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[2010] ZAFSHC 122
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Firstrand Bank Ltd v Bester and Another (3156/2010) [2010] ZAFSHC 122 (16 September 2010)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 3156/2010
In
the matter between:
FIRSTRAND BANK LTD
….........................................................
Plaintiff
and
BESTER: ARTHUR
MARTIN CHARLES
JOHANNES
…...................................................................
1
st
Defendant
PRINSLOO: DEBBIE
…....................................................
2
nd
Defendant
_____________________________________________________
JUDGEMENT:
RAMPAI J
HEARD ON:
2
SEPTEMBER 2010
_____________________________________________________
DELIVERED ON:
16 SEPTEMBER 2010
_____________________________________________________
[1] This is an
application for summary judgment. The application stemmed from the
action in which the plaintiff jointly sued the
defendants for the
payment of the amount of R562 906,63 and ancillary relief pursuant to
monies lent and advanced. The defendants
opposed the application.
[2] The case of the
applicant was that it lent and advanced the money to the defendants
on 30 October 2007. This was done by way
of one account facility
agreement (annexure “a” second verifying affidavit). Such
a special facility was embodied in
a written mortgage loan agreement
(annexure “b” second verifying affidavit). As security
for the repayment of the money
so lent and advanced the defendants
registered a mortgage bond over their residential property in favour
of the plaintiff to the
tune of R660 00,00.
[3] The plaintiff also
averred that the defendants failed to make regular payments as
agreed. The plaintiff further averred that
as a result of such
default the loan had become due and payable. The plaintiff then
instituted an action against the defendant
when its demand for the
repayment was not met.
[4] The following history
of the matter is recorded:
On the 28 June 2010 the
summons was issued;
On the 2
nd
July 2010 the sheriff served the summons;
On the 14
th
July 2010 the defendant filed notice to defend;
On the 22
nd
July 2010 the plaintiff launched summary judgment application;
On the 2
nd
August 2010 the defendants delivered notice in terms of section 86(4)
National Credit Agreement, No 34/2005;
On the 26
th
August 2010 the defendants filed notice to oppose summary judgment
application.
[5] The defendants
averred that they, through a certain debt counsellor called Credit
Matters, applied to be placed under debt review
in terms of section
86 National Credit Act, No 34/2005. To this effect they annexed to
the opposing affidavit a document signed
at Parys on 14 October 2009
marked annexure “a”. The National Payment Distribution
Agency was authorised in terms of
this document to deduct a monthly
instalment of R3 522,00 from the bank account of the first defendant
as from 1 November 2009
for distribution among their creditors.
[6] They further
explained that they were unaware of the problem concerning their
application for debt review. They only realised
that there was a
problem when they received the plaintiff’s summons. They then
consulted an attorney, Ms A van der Schyff,
who advised them that
Credit Matters did not follow the correct procedure in dealing with
their debt review application. According
to the attorney’s
advice the problem was that the debt counsellor at Credit Matters
never obtained an appropriate court order
to validate their debt
review application. Moreover, they were unaware that the plaintiff
had terminated the debt review process
on account of such procedural
mistake.
[7] Before they signed
the aforesaid deduction authorisation, that is to say on 14 August
2009, they made direct payments to Credit
Matters. Therefore, they
prayed that the applicant should not be granted summary judgment
since they had always had a serious intention
to apply for debt
review and to pay their debts in accordance with such an agreed
distribution plan.
[8] The matter is
governed by 32(3)(b) which requires that the defendant should set
out, in his or her affidavit, facts which if
proved at the trial,
will constitute an answer to the plaintiff’s claim.
BREYTENBACH v FIAT
SA (EDMS) BPK
1976 (2) SA 226
(T);
MARSH v STANDARD
BANK (SA) LTD
2000 (4) SA 947
(W).
[9] In determining
whether the defendant has set out a
bona fide
defence all the
court has to ascertain is:
Firstly, whether the
defendant has disclosed the ground of his or her defence and
secondly, whether on the facts so disclosed, the
defendant has or
appears to have, either the whole or part of the claim, a defence
which is
bona fide
and good in law.
MAHARAJ v BARCLAYS
NATIONAL BANK
1976 (1) SA 418
(AD).
[10] The rule is
concerned with the defence. It does not require the defendant himself
or herself to establish his her subjective
bona fides.
It is
the defence which must be objectively
bona fide
.
BREYTENBACH v FIAT
supra
at 227.
[11] There are three
questions to be answered in considering an opposed application for
summary judgment:
Firstly, whether the
defences are good in law; secondly, whether such defences are
bona
fide;
and thirdly, whether the court should exercise its
discretion in favour of the defendant, if one or both of the first
two questions
are answered against the defendant.
MNWEBA v MAHARAJ
(2001) ALL SA 265
at 222 C – E:
“
At this
stage the enquiry is whether there is a reasonable possibility that
the defendant’s defence may be good.”
[12] On behalf of the
applicant Mr Hefer contended that a proper case has been made out for
the grant of summary judgment. However,
Mr Bruwer disagreed. He
contended firstly, that the plaintiff had failed to comply with a
number of the provisions of section 86(10),
National Credit Act, No
34 of 2005
as well as
sections 129(1)(b)
,
130
and
66
thereof and
secondly, that the defendants, acting
bona fide,
placed
themselves under debt review which step bars litigation.
[13] It was contended on
behalf of the defendants that the following annexures were not
attached to the summons or the verifying
affidavits. One account
facility agreement; mortgage loan agreement; notice in terms of
section 86(10)
; certificate of posting in respect of
section 86(10)
notices; and the certificate of balance.
[14] As regards the
required notice in terms of
section 86(10
same was annexed to the
summons – vide page 5 and 8, record). The annexure was unmarked
but dated 8 April 2010. As regards
the certificate of posting in
respect of notices in terms of
section 86(10)
same was annexed to the
summons. It was also umarked. It was issued at Marshalltown Post
Office on the 9
th
April 2010 – vide item 7 and 8, p
9, record). As regards the certificate of balance, the document was
annexed to the commons.
It was also unmarked. It was signed on the
8
th
June 2010 – vide p 3, record). I pause to point
out that the summons was issued on the 28
th
June 2010.
[15] As regards the
agreement, copies were not annexed to the summons. Only a brief
history of the dual account was given –
vide p 4, record). In
my view nothing of significance turns on this point. At paragraph 3
of the opposing affidavit the first defendant
confirmed that he
entered into an agreement with the plaintiff on the 30
th
October 2007. The plaintiff by way of the first verifying affidavit
verified the cause of action, the facts, the amount of the
claim and
the grounds on which the claim was based – vide p 16, record.
[16] The defendant
levelled no critique whatsoever against this first verifying
affidavit. Their critique was aimed at the second
verifying affidavit
– vide p 18, record. Virtually all the documents specified in
paragraph 13
supra
were annexed to the second verifying
affidavit and marked annexure “a” (one account facility
agreement) annexure “b”
(mortgage bond agreement)
annexure c (certificate of balance) and annexure “d”
(notice in terms of
section 86(10).
I have already commented that
save for annexures “a” and annexure b the other annexures
were indeed attached to summons
although they were not originally
labelled. The only new documents attached to the second verifying
affidavit which were not originally
attached to the summons were the
two agreements and nothing more.
[17] In the circumstances
whether the second verifying affidavit is disregarded as counsel for
the plaintiff urged me to do or whether
it is taking into
consideration as counsel for the defendant would have it, will not in
any way prejudice the defendants. The failure
of the plaintiff to
annexe copies of the agreements to the summons was, in the
circumstances of this particular case, not a fatal
procedural error.
This is so because the defendants admitted the agreements. Therefore,
it is my view that the preliminary points
raised
in limine
were not well taken. I have no hesitation to dismiss each and every
one of them.
[18] I find it hard to
believe that no annexures were attached to the two copies of the
summons served on the defendants. If that
was indeed the case the
defendant could easily have ascertained the correct situation. Had
they taken such reasonable steps, they
could have easily obtained
copies of the annexures in question from either the registrar or the
plaintiff’s attorneys.
[19] Moreover, it will be
readily appreciated that the first defendant did not complain about
any missing annexures in the opposing
affidavit. This is telling
against their preliminary argument that no such annexures were
attached to the copies served on them.
It must also be realised that
according to the returns of service, the sheriff served copies of the
summons and annexures upon
each of them. (vide p 10 and p 11,
record).
[20] I turn now to the
merits. Here the defence of the defendants was that they, in good
faith, I must stress, applied in terms
of
section 86(10)
National
Credit Act, No 34 of 2005
to be placed under debt review. They made
their debt review application through a debt counselling entity
called Credit Matters
exactly. It does not appear on the opposing
affidavit when they did so. I shall assume for their benefit that
they did so on the
14 October 2009, some 8 months prior to the issue
of the plaintiff’s summons on the 28
th
June 2010.
[21] They averred that
they made regular payments for the benefit of their creditors to
their appointed debt counsellor and later
to the National Payment
Distribution Agency in accordance with the proposed distribution
plan. Before the sheriff served the summons
upon them on the 2
nd
July 2010, they honestly believe that their debts were regularly
paid. They were not aware that their debt review application was
never finalised and that such debt review process was terminated by
the plaintiff.
[22] The plaintiff’s
papers (vide p 4, record) show that the plaintiff took a decision on
2
nd
February 2010 to terminate the debt review process or
debt review counselling. On Thursday, April 8
th
, 2010 at
08h45 the plaintiff e-mailed the required notices in terms of
section
86(10)
to appointed debt counsellor of the defendants informing the
debt counsellor about the termination. Moreover the plaintiff also
sent the required notices in terms of
section 86(10)
to the first
defendant and to the second defendant on the same day advising them
of the termination. Such notices were mailed to
the defendants by
registered post in terms of
section 129
(vide p 4 – 9, record).
[23]
Section 86(10)
,
National Credit Act, No 34 of 2005
provides that if a consumer is in
default under a credit agreement that is been reviewed in terms of
section 86
, the credit provider in respect of that credit agreement
may give notice to terminate the review in the prescribed manner to
the
consumer, the debt counsellor and the National Credit Regulator.
Such notice may only be given after 60 business days from the date
on
which the consumer applied for debt review.
[24] In his opposing
affidavit the first defendant did not state the exact date on which
they applied in terms of
section 86
for the debt review relief.
However, the opposing papers (annexure a, p 56, record) show that the
first defendant authorised the
National Payment Distribution Agency
on the 14
th
October 2009 to deduct a fixed monthly
instalment from his bank account. He was assisted by a certain Mrs
Lee-Ann Benjamin of Credit
Matters. From this document it may be
reasonable to deduce that the defendants applied in terms of
section
86
before or on the 14
th
October 2009 for the relief by
way of debt review. Therefore the sixty day suspension period as
envisaged in
section 86(10
had already expired when the plaintiff
terminated the debt review process on 2010-04-08.
[25]
Section 88(3)
,
National Credit Act, No 33 of 2005
provides that subject to
section
86(9)
and (10) a credit provider who receives notice of a court
process contemplated in
section 83
or
section 85
or a 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 a credit
agreement until certain
specified conditions are met. The section was
clearly enacted for the benefit of debtors in a financial crises.
[26]
Section 86
(2) of
the
National Credit Act, No 34 of 2005
provides that an application
in terms of
section 86
may not be made in respect of and does not
apply to a particular credit agreement, if at the time of the
application, the credit
provider, under that credit agreement, had
proceeded to take steps contemplated in
section 129
to enforce the
agreement. Once the summons is served to enforced the consumer’s
obligation court proceedings are commenced.
This section was clearly
designed for the benefit of the creditors who are struggling to
recover what is due to them from the debtors.
[27] The defendants put
up a defence of ignorance. They asserted that their debt counsellor,
Ms Lee-Anne Benjamin of Credit Matters,
was to blame for their
current predicament. She, as they said, did not properly handle their
debt review application; did not follow
the correct procedure and did
not inform them about the termination of the debt review process.
Although there is nothing to gain-say
their complaint, they failed to
dispute the plaintiff’s averment that the plaintiff itself
caused two letters dated the 8
th
April 2010 to be
separately mailed to their residential address by registered post on
2010-04-08. The address in question was their
domicilium citandi
et executandi
. Implicit in their failure to deal with such a
crucial averment, is a tacit admission that each of them received the
letter, in
other words,
section 86(10)
notice. I am of the firm view
that the defendants were duly notified of the termination of the debt
review process and that they
took no steps to do anything about the
matter.
[28] The defendant
consulted an attorney, Ms A van der Schyff after the service of the
summons on 2010-07-02, about eleven weeks
after the termination of
the debt review process. It struck me as somewhat odd that they did
not instruct their attorney to convey,
with dismay, their serious
complaint to their debt counsellor for failing them so badly and
thereby plunging them deeper into a
desperate financial crises.
[29] There is hardly any
suggestion let alone any semblance of proof that the undisclosed sums
of money they claimed they paid to
Credit Matters was ever demanded
back. It was their case that before 2009-11-01 they made direct
payments to Credit Matters (vide
par 7, opposing affidavit – p
54, record). The only letter from Credit Matters dated 2010-07-28
(vide annexure “c”,
opposing affidavit, p 58, record) did
not refer to any refund to the defendants or transfer of funds to
NCRDC 1217.
[30] It was further
contended on behalf of the defendants that, from 2009-11-01, the
defendants made regular payments by way of
a stop order to the
National Payment Distribution Agency and that they were taken aback
to receive the plaintiff’s summons.
By 2010-07-01 the
distribution agency must have received R31 698,00 from the first
defendant’s bank if the stop order was
regularly honoured.
However, the defendants apparently did not reclaim such a substantial
sum of money from the distribution agency
on the grounds that the
funds were never distributed among the creditors because there was no
approved distribution plan on account
of the remissness of their debt
counsellor at Credit Matters.
[31] The opposing
affidavit was signed by the first defendant on the 18
th
August 2010, some six weeks or so after the sheriff had served the
summons upon them. There was no annexure attached to the opposing
affidavit in support of the allegation that the stop order signed in
favour of the distribution agency was regularly honoured by
his bank.
At paragraph 8, opposing affidavit (p 54 of the record) the first
defendant explained such omission or failure by saying:
“
8. I have
not been able to obtain copies of all my bank statements since I went
under Debt Review, since Absa Bank in Parys kept
informing me that
they were off line and thus having trouble with their computer
system.”
[32] I cannot understand
what Absa Bank had to do with the monthly stop order deduction signed
against the First National Bank in
favour of the National Payment
Distribution Agency. The opposing affidavit, its confirmatory
affidavits and some of its annexures
were characterised by vagueness.
The actions of the defendants and the opposing papers raise more
questions than answers. The failure
of the defendants to provide
proof of the alleged regular payments they made to the distribution
agency and to meaningfully deal
with the plaintiff’s averments
that debt review process was terminated on account of accumulated
arrears suggest that no
regular payments were received from the
defendants through the distribution agency. All this acts of neglect
by the defendants
and the vagueness of the averments they make
strongly militate against their alleged
bona fides
and their
assertion that it has always been their serious intention to apply
for debt review relief.
[33] The sincerity or
honesty, in other words, their
bona fides
are not relevant in
considering whether to grant them leave to defend. After all, it is
the defendants defence which must be
bona fide
. Their
bona
fides
cannot redeem their defence if their defence lacks
bona
fides.
The defendants have delivered the notice to oppose the
summary judgment and belatedly embarked on another debt review
expedition
for the sole purpose of delaying the action.
[34] At paragraph 12,
opposing affidavit the first defendant stated:
“
12. The
current debt counsellor, Pricilla Trollop of Dynamic Debt Solutions,
has given notice to all Credit Providers on the 2
nd
of August 2010, and I annex hereto a copy of the From 17.1 letter,
marked Annexure “D”, as well as a confirmatory affidavit
by her, marked Annexure “E”.
[35] On behalf of the
plaintiff it was argued that the only steps were taken by the
defendants were in fact taken after the institution
of the present
case and service of the summons. Their second debt review application
of the defendants which was delivered on the
2
nd
of August
2010 four calendar weeks after the summons was served on them was
belated. The second attempt to seek relief by way of
debt review was
contrary to the provision of
section 86(2)
which was designed to
protect credit providers. Therefore the plaintiff was not precluded
by the second debt review application
of the defendants from applying
for summary judgment.
[36] In the circumstances
I have come to the conclusion that none of the procedural or
substantive defences, if there were any,
raised by the defendants
were good in law and none of them was
bona fide
. On the facts,
it would be a travesty of justice to refuse the summary judgment
application and to give the defendants leave to
defend the action. If
I were to do so my decision would not be compatible with the proper
exercise of judicial discretion. The
defendants have disclosed no
defence which if proved at the trial, will constitute an answer to
the plaintiff’s action. They
are playing for time. That is the
sole purpose of their notice to defend the action. I would,
therefore, decline to grant them
leave to defend.
[37] Accordingly, summary
judgment is granted against the defendants, jointly and severally,
the one paying the other to be absolved
in the following terms:
36.1 The defendants are
directed to pay an amount of R562 906,63 to the plaintiff.
36.2 The defendants are
directed to pay interest on the aforesaid amount at the rate of
10,30% per annum calculated and capitalised
monthly in advanced in
terms of the mortgage bond agreement from the 4
th
June
2010 until the date of final payment.
36.3 The defendants’
property, mortgage under mortgage bond B23187/2007, is hereby
declared specially executable for the said
sum of money, interest
plus costs. The property in question is described as:
Erf 543 VREDEFORT
(EXTENTION 11), district VREDEFORT, Province Free State. Measuring
1155 (ONE THOUSAND ONE HUNDRED AND FIFTY FIVE)
square metres. Held
under Deed of Transfer T33301/2004.
The defendants are also
ordered to pay the costs of the action.
______________
M. H. RAMPAI, J
On behalf of applicant:
Adv. J. Hefer
Instructed by:
Hill McHardy & Herbst
BLOEMFONTEIN
On behalf of respondents:
Attorney M Bruwer
Instructed by:
Hugo & Bruwer
Attorneys
BLOEMFONTEIN
/eb