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[2011] ZAFSHC 58
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Firstrand Bank Ltd v Grobler (6446/2010) [2011] ZAFSHC 58 (17 March 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 6446/2010
In
the matter between:-
FIRSTRAND
BANK LTD
…........................................
Applicant
(Plaintiff)
and
PIETER
GROBLER
….......................................
Respondent
(Defendant)
_____________________________________________________
HEARD
ON:
24 FEBRUARY 2011
_____________________________________________________
DELIVERED
ON:
17 MARCH 2011
_____________________________________________________
JUDGMENT
_____________________________________________________
H.M. MUSI, JP
[1] This is an
application for summary judgment. The applicant’s cause of
action is based on a credit agreement entered into
by and between the
parties and it is common cause that such agreement is subject to the
provisions of the National Credit Act,
34 of 2005 (the NCA).
[2] In opposing the
application, the respondent filed a notice in terms of Rule 30
alleging several irregularities in the application.
It is unnecessary
to go into the alleged irregularities, because all were shown to be
without merit and Mr. Buys, who appeared
for the respondent, conceded
this much at the hearing. Mr. Buys was constrained to fall back on a
point
in limine
he raised in his heads of argument to the
effect that the provisions of the Act had not been complied with. In
this regard he cited
the provisions of section 86(4)(b)(i) and
section 86(10).
[3] Now section 86(4)(b)
was cited in relation to section 88(3) which provides as follows:
“
(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 agreed between the consumer
and credit providers, or ordered
by a court or the Tribunal.”
The provisions of
sections 83 and 85 are not applicable to this matter. Section
86(4)(b) is also not applicable, because the respondent’s
application for debt review in terms of that section ran its full
course, culminating in an order of re-arrangement in terms of
section
87(1)(b)(ii). Section 86(9) is also not applicable by virtue of the
fact that the debt counsellor submitted the application
for debt
review to the magistrates’ court which duly granted an order of
re-arrangement. The only possible impediment may
be section 86(10),
with which I proceed to deal
infra
.
[4] It is not disputed
that the order of re-arrangement was made by the magistrates’
court at Parys on 3 November 2009. In
terms thereof the respondent
was required to pay monthly instalments of R4 000,00. In its summons
the applicant alleges that the
respondent has defaulted on the order
of re-arrangement and has given details of such default. The
respondent has not challenged
these averments, because he chose not
to file any answering affidavit and in the absence thereof, the
applicant’s averment
as contained in the summons and verified
by affidavit, must be accepted.
[5] It
is against this factual background that the only issue that remains
to be determined should be considered. That issue is
the respondent’s
contention that the applicant is debarred from proceeding with its
action by virtue of the fact that it
had not issued a notice in terms
of section 86(10) terminating the debt review. My initial view
expressed during the hearing was
that the applicant should have
issued such notice before issuing summons. In this regard, Mr.
Tsangarakis, for the applicant, handed
up a copy of a judgment of the
full bench of the Western Cape High Court in the matter of
WESBANK,
a division of FIRSTRAND BANK LIMITED v DEON WINSTON PAPIER AND THE
NATIONAL CREDIT REGULATOR AS
AMICUS
CURIAE
,
c
ase
number 14256/2010 delivered on 1 February 2011.
[6]
The ratio of this judgment is that where a consumer has applied for
debt review in terms of section 86(1) and the debt counsellor
has
referred the application to the magistrates’ court in terms of
section 86(7) for an order or re-arrangement, notice in
terms of
section 86(10) is incompetent. See also
STANDARD
BANK OF SOUTH AFRICA LTD v KRUGER: STANDARD BANK OF SOUTH AFRICA LTD
v PRETORIUS
2010
(4) SA 635
(GSJ)
where
a similar conclusion was reached for different reasons. This is in
contrast to other judgments that had ruled that a credit
provider can
terminate a debt review process by issuing a section 86(10) notice,
even when the review application has been submitted
to court, but
before a debt re-arrangement order had been granted. Compare
FIRSTRAND
BANK LTD T/A FIRST NATIONAL BANK v SEYFFERT AND ANOTHER AND THREE
SIMILAR CASES
2010
(6) SA 429
(GSJ) at 436 A – B.
1
[7] I
respectfully agree with the reasoning and conclusion reached in
PAPIER
.
However this judgment does not deal with the question of what should
a credit provider do in a situation such as the present where
the
consumer has defaulted on his/her obligations under the
re-arrangement order. Must the credit provider still issue a notice
in terms of section 86(10)? Mr. Tsangarakis contended that in such a
case a credit provider can simply summons whereas Mr. Buys
contended
that it would be necessary to still issue a notice in terms of
section 86(10).
[8]
Mr. Tsangarakis pointed out that section 86(10) applies to a credit
agreement that is being reviewed and that in the instant
case the
debt review process had run its full course, culminating in an order
of re-arrangement. He referred to subsection 2 of
section 129 which
provides that section 129(1) does not apply
inter
alia
to
a credit agreement that is subject to a debt restructuring order. Now
section 129(1) provides that, subject to section 130(2),
a credit
provider
“
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.”
Mr. Tsangarakis submitted
that the effect of these provisions is that neither a section 129(1)
notice nor a section 86(10) notice
is required before a credit
provider can issue summons where a consumer has defaulted on his/her
obligations under an order of
re-arrangement. However, both counsel
were unable to cite any authority in support of their respective
submissions. I considered
it necessary to ponder the issue further
and accordingly reserved judgment.
[9] As
I was working on my judgment, I stumbled upon the matter of
FIRSTRAND
BANK LTD v FILLIS AND ANOTHER
2010 (6) SA 565
(ECP) in which
the same issue as in the instant case arose. The consumer had applied
for debt review in terms of section 86(1)
which culminated in the
magistrates’ court making an order of debt re-arrangement. The
consumer subsequently defaulted with
payments in terms of the order.
Eksteen J held that under those circumstances the credit provider was
entitled to institute action
to enforce the terms of the credit
agreement without further notice to the consumer. The learned judge
put the matter as follows
at 569 par. [14]:
“
The Act
provides very extensive protection to a consumer who has become
overindebted, whether it be of his or her own making or
through
circumstances beyond his or her control. Not only does a
re-arrangement afford him or her alleviation from the onerous
monthly
obligations that he or she has in all seriousness undertaken to his
or her credit providers, but he or she also enjoys
the protection of
s 103(5) against the ravaging effect of escalating interest whilst he
or she remains in default under the credit
arrangement. If, however,
he or she fails to embrace this opportunity, or he or she is,
notwithstanding this very considerable
assistance, unable to comply
with his or her restructured debt commitment, the Act permits the
common law to run its course.”
[10] I fully agree with
the above statement. See also
FIRSTRAND
BANK LTD t/a WESBANK v MOODLEY
[2010]
JOL 265272
(KZD) where the consumer had defaulted on the debt
restructuring order whereupon the credit provider purportedly
2
cancelled the debt review
and proceeded to sue for the return of the motor vehicle that formed
the subject of the credit agreement.
The consumer’s contention
that the credit provider should first have issued a notice either in
terms of section 129(1)(a)
or section 86(10) was rejected.
3
[11] The respondent
herein has not raised any defence on the merits, let alone a
bona
fide
defence. Nonetheless, I have to consider two further issues.
The first relates to the provisions of 130 of the NCA. I have perused
these provisions and they do not preclude the grant of judgment in
the circumstances of this case. The second issue relates to
the
provision of section 26(1) of the Constitution relating to the right
of access to adequate housing. Linked to this is the amended
Rule 46
of the Uniform Rules. In
JAFTHA v SCHOEMAN AND OTHERS; VAN
ROOYEN v STOLTZ AND OTHERS
[2004] ZACC 25
;
2005 (2) SA 140
(CC);
2005 (1)
BCLR 78
the Constitutional Court emphasised the need for courts to
oversee execution against immovable property in order to protect the
right of access to adequate housing and to do so without prompting by
the debtor. Compare
FIRSTRAND BANK LTD v MALEKE AND THREE
SIMILAR CASES
2010 (1) SA 143
(GSJ).
[12] The court in
JAFTHA
v SCHOEMAN AND OTHERS; VAN ROOYEN v STOLTZ AND OTHERS
,
supra
,
listed the factors that a court must take into account when
considering whether to authorise execution of immovable property,
but
made it clear that the list is not exhaustive and that each case must
be decided on its facts. The difficulty I have in this
matter is that
there is no indication in the papers whether or not the property in
question is the primary residence of the respondent,
whether or not
he will have nowhere to go if ejected and whether or not he would be
able to acquire alternative accommodation.
The summons makes it clear
that an order will be sought to declare executable his immovable
property and the respondent has been
legally represented throughout.
Surely his attorneys would have known what the consequences of such
order would be and they would
have advised him of the options
available to him if there was a risk that he may be rendered
homeless. As Masipa, J stated in
STANDARD BANK OF SOUTH AFRICA
LTD v PANAYIOTTS
2009 (3) SA 363
(WLD) at 375, considerations
of fairness require that the circumstances of both the consumer and
the credit provider be given equal
treatment. The balance owing
in
casu
is substantial and it is clear that the respondent is unable
to pay it. It will not be fair that the respondent be allowed to
retain
the property that he cannot pay for, especially considering
that he has had the full benefit of the ameliorating provisions of
the NCA.
In the circumstances sale
of the property will be justifiable.
[13] Accordingly I grant
an order in terms of prayers 1, 2 and 3 of the notice of motion
together with costs, to be taxed on the
scale as between attorney and
client.
____________
H.M. MUSI, JP
On
behalf of applicant: Adv. S. Tsangarakis
Instructed
by:
Lovius
Block
BLOEMFONTEIN
On
behalf of respondent: Adv. J.J. Buys
Instructed
by:
Rosendorff
Reitz Barry
BLOEMFONTEIN
/sp
1
Other
judgments are cited at p. 9 footnote 10 of the
PAPIER
-judgment.
2
I
use the word “purportedly” because it was incompetent of
the credit provider to cancel an agreement that was subject
to a
debt re-arrangement order.
3
It
seems to follow from the above that a notice in terms of section
86(10) can only be issued in respect of a pending debt review
that
has not been referred to a magistrates’ court in terms of
section 87(1).