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[2014] ZAWCHC 47
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SA Taxi Securitisation (Pty) Ltd v Melaphi (2656/14) [2014] ZAWCHC 47 (2 April 2014)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 2656/14
Before:
The Hon. Mr Justice Binns-Ward
In
the matter between:
SA
TAXI SECURITISATION (PTY)
LTD
Plaintiff
and
JOHN
PHUMELELE
MELAPHI
Defendant
JUDGMENT:
DELIVERED: 2 APRIL 2014
BINNS-WARD J:
[1]
The plaintiff sold a 15-seater Toyota
Quantum Sesfikile motor vehicle to the defendant in terms of an
instalment sale agreement.
The contract provided that ownership
of the vehicle remained vested in the plaintiff until such time as
the defendant had discharged
all his obligations under the
agreement. It also provided that if the defendant defaulted on
his contractual obligations
the plaintiff would be entitled to
terminate the agreement and take possession of the vehicle. The
instalment agreement was
a ‘credit agreement’ that was
subject to the National Credit Act 34 of 2005 (‘the NCA’).
It is common
ground that the defendant fell into arrears with the
periodic payments that he was required to make under the agreement.
The summons alleges that the defendant was R44 254,72 in arrears
as at 13 February 2014. The plaintiff has given
notice of
cancellation of the contract and has instituted proceedings by action
for the return to it of the vehicle and certain
other consequential
relief.
[2]
Prior
to the institution of the action, the defendant had applied for debt
relief in terms of part D of chap. 4 of the NCA.
In that
connection, an application, which, according to the tenor of the
notice of application, was made in terms of ‘
section
86(7) read with sections 83(3)(b), 86(8)(b), 86(11), 87(1), 85 &
79
’
of the NCA, is currently pending at the Khayelitsha Magistrates’
Court. The plaintiff alleged that it had given
the defendant
notice of termination of the debt review in terms of s 86(10) of
the NCA, and thereby complied with the requirement
of s 129(1)(b)(i)
of the Act.
[1]
The
defendant was alleged to still be in default when the action was
instituted, the period referred to in s 130(1)(a)
of the Act
[2]
having by then elapsed.
[3]
The defendant entered appearance to defend
the action and has opposed the subsequently instituted application by
the plaintiff for
summary judgment in respect of its prayer for
delivery up of the vehicle.
[4]
The
defendant’s opposing affidavit set forth a number of defences
that the defendant says that he intends to plead in the
action.
Firstly, he contended that the stipulated interest charged under the
agreement (24% per annum) exceeds the maximum
rate permitted in terms
of regulation 42 of the National Credit Regulations, 2006
[3]
(which the defendant averred to be 21% per annum
[4]
).
He averred that in the result he was overcharged for interest in the
sum of R21 216,03 as at 13 February 2014.
Secondly,
the defendant averred that in the context of his application for
declarations of reckless credit, the provisions of s 86(10)
of
the NCA
[5]
do not avail the
plaintiff. He alleged that in any event he had not received the
s 86(10) notice. Thirdly, he
averred that the contract was
concluded in the context of reckless lending within the meaning of
that concept in part D of chap 4
of the NCA and that he would be
entitled to ask the trial court to partially set aside and reorder
his obligations under the contract.
[5]
The
plaintiff’s counsel pointed out in respect of the first of the
aforementioned defences that even were the defendant to
be correct in
his reliance on regulation 42 (which counsel did not concede),
crediting him with the amount that he contended had
been overcharged
to interest would still leave him in the red in respect of payments
due and thus would not detract from the validity
or effectiveness of
the plaintiff’s cancellation and consequent entitlement to
return of the vehicle. In my judgment
the soundness of that
argument is irrefutable. (It is unnecessary to make any finding
in that regard, but it is in any event
clear that the defendant’s
calculations are incorrect. The contract provides for a
variable interest rate ‘linked
to prime’. I think
the court is entitled to take judicial notice of the fact that the
prime rates charged by lending
institutions are in practice directly
related to the ruling SA Reserve Bank repurchase rate. In other
words, the prime rate
rises and falls in line with rises and falls in
the ‘repo’ rate. The maximum permitted rates of
interest provided
for in terms of regulation 42 also fall to be
calculated with regard to the ruling SA Reserve Bank Repurchase Rate.
Regulation
42 accordingly falls to be construed with reference to
extraneous fact. It is a matter of public record that there
have been
two changes in the SA Reserve Bank repo rate during the
period from inception of the contract and 13 February 2014,
[6]
whereas the defendant’s calculation assumes a constant rate of
5%. The rate has in fact been fixed at 5.5% for two
periods
during the currency of the contract. During those periods the
maximum permitted rate of interest on credit agreements
which qualify
as credit facilities would have been 22,1% per annum.) The
correct interest calculation is an issue that may
bear relevance on
the consequential monetary relief to be claimed by the plaintiff when
it is has determined the value of the vehicle
after taking
repossession, but it has no relevance in the peculiar circumstances
to the claim for delivery up of the vehicle.
[6]
There
is also no merit in the defendant’s second defence in my view.
The provisions of s 86(10) of the NCA plainly
bear on any credit
agreement debt being reviewed in terms of s 86 of the Act.
It is common ground that the plaintiff’s
contractual claim
against the defendant constituted such a debt and that the defendant
had submitted it for review in terms of
the section. One of the
matters that a debt counsellor who has accepted an application in
terms of s 86 must determine,
in the prescribed manner and
within the prescribed time, is ‘
whether
any of the consumer's credit agreements appear to be reckless
’.
The obligation to make this determination arises ‘
if
the consumer seeks a declaration of reckless credit
’;
see s 86(6).
[7]
The
tenor of the application made by the debt counsellor to the
magistrates’ court in terms of s 86(7) of the
NCA,
[8]
annexure QZ2 to the opposing affidavit, confirms that declarations of
reckless credit must have been sought by the defendant because
relief
is asked for in terms of s 83(3)(b) of the Act.
[9]
It is thus apparent that the fact that the defendant’s
application for debt review included an application for a declaration
of reckless credit did not put the plaintiff’s claim outside
the debt review in terms of s 86 of the NCA and thus also
did
not immunise the review in any relevant respect from the effect of
s 86(10).
[7]
The defendant’s attorney’s
reliance in argument on the following dicta of Malan JA in
Collett v Firstrand Bank Ltd and Another
2011 (4) SA 508
(SCA), at para 11, was misplaced:
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.
In
context it is clear that all that the learned judge of appeal
intended to state was that a termination by a credit provider in
terms of s 86(10) does not in and by itself displace a court’s
powers to undertake a review in terms of ss 83 or
85 of the NCA,
a matter to which I shall return in the context of the defendant’s
third defence. The issue of relevance
in regard to the
defendant’s second defence, however, is whether his allegations
of reckless credit rendered the plaintiff’s
notice in terms of
s 86(10) ineffectual for the purposes of s 129(1)(b) of the
NCA.
[10]
The short
answer is that they did not. Accordingly, in the context of the
defendant’s continued default in payment
under the agreement
after the plaintiff had given notice in terms of s 86(10), the
latter was entitled to cancel the agreement.
The effect of the
cancellation on the ambit of the defendant’s remedies under
s 83 of the Act will be considered presently,
in relation to his
reckless lending defence.
[8]
As
to the issue of alleged non-receipt of the notice in terms of
s 86(10), the agreement reflected that the address ‘
Stand
No. 36703, 46 Phakama T3V3, Khayelitsha 7750
’
had been typed in as the defendant’s chosen address for notice
purposes. The typescript was crossed through
and the
handwritten address ‘
M40
Saxenwold Witsand
’
written in its place. The defendant did not deal in his
opposing affidavit with how the handwritten amendment came
about.
The agreement allowed for the service of notices by registered post.
The post office ‘track and trace
reports’
[11]
annexed to the summons indicated that the s 86(10) notice had
been sent by registered post to the defendant at both the
aforementioned
addresses. The summons also alleged that
Heidelberg was the ‘appropriate post office’ for the
nominated address
and that Manyanani was the post office serving the
Khayelitsha address. The track and trace reports indicate that
the registered
items reached the respective post offices. The
items were not collected and were returned to sender. The item
sent
to Witsand was held at the Heidelberg post office for only a day
before being returned to sender. The one sent to Khayelitsha
was held at the Manyanani post office for a month before being
returned.
[9]
Witsand
(Whitesands in English) is well known locally to be a small coastal
village in the Western Cape. It lies to the southeast
of Cape
Town at the mouth of the Breede River. The nearest town to
Witsand of any size is Heidelberg, an inland town on the
N2 national
road. Reference to the South African Post Office website
(whence the ‘track and trace’ reports are
obtained)
indicates that Heidelberg and ‘Whitesands’ have the same
postal code: 6666.
[12]
‘Whitesands’ is characterised on the website as a
‘suburb’. The context indicates that the
Post
Office treats Witsand as a suburb of Heidelberg. The short
period that the item was kept at Heidelberg post office suggests
that
it may have been returned because the address given was not a valid
or recognised one. That would be no cause for surprise
because
it appears from his opposing affidavit that the nominated address
selected by the defendant was not correctly reflected
in the
agreement. The address that he had meant to select was ‘M40
Saxonwold, Witsand,
Atlantis
,
7349’. Atlantis is a town to the northwest of Cape Town.
[10]
It appears from the allegations in the summons that, apparently
concerned with the effectiveness of giving notice at the address
reflected in the agreement, the plaintiff sought other means of
effectively giving the defendant the benefit of notice in terms
of
s 86(10). It appears from the summons that it chose the
Khayelitsha address because that was the defendant’s
last known
residential address. Having regard to the objects of the Act, I
do not think, in the circumstances of the incompleteness
of the
postal address given by him in the agreement, that the defendant can
be heard to complain about the alternative means of
obtaining
delivery of the notice chosen by the plaintiff. The return of
service in respect of the summons shows that process
was served at
the Khayelitsha address. The person who accepted service there
was described on the sheriff’s return
as being the defendant’s
sister. That service at that address was effective is evident
from the defendant’s subsequent
entry of appearance to defend
the action. In the circumstances, having regard to the approach
stated in
Sebola
[13]
and clarified in
Kubyana
v Standard Bank of South Africa Ltd
,
[14]
it would be incumbent on the defendant to explain why the plaintiff
had not done everything that could have reasonably achieved
effective
delivery of the notice.
[15]
No explanation at all was offered in the opposing affidavit. In
the circumstances I do not consider that non-receipt
of the s 86(10)
notice has been raised
bona
fide
as a defence.
[11]
Turning
then to the third defence. If, as appears to be the case, the
defendant is unable to reinstate the credit agreement
(see s 129(3)
and (4) of the NCA
[16]
), he
has no basis upon which to resist the plaintiff’s claim to
return of the vehicle; cf.
BMW
Financial Services (SA) (Pty) Ltd v Donkin
.
[17]
The provisions of s 83 of the NCA, which invest the courts with
various powers to deal with the consequences of reckless
credit, do
not provide for the reinstatement of cancelled contracts. It
might be that the defendant could invoke the provisions
to ameliorate
or avoid his residual liability in terms of the consequential relief
claimed by the plaintiff (I make no finding
in that regard), but they
can be of no assistance to him in his opposition to a claim by the
owner to the return of the vehicle;
cf.
Donkin
supra,
at para 33-35. I am conscious that
Donkin
was
decided with reference to the provisions of s 85 of the NCA
rather than those of s 83 on which the defendant intends
to
rely, but the contextual considerations to which Wallis J had regard
in construing s 85 apply to the same effect in respect
of s 83.
In the context of a number of other decisions to the same effect,
[18]
it would be a supererogation for me to undertake a detailed analysis
to support this conclusion.
[12]
In
the result I have been impelled to conclude that none of the grounds
of opposition advanced in the defendant’s opposing
affidavit
makes out a sustainable defence to the plaintiff’s claim for
delivery up. At the hearing, however, the defendant’s
attorney sought to argue an additional point arising out of the
defendant’s averment in his opposing affidavit that he had
only
grade 5 education with a limited command of English and no ability to
read or write the language. I did not understand
the opposing
affidavit to attach any significance to this other than to rely upon
it in the context of the abovementioned reckless
lending defence, in
respect of which he averred (at para 29 of his opposing
affidavit) that ‘
Nobody
properly explained the terms and conditions of the credit agreement
and I generally did not understand and appreciate the
risks and costs
of the proposed credit and my rights and obligations under the credit
agreement
’.
Outside the context of reckless credit, the only possible
relevance of the defendant’s alleged lack of understanding
of
the agreement would be to the validity of the agreement, for if he
was not able to understand the agreement there could not
have been
actual
consensus
ad idem
between the contracting parties. The result might then be that
the purported agreement would not be binding on him; cf.
Standard
Bank of South Africa Ltd v Dlamini
.
[19]
Such a result would not, however, give the defendant any cause to
avoid returning the vehicle.
[13]
The defendant’s attorney also sought
to rely on the averment made by the defendant in the section of his
opposing affidavit
which dealt with the s 86(10) related defence
to the effect that all his credit providers responded to his debt
counsellor’s
debt restructuring proposal by ‘
engag
[ing]
in bona fide negotiations, except for
[the plaintiff]
, which did not respond
in any meaningful manner to the Debt Counsellor
’.
He submitted that this amounted to an allegation of non-compliance by
the plaintiff with its obligations in terms
of s 86(5)(b) of the
NCA. There are a number of difficulties with this argument,
which seemed to me to hang in the air.
Firstly, non-compliance
with s 86(5)(b) was not advanced as a defence in the opposing
affidavit. Secondly, the issue
was not treated of in meaningful
detail in the opposing affidavit. I accept that it is not
necessary for the deponent to
an opposing affidavit in summary
judgment proceedings to set out a defence with the precision that
might be expected in pleadings,
but he must set out the relevant
facts out in sufficient detail to enable the court to establish his
bona fides
;
cf. e.g.
Breitenbach v Fiat SA (Edms)
Bpk
1976 (2) SA 226
(T) at 228.
There is nothing in the affidavit to allow the court to assess what
proposals were made to the plaintiff, or
how it could be regarded as
having been unreasonable in failing to react positively to them.
It is contextually evident that
this was probably so because the
defendant does not appear to have intended to raise the point as a
substantive issue in his opposing
affidavit. Thirdly, it is not
evident from the Act that non-compliance with s 86(5)(b) would
render notice subsequently
given by the credit provider in terms of
s 86(10) of the NCA ineffectual.
[14]
The following order is therefore made:
(a)
Summary judgment is granted in favour of
the plaintiff for the delivery up to it by the defendant forthwith of
the 2011 Toyota Quantum
Sesfikile 2,5D-4D 15-seater motor vehicle
with engine number 2KD5245810 and chassis number JTFSS22P800083967.
(b)
The defendant shall be liable to pay the
plaintiff’s costs of suit in the summary judgment application
on the scale as between
attorney and client (as provided in terms of
the instalment agreement).
(c)
The further conduct of the action for the
determination of the remaining relief sought in terms of the
plaintiff’s particulars
of claim is postponed until such time
as the relevant issues are ripe for hearing after the return of the
vehicle in compliance
with paragraph (a), above.
A.G.
BINNS-WARD
Judge
of the High Court
[1]
Section 129 (1)(b) of the NCA provides:
If
the consumer is in default under a credit agreement, the credit
provider-
(b)
subject to section 130 (2), 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.
[2]
Section 130(1) (a) 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
.
(The
reference to s 86(9) is plainly intended to mean s 86(10).)
[3]
Published under GN R489 in
GG
28864 of 31 May 2006 as amended by GN R1209 in
GG
29442 of 30 November 2006 and GN R604 in
GG
30713 of 29 May 2008.
[4]
It
is in fact currently 22,1% per annum.
[5]
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.
[6]
The rate was fixed at 5.5% on 19 November 2010, 5% on 20 July
2012 and 5.5% on 30 January 2014. The contract
was
entered into during March 2011.
[7]
Section 86(6) of the NCA provides:
A
debt counsellor who has accepted an application in terms of this
section must determine, in the prescribed manner and within
the
prescribed time-
(a)
whether the consumer appears to be over-indebted; and
(b)
if the consumer seeks a declaration of reckless credit, whether
any
of the consumer's credit agreements appear to be reckless.
[8]
Section 86(7) of the NCA provides:
If,
as a result of an assessment conducted in terms of subsection (6), a
debt counsellor reasonably concludes that-
(a)
the consumer is not over-indebted, the debt counsellor must
reject the application, even if the debt counsellor has concluded
that a particular credit agreement was reckless at the time it was
entered into;
(b)
the consumer is not over-indebted, but is nevertheless
experiencing, or likely to experience, difficulty satisfying all the
consumer's
obligations under credit agreements in a timely manner,
the debt counsellor may recommend that the consumer and the
respective
credit providers voluntarily consider and agree on a plan
of debt re-arrangement; or
(c)
the consumer is over-indebted, the debt counsellor may issue a
proposal recommending that the Magistrate's Court make either or
both of the following orders-
(i)
that one or more of the consumer's credit agreements be declared
to
be reckless credit, if the debt counsellor has concluded that those
agreements appear to be reckless; and
(ii)
that one or more of the consumer's obligations be re-arranged by-
(aa)
extending the period of the agreement and reducing the amount of
each payment due accordingly;
(bb)
postponing during a specified period the dates on which payments
are due under the agreement;
(cc)
extending the period of the agreement and postponing during a
specified period the dates on which payments are due under the
agreement;
or
(dd)
recalculating the consumer's obligations because of
contraventions of Part A or B of Chapter 5, or Part A of Chapter 6.
[9]
Section 83(3) of the NCA provides:
If
a court declares that a credit agreement is reckless in terms of
section 80 (1) (b) (ii), the court-
(a)
must further consider whether the consumer is over-indebted at the
time of those court proceedings; and
(b)
if the court concludes that the consumer is over-indebted, the
court may make an order-
(i)
suspending the force and effect of that credit agreement until
a
date determined by the Court when making the order of suspension;
and
(ii)
restructuring the consumer's obligations under any other credit
agreements, in accordance with section 87.
[10]
See note 1, above.
[11]
See
Sebola
and Another v Standard Bank of South Africa Ltd and Another
[2012] ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) at
para 76-77.
[12]
That much was also alleged in the summons.
[13]
Note 11, above.
[14]
[2014]
ZACC 1
(20 February 2014).
[15]
Kubyana
,
at para 53.
[16]
Subsections 129(3) and (4) of the NCA provide:
(3)
Subject to subsection (4), a consumer may-
(a)
at any time before the credit provider has cancelled the agreement
re-instate a credit agreement that is in default by paying to the
credit provider all amounts that are overdue, together with
the
credit provider's permitted default charges and reasonable costs of
enforcing the agreement up to the time of re-instatement;
and-
(b)
after complying with paragraph (a), may resume possession of any
property that had been repossessed by the credit provider pursuant
to an attachment order.
(4)
A consumer may not re-instate a credit agreement after-
(a)
the sale of any property pursuant to-
(i)
an attachment order; or
(ii)
surrender of property in terms of section 127;
(b)
the execution of any other court order enforcing that agreement;
or
(c)
the termination thereof in accordance with section 123.
[17]
2009
(6) SA 63 (KZD).
[18]
See e.g.
SA
Taxi Securitisation (Pty) Ltd v Mbatha; SA Taxi Securitisation (Pty)
Ltd v Molete; SA Taxi Securitisation (Pty) Ltd v Makhoba
2011 (1) SA 310
(GSJ);
SA
Taxi Securitisation (Pty) Ltd v T Booi and Three other similar
matters
(ECG High Court case no.s 4077, 5065, 4021 and 5069/2009 (20 March
2010) (per Plasket J) and
SA
Taxi Securitisation (Pty) Ltd v Nako and Others
[2010] ZAECBHC 4 (8 June 2010).
[19]
2013
(1) SA 219
(KZD) at para 64-67.