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[2012] ZAWCHC 35
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Motor Finance Corporation v Herbert (16098/2011) [2012] ZAWCHC 35 (24 April 2012)
Republic of South Africa
IN THE HIGH COURT OF SOUTH
AFRICA
(WESTERN CAPEHIGH COURT, CAPE
TOWN)
Case
No: 16098/2011
Before: The Hon. Mr Justice
Binns-Ward
In the matter between:
THE MOTOR FINANCE CORPORATION
.............................................................
Plaintiff
and
JO-LEEN HERBERT
…
...............................................................................................
Defendant
JUDGMENT DELIVERED: 24 APRIL
2012
BINNS-WARD J:
In this matter the plaintiff has
applied for summary judgment for the delivery up of a motor vehicle
that had been sold by it
to the defendant in terms of an instalment
sale agreement. The instalment agreement was a credit agreement to
which the provisions
of National Credit Act 34 of 2005 (‘the
NCA’) applied.The defendant has opposed the application. Her
defences may
be summarised as follows:
That the action was instituted
in breach of the requirements of s 130(1) of the NCA.
1
That the plaintiff had not
sufficiently alleged compliance with s 86(10)
2
of the NCA, in respect of its
purported termination of the debt review process.
That an order in terms of
s 86(11)
3
of the NCA should be granted, or
that the debt should be dealt with in terms of s 85 of the
NCA,
4
in other words that the debt
review process should be resumed.
(The defendant also alleged that
the plaintiff had failed to apply with an agreed industry code of
conduct and had, in that regard,
acted in contravention of the good
faith requirements of the statute. However, quite correctly, that
defence was not persisted
in at the hearing.)
In order to properly assess the
validity of these defences it is necessary to set out the history.
This is most conveniently done
in point form, consistently with the
plaintiff’s counsel’s heads of argument:
The instalment sale agreement
was concluded in March 2008.
The defendant, and her husband,
to whom she is married in community of property, applied for debt
review in terms of s 86(1)
of the NCA on 30 July 2009. The
instalment sale debt was included in this review.
The defendant fell into arrears
in respect of the payment of the instalments due in terms of the
credit agreement.
On 5 October 2010 the
defendant applied to the magistrate’s court for a debt
restructuring order in terms of s 86(7)
of the NCA.
The debt restructuring
application, which was opposed by the plaintiff, was set down for
hearingon 20 October 2010, but was
dismissed on that date for
want of prosecution - the defendant’s then legal
representative having failed to appear in court
to move for relief
in terms of the application.
On 1 July 2011, the
plaintiff, being unaware of the determination of the debt
restructuring application, purported to give
notice of the
termination of the debt review in terms of s 86(10) of the NCA.
On 4 August 2011 summons in
the action was issued. The summons was served on the defendant on 11
August 2011. The summons
incorporated notice of cancellation of the
credit agreement.
The application for summary
judgment was served on the defendant on 25 August 2011.
The summary judgment application
was called before Baartman J in the Third Division on
21 September 2011. The learned
judge appears to have considered
that the plaintiff was required by the NCA to have given notice to
the defendant in terms of
s 129(1)(a) of the Act before
commencing the action. Apparently acting in terms of s 130(3)(a)
5
read with s 130(4)(b) of
the NCA
6
,
Baartman J made an order postponing the application for summary
judgment
sine die
and directing the plaintiff to
send a notice to the defendant in terms of s 129(1)(a), giving
it leave to re-enrol the application
for summary judgment after it
had done so and had filed a further affidavit to show that it had
complied with the order.
On 7 November 2011, the
magistrate’s court made an order rescinding the order which
had been made on 20 October
2010.
After the requirements of the
order made by Baartman J had been satisfied, the summary
judgment application was re-enrolled
and came before Weinkove AJ in
the Third Division on 6 February 2012. For reasons which are
not apparent, the learned acting
judge did not dispose of the
application, but postponed it for hearing on the semi-urgent roll in
the Fourth Division. The matter
thus came before me today.
In my judgment,the debt review
came to an end when the debt restructuring application was dismissed
in the magistrate’s
court on 20 October 2010. By reason
of the provisions of s 88(3)(b)(i)
7
read with s 88(1)(b)
8
of the NCA, the plaintiff was
thereupon entitled to institute enforcement proceedings against the
defendant without further compliance
with statutory formality. The
defendant’s attorney argued, however, that because the debt
restructuring application had
been dismissed for want of prosecution
because of the non-appearance of the defendant’s legal
representative, and not after
a consideration by the magistrate of
the merits of the application, s 88(1)(b) did not apply. He
submitted that in the circumstances
it could not properly be said
that the magistrate’s court had ‘
rejected
the consumer’s application
’
within
the meaning of the provision. I do not find any merit in that
argument.
The provisions of the Act must
be construed contextually with appropriate regard to the apparent
objects of the statute. See in
this regard ss 2 and 3 of the
NCA. It would not serve the purposes of the Act to construe the
provision in the manner contended
for on behalf of the defendant. It
has been recognised that the Act strives to strike a fair balance
between the interests of
credit providers and those of consumers. If
a consumer’s application for debt restructuring is dismissed,
for whatever
reason, the debt review process of which the
application isthe culmination - in terms of the statutory scheme -
is thereby terminated.
The events referred to in s 88(1)(a)-(c)
of the NCA are all by their character inherently bound up with the
termination
of the debt review process. The terminal effect of the
order made dismissing the debt re-arrangement application could only
be
undone by an appropriate application for rescission of the order.
Until and unless the order was rescinded the defendant’s
creditors were entitled to order their affairs consistently with the
terminating effect of the dismissal order. There is nothing
in the
statute which suggests the existence of an obligation on their part
to hold back pending possible future developments.
In the
circumstances I hold that any order dismissing a debt restructuring
application, irrespective of the reason therefor,
effectively
constitutes a ‘rejection’ of the application within the
meaning of s 88(1)(b) of the NCA.
In the circumstances I consider
that the interlocutory order made by Baartman was
per
incuriam
, and the
requirements it gave rise to may be disregarded. There was no
obligation on the plaintiff to have preceded its institution
of the
action with notice to the defendant in terms of s 129(1)(a) of
the NCA. The defendant’s attorney, quite correctly
in my view,
did not contend to the contrary in the event of it being held, as it
has been, that on the facts the position is
governed by
s 88(3)(b)(i) of the Act. The order made by Baartman J was
in any event, according to its tenor, not intended
to prevent a
determination of the summary judgment application on its merits.
It is thus not necessary to
consider the defence premised on an inadequate allegation of
compliance with s 86(10) of the
NCA. Suffice it to say,
however, that had s 86(10) in fact been applicable, I would not
have found any merit in the defence.
The summons contained
allegations specifying the dates upon which notice in terms of
s 86(10) was sent to each of the relevant
parties and a copy of
the notice and proof of posting was annexed to the summons in
support of the allegations. The position
differed
toto
caelo
from that which
was found to be wanting in the summons in
Rossouw
and Another v FirstRand Bank Ltd
2010
(6) SA 439
(SCA).
This application is, as
mentioned, for an order for delivery up. The underlying contract has
been competently cancelled by the
plaintiff and there is no scope in
the context of debt review for its re-instatement. See e.g.
BMW
Financial Services (SA) (Pty) Ltd v Donkin
2009
(6) SA 63
(KZD) and
Standard
Bank of South Africa Ltd v Newman
[2011]
ZAWCHC 91
(15 April 2011). Section 86(11) does not appear
to be relevant because the debt review was not terminated in terms
of s 86(10), but relief in terms of s 85 would also not
avail the defendant against the remedy sought by the plaintiff
consequent upon the cancellation of the instalment sale agreement.
When I put this to him, the defendant’s attorney realistically
conceded as much.
The defences put up by the
defendant do not bear scrutiny and the plaintiff is therefore
entitled to summary judgment, substantially
as prayed. I should
perhaps mention, however, that Mr
Wessels
,
who appeared for the plaintiff, quite properly drew my attention to
an unreported judgment of Lopes J in the Pietermaritzburg
High
Court (
Subramanian v
Standard Bank Ltd
[2012]
ZAKZPHC 12 (13 March 2012))in which it was held, consistently
with other decisions in KwaZulu-Natal, that notices
which fall to be
given in terms of the NCA to a person who is married in community of
property should be given to both spouses.
In view of the conclusion
that I have reached on the issue of notice in terms of s 86(10)
in the current matter it was not
necessary to reach this point.
However, it might limit this point arising in this jurisdiction were
I to take the opportunity
nevertheless to state, respectfully, that
I consider the approach adopted by the KwaZulu-Natal High Court to
be without foundation.
The relevant provisions of the NCA require
notice to be given to the ‘
consumer
’
.
The word ‘
consumer
’
is specially defined in s 1
of the NCA.
9
In the current case the
defendant, as the sole lessee in terms of the instalment agreement
(see the definition of ‘
lease
’
in s 1 of the NCA) falls
within paragraph (f) of the definition. Her husband does not. There
is in my view no warrant to
impose on credit providers notice
obligations beyond those expressly required in terms of the Act.
The following order is made:
Summary judgment is granted in
favour of the plaintiff against the defendant in terms of paragraphs
(a), (b) and (c) of the application
for summary judgment, dated
24 August 2011.
The defendant is directed to pay
the plaintiff’s costs of suit on the scale as between party
and party.
A.G. BINNS-WARD
Judge of the High Court
FOR THE PLAINTIFF
: Adv.
L.N. Wessels
INSTRUCTED BY
: STRAUSS
DALY INCORPORATING
BALSILLIES
FOR THE DEFENDANT
:
Mr. C.
Geel
INSTRUCTED BY
:
THOMPSON WILKS INC.
DATE OF HEARING
: 24
APRIL 2012
DATE OF JUDGMENT
: 24
APRIL 2012
1
Section
130(1) of the NCA 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;
(b) in the case of a notice
contemplated in section 129 (1), the consumer has-
(i)
not responded to that notice; or
(ii)
responded to the notice by rejecting the credit provider's
proposals; and
(c) in the case of an
instalment agreement, secured loan, or lease, the consumer has not
surrendered the relevant property to
the credit provider as
contemplated in section 127.
2
Section
86(10) of the NCA 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
(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.
3
Section
86(11) of the NCA provides:
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.
By means of
an interpretative reading in the SCA has determined that the
reference to ‘the Magistrate’s Court’
includes the
High Court.
See
Collett
v Firstrand Bank Ltd
2011
(4) SA 508 (SCA).
4
Section
85 of the NCA provides:
Despite any provision of law
or agreement to the contrary, in any court proceedings in which a
credit agreement is being considered,
if it is alleged that the
consumer under a credit agreement is over-indebted, the court may-
(a) refer the matter directly
to a debt counsellor with a request that the debt counsellor
evaluate the consumer's circumstances
and make a recommendation to
the court in terms of section 86 (7); or
(b) declare that the consumer
is over-indebted, as determined in accordance with this Part, and
make any order contemplated in
section 87 to relieve the consumer's
over-indebtedness.
5
Section
130(3)(a) of the NCA provides:
Despite any provision of law
or contract to the contrary, in any proceedings commenced in a court
in respect of a credit agreement
to which this Act applies, the
court may determine the matter only if the court is satisfied that-
(a) in the case of
proceedings to which sections 127, 129 or 131 apply, the procedures
required by those sections have been complied
with
6
Section
130(4)(b) of the NCA provides:
In any proceedings
contemplated in this section, if the court determines that-
(b) the credit provider has
not complied with the relevant provisions of this Act, as
contemplated in subsection (3) (a), or has
approached the court in
circumstances contemplated in subsection (3) (c) the court must-
(i)
adjourn the matter before it; and
(ii)
make an appropriate order setting out the steps the credit provider
must complete before the matter may be resumed
7
Section
88(3)(b)(i) of the NCA provides:
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-
(b) one of the following has
occurred:
(i) An event contemplated in
subsection (1) (a) through (c); or…
8
Section
88(1)(b) of the NCA provides:
A consumer who has filed an
application in terms of section 86 (1), or who has alleged in court
that the consumer is over-indebted,
must not incur any further
charges under a credit facility or enter into any further credit
agreement, other than a consolidation
agreement, with any credit
provider until one of the following events has occurred:
(a)…
(b) the court has determined
that the consumer is not over-indebted, or has rejected a debt
counsellor's proposal or the consumer's
application; or
(c)…
9
'
consumer
',
in respect of a credit agreement to which this Act applies, means-
(a) the party to whom goods
or services are sold under a discount transaction, incidental credit
agreement or instalment agreement;
(b) the party to whom money
is paid, or credit granted, under a pawn transaction;
(c) the party to whom credit
is granted under a credit facility;
(d) the mortgagor under a
mortgage agreement;
(e) the borrower under a
secured loan;
(f) the lessee under a lease;
(g) the guarantor under a
credit guarantee; or
(h) the party to whom or at
whose direction money is advanced or credit granted under any other
credit agreement