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[2011] ZAWCHC 396
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Gelderbloem and Another v Changing Tides No 17 (Pty) Ltd (19179/2001) [2011] ZAWCHC 396 (27 October 2011)
Reportable
Judgment
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case
No.:
19179/2001
Related
Case No.:
8179/2011
In
the matter between:
REYNALD
MARTIN GELDERBLOEM
First
Applicant/Defendant
JANINE
GELDERBLOEM
Second
Applicant/Defendant
and
CHANGING
TIDES NO. 17 (PROPRIETARY) LIMITED
First
respondent/Plaintiff
_____________________________________________________________________
PRESIDING
JUDGE
:
Y.S.
Meer J.
Counsel
for Applicants’
:
Adv.
Natalie Lawrenson
Instructed
by
:
Chris
Truter Attorneys
(Ref: Chris
Truter)
Counsel
for Respondents’ :
Adv. Ross Randall
Instructed
by
:
Herold
Gie Attorneys
(Ref: M Cook)
Date
of Hearing
:
20
October 2011
Date
of Judgment
:
27
October 2011
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
HIGH COURT, CAPE TOWN)
Case No.:
19179/2001
Related Case No.:
8179/2011
In the matter
between:
REYNALD MARTIN
GELDERBLOEM
...................
First
Applicant/Defendant
JANINE
GELDERBLOEM
….................................
Second
Applicant/Defendant
and
CHANGING TIDES
NO.17(PROPRIETARY)
LIMITED
…............................................................................
Respondent/Plaintiff
________________________________________________________________
JUDGMENT
delivered on
27
TH
OCTOBER 2011
________________________________________________________________
MEER J.
[1] The applicants
apply for the rescission of a summary judgment granted by this court
against them as defendants and in favour
of the respondent as
plaintiff on 9 September 2011. Theorder states as follows:
“
IT
IS HEREBY ORDERED THAT:
1. First Defendant
and Second Defendant pay Plaintiff the sum of R373 623,72
jointly and severally, the one paying the other
being absolved;
2. First Defendant
and Second Defendant pay Plaintiff interest on the aforesaid amount
jointly and severally, the one paying the
other being absolved, at
the rate of 10.80% per annum, from 01 March 2011, to date of final
payment;
3. The property
described as:
ERF 1083 KUILS
RIVER, IN THE CITY OF CAPE TOWN, STELLENBOSCH DIVISION, WESTERN CAPE
PROVINCE AND HELD BY DEED OF TRANSFER NO. T
27773/2003
is declared
specially executable;
4. First Defendant
and Second Defendant pay the costs of this suit on the scale as
between attorney and client.’’
[2] The respondent
has abandoned paragraph 3 of the above order.
[3] The background
facts relevant to this rescission application are briefly as follows:
The respondent issued summons against the
applicants on 13 April 2011
for the sum of R373 623,72, being the balance alleged to be owing by
the applicants under a home loan
agreement. The basis for the summons
was that the applicants had fallen into arrears with the payment of
their monthly instalments
in terms of a loan agreement between
themselves and RCS Home Loans Proprietary Limited, a company which
administers loans on behalf
of the respondent. The loan agreement
dated 1 February 2007 provided for a monthly repayment of R4273.76.
The agreement recorded
at paragraph 15 that “a certificate by a
director of RSCHL or an official of the Lender showing the
indebtedness of the Borrower
to the Lender,” would be prima
facie proof of such indebtedness. It recorded further at paragraph
19.1 that costs on an attorney
and own client scale would be payable
by the borrower to the lender in the event of the latter taking steps
to enforce its rights
under the agreement.
[4] During November
2009 the applicants applied for debt review in terms of s 86(1) of
the National Credit Act 34 of 2005 (“the
Act”). The
applicants contend they were not in default of their loan agreement
at the time they applied for debt review.
As a consequence of the
application for debt review a debt restructuring proposal by a debt
counsellor was circulated to all the
applicants’ credit
providers, including the respondent. The respondent did not accept
the proposal. The proposal was nonetheless
adopted and implemented by
the applicants who began paying a monthly amount of R3,430.00 to debt
collectors for payment to their
respective creditors. Annexed to the
founding affidavit of the first applicant are slips indicating
monthly payments of R3430 from
27 October 2010 to 30 August 2011.
According to the applicants, of this amount, the sum of R971.50 was
paid to the respondent each
month in respect of the home loan. The
matter was referred to the Kuilrivier Magistrate’s Court in
terms of s 86 (8) of the
Actfor an order that the applicants be
declared over-indebted and that their debt commitments be
re-arranged. That application
is pending.
[5] On 28 March 2011
the applicants were sent a notice by the attorneys acting for the
manager of RSC Home Loans Guarantee Trust,
in terms of Section 86
(10) of the Act terminating the debt review. The letter stated that
the termination was with immediate effect
as sixty days after the
application for debt review had already lapsed.Thereafter on 13 April
2011 asaforementioned the summons
was issued for the balance owing
under the home loan agreement.
[6] The applicants’
attorney filed a notice of intention to defend whereafter an
application for summary judgment was served
on 7 July 2011 which
application was set down for hearing on 26 July 2011. The application
was however postponed several times
and ultimately heard on 9
September 2011. There was neither opposition to the summary judgment
application nor appearance on behalf
of applicants and summary
judgment was accordingly granted against them. It is the rescission
of such judgment which applicants
now seek.
[7] It is trite that
to succeed in their application the applicants are required to show
good and sufficient cause why a court should
exercise its discretion
in favour of granting an order for rescission. The applicants must
provide a reasonable explanation for
their default and show that the
application is bona fide and not made merely to delay the
respondent’s claim. They must also
show that they have a
bona
fide
defence to the claim which
prima facie
has some
prospect of success. See
Grant v Plumbers (Pty)Ltd
1949 (2) SA
470
(O) at 476-477;
Colyn v Tiger Food Industries Ltd t/a Meadow
Feed Mills (Cape)
2003 (6) SA 1
(SCA) at paragraph 11.
Applicants’
explanation for their default
[8] In explaining
their default the applicants must furnish an explanation sufficiently
full to enable the court to understand how
it really came about, and
to assess their conduct and motive. See
Silber v Ozen Wholesalers
(Pty) Ltd
1954(2) SA 345 (A) at 353 A.
[9] The first
applicant explains that due to an administrative error on the part of
his attorneys, immediately after service of
the summary judgment
application and before the matter could be diarised by the attorneys,
the papers relating to the summary judgment
application were
inadvertently delivered to the office of the debt counsellor. The
debt counsellor had appointed the attorneys
and the first applicant
was under the impression that contact was to take place between the
attorneys and the debt counsellor.
He explains that he was not
informed of the service of documents, was not aware of the
circumstances surrounding the application
for summary judgment or
that the file was not in possession of his attorneys, until he learnt
of the judgment. Had he known the
facts surrounding the summary
judgment application and that he could appear without an attorney, he
would have done so. On being
informed on 12 September 2011 that
summary judgment had been granted, the applicants immediately
instructed their attorneys to
apply for its rescission.
[10] In
Cavalinias
v Claude Neon Lights S.A.
Ltd
1965 (2) SA 649
T, it was found
that a court is entitled to refuse an application for rescission even
where the fault is that of the applicant’s
legal
representative. In that case the attorney concerned was said to be
guilty of more than mere negligence. His conduct was found
to be
deliberate and wilful and to have shown a total and contemptuous
disregard for the process of the court.
Cavalinias supra
652
Bto H. The same does not, I believe, apply in the instant case. From
the explanation that has been furnished it is clear thatthe
default
was due to an error and was not wilful. Moreover, neither gross
negligence nor a contemptuous disregard for the court process
was
displayed. The applicants themselves were certainly not in wilful
default. I am satisfied in the circumstances that the applicants
have
furnished a reasonable and sufficiently full explanation for their
default, which casts aspersions on neither their nor their
attorneys’
conduct and motives.
Bona Fide Defence
[11] To establish a
bona fide
defence it is sufficient for applicants to make out
a
prima facie
defence in the sense of setting out averments
which if established at the trial, would entitle themto the relief
asked for. They
need not deal fully with the merits of the case and
produce evidence that the probabilities are actually in their favour.
See
Grant v Plumbers supra
at 476 – 7.
[12] Ms Lawrenson
for the applicants submitted that the main thrust of applicants’
defence is that they were not in default
of their obligations under
the loan agreement at the time when they applied for debt review and
hence the respondent was precluded
from terminating the debt review
in terms of section 86 (10) until such time as the debt review
process has been finally adjudicated
upon. This contention was not
substantiated. No documents or statements were furnished to show that
applicants were not in default
when they applied for debt review. In
support of her argument Ms Lawrenson relied on the recent decision of
Collet v Firstrand Bank Limited
2011 (4) SA 508
SCA
.
The reliance is misplaced. For that judgment, whilst precluding a
termination under s 86 (10) at a time when a consumer is not
in
default, does not suggest that such a termination cannot occur once
such consumer falls into default. It acknowledges the right
to
terminate when the consumer is in default. The relevant extracts from
paragraphs 9 and 12 of the judgment state as follows:
“
[9]…
An
application by a consumer to apply for debt review, be declared
over-indebted and have his debts arising from credit agreements
re-scheduled are novel concepts introduced by the NCA. Their purpose
is to assist not only consumers who are over-indebted, but
also those
who find themselves in ‘strained’ circumstances. A
consumer who finds himself in either of these circumstances
may apply
for debt review in terms of s 86(1). He may do so whether or not he
is in arrears under any particular credit agreement.
Where the
consumer is not in default of any of his obligations, the credit
provider is unable to terminate the process because
s 86(10) gives
the right to terminate the debt review only where the consumer is in
default. In such a case the credit provider
must await the hearing in
terms of s 87. Nor can the credit provider proceed to enforce the
credit agreement because the consumer
is not in default. Where the
consumer, however, is in default the credit provider is entitled to
enforce that credit agreement
provided the consumer has not made
application for debt review pursuant to s 86(1) and the credit
provider has complied with the
requirements of s 129 and 130.
……………
[12] ….. A
sounder approach is to recognise the express words of s 86(10) which
gives the credit provider a right to terminate
the debt review in
respect of the particular credit transaction under which the consumer
is in default, and only when he is in
default, at least 60 business
days after the application for debt review was made. It must be
emphasised that it is only when the
consumer is in default that the
credit provider has this right. If he is not, the debt review
continues without the credit provider
being entitled to terminate it.
It is not the credit provider that is is ‘derailing’ the
process when he terminates
the debt review: it is the consumer that
is in breach of contract, not the credit provider. If the consumer
applies for debt review
before he is in default the credit provider
may not terminate the process. But if the consumer is in default the
consumer is entitled
to a 60 business days’moratorium during
which time the parties may attempt to resolve their dispute. ”
[13] Whilst in
theabove extracts it is stated that if a consumer applies for debt
review before he is in default, the credit provider
may not terminate
the process, it is neither stated nor implied that atermination under
s 86 (10) cannot validly occur once such
a consumer comes to be in
default. The interpretation relied upon by the applicants which seeks
to protect such a defaulting consumer
is thus misplaced. It is now
settled law that when a consumer is in default a credit provider may
terminate debt review proceedingsin
terms of Section 86(10) of the
Actafter the lapse of 60 days from date of application for debt
review, even when such an application
is pending before a
Magistrate’s Court. The fact that the consumer might not have
been in default when the application for
debt review was made, does
not render the termination invalid. The right of the credit provider
to terminate the review is balanced
by s 86(11), as is pointed out in
Collet
at paragraph 15. The section provides that if the
credit provider has given notice to terminate and proceeds to enforce
the agreement,
the Magistrate’s Court may order that the debt
review resume on any conditions that the court considers to be just
in the
circumstances.
[14] The applicants
argue further that that they have at all times complied with their
payment agreement with the respondent in
terms of the debt review
process and in light thereof, the respondent has unlawfully
terminated the debt review process in terms
of Section 86(10) of the
Act. This argument cannot be sustained as there was no debt
restructuring agreement with the respondent
flowing from the debt
review process.
[15] As a further
defence the applicants deny that they were in default and challenge
the amount claimed in the summons. This defence
is however not borne
out by their own annexures. The monthly repayment amount is recorded
in the loan agreement as R4273,76,yet
the applicants’ annexures
illustrate that they were paying the lesser amount of R3 430,00 since
27 October 2010. On their
own version, of this amount, R971.50 was
received by the Respondent. In addition the applicants’
supplementary affidavit
makes unsubstantiated allegations of double
charging and of interest and service charges being charged in
advance, contrary to
the Act. These allegations do not detract from
the fact that on their own version they were paying less than the
monthly instalment
of R4273,76.
[16] In respect of
the amount claimed, the first applicant’s founding affidavit
denies that such sum is due and payable, states
that the erroneous
interest rate has been applied to a “mis-stated capital sum”
and adds that the amount has been calculated
in a manner which is
contrary to the agreement between the parties. The affidavit does not
however substantiate such bare denial
by indicating what precise sum
is due and payable, what the correct interest rate is, nor what the
agreed manner is between the
partiesfor calculation of the amount
due. Bank statements reflecting what was paid are not furnished. As
against this bare denial
there is a certificate of balance reflecting
the amount claimed by Nirvana Singh, manager of SA Home Loans, which
in terms of paragraph
15 of the loan agreement provides prima facie
proof of the amount owing.
[17] A bare and
unsubstantiated denial of this ilk does not disclose fully the nature
and grounds of Applicant’s defence and
the material facts
relied upon. Nor can such be said of any of the other defences
furnished. The defences raised by the applicants
have not set out
averments which if established at the trial would entitle the
applicants to the relief asked for. They are inherently
unconvincing.In the circumstances the applicants have not satisfied
the requirements of a
bona fide
defence to the claim which
prima facie
has some prospect of success.
Costs
[18 ] The loan
agreement at paragraph 19.1 makes provision for legal costs on a
scale as between attorney and own client to be paid
by the borrower
for costs incurred by the lender in taking steps to exercise and
enforce its rights in terms of the agreement.
This rescission
application constitutes such a step and hence costson such scale
applies.
[19] I grant the
following order:
The application
for rescission of judgment is refused with costs such costs to be on
the scale as between attorney and own client.
____________________
Y.S. MEER J.