per annexure
“A”;
the payment to the
credit providers is made through a credit payments division agent;
that all parties bear
their own costs to the application.”
[3] The plaintiff submitted that it
terminated the debt review in terms of section 86(10) of the Act and
a notice to that effect
was posted by pre-paid registered post to the
defendants on 13 April 2010.
[4] The issue to be determined is
whether the credit provider is entitled to terminate a debt review in
terms of section 86(10)
after the debt counsellor has referred the
matter to the magistrates’ court.
[5] Section 86 reads as follows:
“
(10)
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.”
(11) 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 Magistrate’s Court hearing the matter may
order that the debt review resume
on any conditions the court
considers to be just in the circumstances.”
[6] This section has to be read with
sections 87 and 88 (3) which read:
“
87
The
Magistrate’s Court may re-arrange consumer’s obligations.
–
(1) if a debt counsellor
makes a proposal to the Magistrate’s Court in terms of Section
86(8)(
b
), or a
consumer applies to the Magistrate’s Court in terms of section
86(9), the Magistrate’s Court must conduct a
hearing and,
having regard to the proposal and information before it and the
consumer’s financial means, prospects and obligation,
may-
reject the
recommendation or application as the case may be; or
make-
an order declaring any
credit agreement to be reckless, and an order contemplated in
section 83(2) or (3), if the Magistrate’s
Court concludes
that the agreement is reckless;
an order re-arranging
the consumer’s obligations in any manner contemplated in
section 86(7)(
c
)(ii); or
both orders
contemplated in subparagraph (i) and (ii).
(2) The National Credit
Regulator may not intervene before the Magistrate’s Court in a
matter referred to it in terms of this
section.
88 (3) Subject to section
86(9) and (10), a credit provider who receives 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 by 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 re – arrangement
agreement between the consumer and the credit
providers, or ordered
by a court or the Tribunal
[7] In
Wesbank , a Division of
FirstRand Ltd v Papier (National Credit Regulator as Amicus Curiae)
2011 (2) SA 395
(WCC) and First Bank Limited
,
trading as
Wesbank v Kishore Sewsunker 22 February 2011,
the court held that
once a debt review has been referred to the magistrates’ court,
any litigation proceeding for the recovery
of the debt should be
stayed.
[8] However
Eksteen J
, held
that in
FirstRand Bank Ltd v Collett
2010 (6) SA 351
(ECG)
that a credit provide is entitled to terminate a debt review in terms
of section 86(10) even after the debt counsellor has referred
the
matter to the magistrates’ court
.
This decision was
confirmed by the Supreme Court of Appeal in
Collett v FirstRand
Bank Ltd
2011 (4) SA 508
(SCA)
where the Court held at 515:
“
[11]
…The role of the debt counsellor does not end with his
referral of the matter to the magistrates’ court. His
‘proposal’ takes the form of an application governed by
the rules of the magistrates’ court and he is required
to be
present in court, participate in the hearing and assist the court by
way of furnishing evidence, making submissions or answering
questions. It is no answer to contend that contextually s 86(10)
forms part of s 86 and thus part of the ‘debt review’,
as
opposed to the ‘hearing’ before the magistrates’
court in terms of s 87. The words in s 86(10), ‘that
is being
reviewed in terms of this section’, rather emphasise that it is
not a debt review pursuant to s 83(3) (
b
)
or 85(
a
)
and (
b
).
Entirely different considerations apply to the review under these
sections: they are not necessarily initiated by the consumer
and the
court has a discretion whether to proceed under those provisions. The
credit provider is not entitled to terminate either
of them. Under ss
86 and 87 there is only one unified process, the purpose of which is
the restructuring of the consumer’s
debts by amending the terms
of credit transaction between the parties. If the parties agree, they
may amend the agreement in terms
of s116 or file a consent order as
envisaged by s 86 (8)(
a
).
If they do not, the hearing envisaged by s87 takes place. It follows
that I am in agreement with the conclusion reached in the
court
below:
‘
I
am unable to find anything in the structure of s86, or of the Act in
its entirety, which is indicative of an intention on the
part of the
legislature to limit the right of a credit provider under s86(10) to
the process prior to the reference to the magistrate’s
court.
On the contrary ... I consider that the credit provider’s
rights to give notice in terms of s86(10) and to legitimately
terminate the debt review process continue until the magistrates’
court has made an order as envisaged in s 87.’”
[9] In
casu
, not only is the
matter pending before the magistrate, an order has been made in terms
of sections 86 and 87 to re-arrange the
debt. The plaintiff has not
alleged that the defendant has defaulted the terms of the court order
granted on 10 May 2010. Therefore
the plaintiff is not entitled to
exercise or enforce by litigation any right under the credit
agreement.
[10] Another issue raised by the
defendants is that the plaintiff failed to respond to the proposals
made by the debt counsellor
in restructuring the debt which in terms
of section 86(5) obliges both the plaintiff and defendants to
cooperate in debt reviews.
According to the defendants, the plaintiff
has been reckless in failing to participate in such arrangement and
they asked for a
punitive costs order against the plaintiff.
[11] I agree, section 86(5) obliges
both the consumer and credit provider to participate in good faith in
the review and any negotiations
designed to result in responsible
debt rearrangement. Should the credit provider fail to participate in
the review, the court may,
on request by the consumer, order that the
debt review resume. No such request was made by the defendants
because the court has
already made an order in terms of section 86
and 87.
[12] Having stated the above, I am of
the view that the plaintiff’s failure to participate in the
review proceedings is reckless
but not to an extent of attracting
punitive costs against it.
Order
The plaintiff’s action is
dismissed with costs.
__________________
MOKGOHLOA J
COUNSEL
Counsel for the Applicant : Adv S
Rasool
Instructing Attorneys : Livingston
Leandy Inc
4
Th
Floor Mercury House
320 Anton Lembede Street
Durban
Ref: B A Rist/kr/02F193042
Counsel for the Respondent : Adv IJ
Patel
Instructing Attorneys
: Patel & Associates
Suite 6, First Floor
La Lucia Park
64 Armstrong Avenue
Ref: P4323/10
Date of hearing : 22 March 2011
Date of Judgment
: 10 February 2012