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[2014] ZAWCHC 92
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Absa Bank Ltd v Walker (2307/14) [2014] ZAWCHC 92 (17 June 2014)
REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE
DIVISION)
Case
No.2307/14
DATE:
17 JUNE 2014
Before: The
Hon. Mr Justice Binns-Ward
In the matter
between:
ABSA
BANK
LTD
..........................................................................
Plaintiff
And
CLAUDINE
LEIGH WALKER
..............................................
Defendant
JUDGMENT
DELIVERED: 17 JUNE 2014
BINNS-WARD J:
[1]
The defendant entered into an instalment
agreement with the plaintiff bank for the purchase of a motor
vehicle. The contract
provided that ownership of the vehicle
would vest in the plaintiff until the defendant had discharged all of
her obligations under
the agreement. It also provided that in
the event of the defendant defaulting on her instalment payments the
plaintiff would
be entitled to cancel the agreement and repossess the
vehicle.
[2]
The defendant fell into arrears with her
instalment payments. She referred the agreement to a debt
counsellor for debt review
in terms of s 86 of the National
Credit Act 34 of 2005 (‘the NCA’).
[1]
A period of more than 60 business days having elapsed after the date
of the referral for debt review, and no debt rearrangement
order
having been made, the plaintiff terminated the debt review of the
agreement by notice in terms of s 86(10) of the NCA.
The
plaintiff thereafter instituted an action claiming various heads of
relief, including a declaration confirming the termination
of the
agreement and return of the vehicle. The summons included a
notice of cancellation of the agreement.
[3]
The defendant entered notice to defend the
action, whereupon the plaintiff applied for summary judgment for
delivery up of the vehicle.
The defendant delivered an
affidavit opposing the summary judgment application.
[4]
The defendant raised a number of issues in
her opposition to the summary judgment application. I shall
address each of them
in turn.
[5]
The first contention advanced by the
defendant was that it did not appear sufficiently from the supporting
affidavit that the deponent
had direct knowledge of the facts so as
to be able to confirm the cause of action, as required by rule
32(2). The deponent
averred that he was a legal manager in the
plaintiff bank’s legal retail collections division. He
stated that by virtue
of that position he had in his possession and
under his control the files and records pertaining to the plaintiff’s
dealings
with the defendant, with which he had familiarised himself.
The defendant contended that those averments were insufficient
to
comply with the sub-rule.
[6]
The issue raised in the defendant’s
first contention has enjoyed attention in two judgments of the appeal
court given earlier
in the year; viz.
Dean
Gillian Rees v Investec Bank Limited
[2014] ZASCA 38
(28 March 2014) and
Stamford
Sales & Distribution v Metraclark
[2014] ZASCA 79
(29 May 2014). The supporting affidavit
considered in the latter matter contained averments by the
plaintiff’s national
credit manager to the effect that ‘[t]
he
Applicant’s file pertaining to the above-captioned matter which
contains, inter alia, a cession of book debts in favour
of the
Applicant, proof of the Applicant’s claim against Quali Cool CC
and all correspondence entered into by the Applicant
and/or its
attorney with the Respondent, is currently in my possession and under
my control and I am fully conversant with the
content thereof
’.
That was held to be sufficient to comply with the requirement of rule
32(2) of the Uniform Rules of Court that the
supporting affidavit
must be made by a person ‘who can swear positively to the facts
verifying the cause of action’.
[7]
At para 10-12 of the court’s judgment
in
Stamford Sales
,
Swain AJA stated:
[10]
This court in
Dean Gillian Rees v Investec Bank Limited
(330/13)
[2014] ZASCA 38
(28 March 2014), in dealing with the issue
of whether personal knowledge of all of the facts forming the basis
for the cause of
action, had to be possessed by the deponent to the
verifying affidavit, said the following in para 15:
‘
As
stated in
Maharaj
[1976 1 SA 418
(A)], “undue formalism in procedural matters is always to be
eschewed” and must give way to commercial pragmatism.
At the
end of the day, whether or not to grant summary judgment is a
fact-based enquiry
.
Many summary judgment applications are brought by financial
institutions and large corporations. First-hand knowledge of every
fact cannot and should not be required of the official who deposes to
the affidavit on behalf of such financial institutions and
large
corporations. To insist on first-hand knowledge is not consistent
with the principles espoused in
Maharaj
.’
(My emphasis.)
In
my view, as long as there is direct knowledge of the material facts
underlying the cause of action, which may be gained by a
person who
has possession of all of the documentation, that is sufficient.
[11]
The enquiry, which is fact-based, considers the contents of the
verifying affidavit together with the other documents properly
before
the court. The object is to decide whether the positive affirmation
of the facts forming the basis for the cause of action,
by the
deponent to the verifying affidavit, is sufficiently reliable to
justify the grant of summary judgment. Those high court
decisions
which have required personal knowledge of all of the material facts
on the part of the deponent to the verifying affidavit
are
accordingly not in accordance with the principles laid down by this
court in
Maharaj
.
[12]
An insistence upon personal knowledge by a deponent to a verifying
affidavit of all of the material facts forming the basis
for the
cause of action, where the cessionary of a claim seeks summary
judgment against the debtor, in most cases would effectively
preclude
the grant of summary judgment. The consequences of this narrow
approach is illustrated by the decision in
Trekker Investments
(Pty) Ltd v Wimpy Bar
1977 (3) SA 447
(W). It was held that it
had to appear from the verifying affidavit that the facts relating to
the claim of the cedent against
the debtor were within the knowledge
of the deponent who was able to swear positively thereto. The
deponent in such a case was
prima facie
making the affidavit
on behalf of a cessionary and there was nothing in the affidavit to
indicate that the deponent had any connection
with the cedent, which
presumably would have enabled him to acquire this knowledge. To
insist on personal knowledge by the deponent
to the verifying
affidavit on behalf of the cessionary of all of the material facts of
the claim of the cedent against the debtor,
emphasises formalism in
procedural matters at the expense of commercial pragmatism.
[8]
In the circumstances I am not persuaded
that there is any merit in the defendant’s allegation of
‘technical shortcomings’
in the supporting affidavit.
(I would suggest, however, that the argument to which compliance with
rule 32(2) by large financial
institutions applying for summary
judgment frequently gives rise in respect of the reliance on the
content of electronic records
by deponents to the supporting
affidavit could be avoided if appropriate resort were had to the
provisions of
s 15
of the
Electronic Communications and Transactions
Act 25 of 2002
; see
Absa Bank Ltd v Le
Roux and Others
2014 (1) SA 475
(WCC),
at para 19-21. As is apparent from the review of the relevant
jurisprudence in
Le Roux
,
the judgments of the superior courts, including those most recently
given in the appeal court, still leave open for debate precisely
what
is required short of ‘personal knowledge of
all
of the material facts on the part of the deponent’ for the
purposes of the necessary ‘facts-based enquiry’.)
[9]
The second point taken by the defendant is
that the plaintiff did not attach a certificate of balance to its
summons. The
agreement provided that the plaintiff could prove
the amount owed to it by the defendant under the contract by means of
a certificate
of balance signed by a designated officer of the bank
and could use such a certificate for the purpose of obtaining default
or
summary judgment. The provision is one that operates
exclusively for the benefit of the bank. If the bank avails of
the provision it casts an evidential onus on the debtor to displace
the
prima facie
evidential
effect of the certificate; cf.
Senekal v
Trust Bank of Africa Ltd
1978 (3) SA
375
(A), at 382H - 383A. A purposeless reference to the
provision was contained in the plaintiff’s particulars of
claim.
The reference was purposeless because the plaintiff did
not attach a certificate of balance. The defendant’s
reliance
on the omission as being in any way material was
misconceived, however, because the production of such certificate
does not form
part of the plaintiff’s cause of action.
The plaintiff alleged in its summons that the defendant was in
arrears with
her instalment payments in the amount of R36 534,07
as at 13 January 2014. The defendant has not denied the
allegation.
On the undisputed allegations the bank was
therefore entitled, in terms of
s 123(2)
of the NCA, and subject
to the provisions thereof, to cancel the agreement.
[2]
[10]
The third point taken by the defendant was
that the plaintiff’s termination of the debt review process had
been incompetent.
The essence of the defendant’s
argument in this regard was that the plaintiff had been bound to
respond constructively to
the debt restructuring proposal put to it
for consideration by the debt counsellor in terms of
s 86(7)(c)(ii)
of the NCA. The contention, as I understood it, was that as the
plaintiff had failed to respond to the proposal it had fallen
short
of the obligation on it in terms of the Act to treat with the debtor
in good faith, and was thus prohibited from availing
of the right of
termination provided in terms of s 86(10) of the NCA.
[3]
[11]
The defendant’s submission that the
plaintiff was bound to respond to the debt re-arrangement proposal in
good faith is supported
by authority; see
Collett
v FirstRand Bank Ltd
2011 (4) SA 508
(SCA), at para 13 and 15. The judgment in
Collett
,
however, also makes it clear that a credit provider is entitled,
without qualification, to have resort to s 86(10) in any
case in
which the consumer is in default of his contractual obligations at
the time he makes application for debt review.
The defendant
has not contended that that was not the position in her application
for debt review, or that she was not still in
default when the
plaintiff gave notice of termination in terms of s 86(10).
The consumer’s remedy, when a credit
provider has terminated a
debt review in circumstances in which it has failed to treat with the
consumer’s debt re-arrangement
proposals in good faith, is to
apply, in terms of s 86(11) of the NCA, for a resumption of the
debt review, or, in the context
of a summary judgment application, to
ask the court, in the exercise of its overriding discretion, to
refuse the application for
summary judgment; see
Collett
at para 15, 16 and 18. It seems to me that there would be
little purpose served in the exercise of the court’s discretion
in favour of a defendant in a summary judgment application if the
refusal of judgment were not attended by an order directing a
resumption of the debt review, either in terms of s 86(11) or by
way of a ‘general review’ in terms of s 85
of the
NCA. As the appeal court noted at para 18 of its judgment
in
Collett
,
‘
Of course, sufficient information
on which the request for a resumption of the debt review is based
must be placed before the court.
’
I turn next to deal with the issue of a postulated resumption of the
debt review.
[12]
The defendant’s debt restructuring
proposal contemplates that the defendant will retain possession of
the plaintiff’s
vehicle, while extending the period for the
payment of instalments to 98 months; some 26 months longer than the
parties had originally
agreed. A significant feature inherent
in the defendant’s proposal was the partial negation of the
plaintiff’s
right of security in the asset and a relative
reduction of the value provided by the security in the asset during
the extended
payment period because of the effect of depreciation.
Doubt has been expressed in a number of judgments whether such a
result
is contemplated by the NCA, which requires a balanced approach
to the rights and interests of both the creditor and the debtor.
It has been remarked that debt re-arrangement is directed at the
settlement of a debtor’s financial obligations, and not
at
facilitating the ability of a purchaser of goods in terms of an
instalment agreement to keep and use the goods on more favourable
terms of payment; cf. e.g.
Standard
Bank of South Africa Ltd v Panayiotts
2009 (3) SA 363
(W) at para 77;
SA Taxi
Securitisation (Pty) Ltd v Mbatha and Two Similar Cases
2011
(1) SA 310
(GSJ) at para 35-36 and 46-50;
Pelzer
v Nedbank Ltd
2011 (4) SA 388
(GNP), at
para 6.3-6.4;
Standard Bank of South
Africa Ltd v Newman
[2011] ZAWCHC 91
,
at para 11;
Absa Bank Ltd v O’Connor
[2012] ZAWCHC 152
at para 3;
Nedbank Ltd v Jaars
[2012] ZAWCHC 270
, at para 22-23; and
SA
Taxi Securitisation (Pty) Ltd v Melaphi
[2014] ZAWCHC 47
, at para 11.
[13]
More pertinently, however, in the
circumstances of the current case a resumption of the debt review
with the object of obliging
the plaintiff to accept the proposed debt
rearrangement would negate the right of cancellation conferred upon,
and exercised by,
the plaintiff in terms of s 123(2) of the
NCA. There is nothing in the NCA that would permit the
extraordinary measure
of the involuntary reinstatement of a lawfully
cancelled agreement as part of a debt re-arrangement order. On
the contrary,
s 129(4)(c) of the NCA expressly provides that a
consumer may not reinstate a credit agreement after the termination
thereof
in terms of s 123. Upon the cancellation of the
agreement, the defendant ceased to have any right to possess the
vehicle.
There is no merit in the defendant’s contention
that the cancellation was invalid. The provisions of s 123(2)
of the NCA were complied with. Notice of cancellation was given
when the defendant was in default of her obligations under
the
agreement and after the plaintiff had effectively terminated the debt
review in terms of s 86(10) of the NCA.
[14]
The defendant’s counsel sought in
argument to invoke the provisions of s 88(3)(b)(ii) of the NCA
to contend that the
plaintiff was not entitled to enforce its
security after receiving notice of the debt review application.
The reliance on
this provision had not been adumbrated in the
defendant’s opposing affidavit. In my view it is without
merit.
The provision is expressly subject to the credit
provider’s right of termination in terms of s 86(10).
That means
that the provision does not operate when the debt review
has been terminated in terms of s 86(10). (It also does
not
operate when the debt counsellor has rejected the debt review
application – hence the reference in s 88(3) also to
s 86(9).)
[15]
The only matter then outstanding that might
arguably fall to be regulated in terms of the Act and its debt review
procedures would
be payment of any amount that might remain due after
the realisation of the vehicle.
[16]
The defendant incorporated a contingent
application for a resumption of the debt review in terms of s 86(11),
alternatively
for a general debt review in terms of s 85 of the
NCA, in her opposing affidavit. The application was predicated
on
the existence of a power in the court determining the contemplated
debt re-arrangement to reinstate the cancelled agreement.
As
already noted, however, the courts have no such power.
[17]
Finally, the defendant set out her personal
and family circumstances in some detail in her opposing affidavit.
The purpose
of providing this information was to explain why she had
fallen into arrears with her instalment payments and to describe the
hardships
to which she would be subject were she required to
surrender the vehicle. I accept that circumstances have
conspired against
the defendant and that it will be difficult for her
to manage without the vehicle, but those considerations do not afford
a proper
reason for the plaintiff’s proprietary right in the
vehicle to be subordinated. The court’s discretion to
refuse
summary judgment when a case for it has been made out has to
be exercised judicially. The institution of the action was not
an abuse of process, there is nothing to send to trial and debt
re-arrangement relief of the nature sought by the defendant is
not
available. In the circumstances there are no cognisable grounds
for the exercise of the court’s discretion in favour
of the
defendant.
[18]
This application should not have been
postponed for hearing in the Fourth Division. It is the
practice of this Court that
opposed summary judgment applications
should, save in exceptional circumstances, be determined in the Third
Division. There
is nothing exceptional about the current
matter, and my attention was not directed to any circumstances which
would have justified
a judge in the Third Division to decline to deal
with the case. It would be unjust in the circumstances to
burden the defendant
with the increased costs involved in a hearing
in the Fourth Division.
[19]
The following order is made:
Termination
of the agreement is confirmed and summary judgment is consequently
granted in favour of the plaintiff against the defendant
for delivery
up of certain 2009 Dodge Caliber 2.0 CRD SXT motor vehicle with
engine number 8D689814 and chassis number 1B3H348A58D689814
and costs
of suit, which shall be taxable as if the application had been argued
and determined in the Third Division court.
A.G.
BINNS-WARD
Judge
of the High Court
Date
of hearing:
17 June 2014
Judgment
delivered:
17 June 2014
Judge:
Mr Justice Binns-Ward
Plaintiff’s
counsel:
Johan Louw
Defendant’s
counsel
:
Craig Cutler
Plaintiff’s
attorneys
:
Strauss Daly Inc., Cape Town
Defendant’s attorneys
:
Van der Hoven Attorneys, c/o Shepstone &Wylie Attorneys, Cape
Town
[1]
The summons erroneously alleges that the reference to
the debt counsellor occurred in terms of s 129 of the Act.
[2]
Section 123(2) of the NCA provides: ‘
If
a consumer is in default under a credit agreement, the credit
provider may take the steps set out in Part C of Chapter 6 to
enforce and terminate that agreement
’.
[3]
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.
’