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[2015] ZAWCHC 11
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Hardenberg and Another v Nedbank Limited (A315/2013) [2015] ZAWCHC 11; 2015 (3) SA 470 (WCC) (12 February 2015)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
In
the matter between
Appeal
Case No: A315/2013
Trial
Case No: 18463/2012
DATE:12
FEBRUARY 2015
REGINALD
HARDENBERG
.................................
FIRST
APPELLANT
LISA
ANN HARDENBERG
...............................
SECOND
APPELLANT
And
NEDBANK
LIMITED
......................................................
RESPONDENT
Coram
:
ERASMUS, ROGERS & MANTAME JJ
Heard:
30 JANUARY 2015
Delivered:
12 FEBRUARY 2015
JUDGMENT
ROGERS
J (ERASMUS AND MANTAME JJ concurring) :
Introduction
[1]
The appellants were the
defendants and the respondent the plaintiff in the court quo. I shall
refer to them as such.
[2]
The parties concluded a
mortgage loan agreement during November 2007 in terms whereof the
plaintiff was to lend the defendants,
who are married in community of
property, an amount of R673431 to be secured by a mortgage bond over
property situated in Ottery.
The money was advanced and the mortgage
bond registered during January 2008.
[3]
In mid-2009 the
defendants applied to a debt counsellor in terms of s86(1) of the
National Credit Act 34 2005 (‘the Act’)
to be declared
over-indebted. On 19 June 2009 the counsellor gave the defendants’
credit providers, including the plaintiff,
the notice contemplated in
s86(4) of the Act.
[4]
The counsellor, having
circulated several proposals to the credit providers, brought an
application in the Wynberg Magistrate’s
Court in terms of
s86(7)(c) for a re-arrangement of the defendants’ obligations,
including their obligations to the plaintiff.
[5]
By letter dated 2 May
2012, at a time when the re-arrangement application was pending, the
plaintiff gave notice that it was terminating
the debt review in
terms of s86(10). Summons was issued in September 2012. The
defendants defended the action. The plaintiff applied
for summary
judgment. The defendants filed papers in opposition.
[6]
The summary judgment
application was granted by the court a quo (Henney J) on 10 December
2012. The judge refused a request to postpone
the application to
afford the defendants opportunity to ascertain the status of the
re-arrangement application. He considered that
the defendants did not
have a bona fide defence.
[7]
In April 2013 the
defendants delivered an application for leave to appeal. The only
point raised was that the defendants had not
been in arrears at the
time they applied for debt review in mid-2009 and that for this
reason, and by virtue of the decision in
Collett
v FirstRand Bank
2011
(4) SA 508
(SCA), the plaintiff had not been entitled to terminate
the debt review. Henney J granted leave to appeal to a full bench.
[8]
In the appeal the
defendants were represented by Mr Tredoux and the plaintiff by Mr
Jonker.
The Collett point
[9]
The defendants alleged,
in their affidavits opposing summary judgment, that they were not in
arrears to the plaintiff when they
applied to the debt counsellor for
debt review or when the debt counsellor issued the prescribed notice
to the credit providers.
They say they only fell into arrears when
the plaintiff, upon notification of the debt review, reversed their
last debit order.
This is at odds with the statement of balance which
the plaintiff provided to the debt counsellor on the latter’s
request
and which reflected an arrears of R5 597 as at the
certificate date, namely 23 June 2009. If the debit order of 27 May
2009
was not dishonoured for lack of funds, it is surprising that the
plaintiff would have reversed a good payment (which was to its
benefit) merely because the defendants had applied for debt review. I
shall assume, however, that for purposes of summary judgment,
and
thus the appeal, the defendants’ version must be accepted as
correct. Indeed, I understood Mr Jonker to invite us to
decide the
appeal on this basis.
[10]
Mr Tredoux argued that
the effect of
Collett
was that, because
the defendants were not in default of their agreement with the
plaintiff at the time they applied for debt review,
the plaintiff was
not entitled to terminate the debt review in terms of s 86(10),
even though by the date of termination the
defendants were in
default.
[11]
In
Collett
the consumer was in
default when he applied for debt review. The question in the case was
whether the right to terminate in terms
of s 86(10) could be
exercised while an application for a re-arrangement order was pending
in the magistrate’s court.
This was a question on which there
had been conflicting decisions in the provincial divisions. The
Supreme Court of Appeal held
in
Collett
that a pending re-arrangement application did not bar termination in
terms of s 86(10).
[12]
In the course of
delivering the court’s judgment, Malan JA said that a consumer
who was over-indebted or in strained circumstances
could apply for
debt review in terms of s 86(1) whether or not he was in arrears
under any particular credit agreement. The
learned judge of appeal
proceeded:
‘
[9]…
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 creditor
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 ss 129 and 130.
In terms of s 86(2), an application for debt review concerning a
particular credit
agreement may not be made if the credit provider
has “proceeded to take the steps contemplated in section 129 to
enforce
that agreement”.’
[13]
Malan JA continued by
observing that the purpose of debt review is not to relieve the
consumer of his obligations but to achieve
either a voluntary debt
re-arrangement or a debt re-arrangement by the magistrates’
court (para 10). Under ss 86 and
87 there is ‘only one
unified process, the purpose of which is the restructuring of the
consumer’s debts by amending
the terms of the credit
transaction between the parties’.
[14]
He then dealt with the
decision of this court in
Wesbank,
A Division of FirstRand Ltd v Papier
2011
(2) SA 395
(WCC), which held that a credit provider’s right to
terminate the debt review was forfeited once the counsellor delivered
an application to the magistrates’ court for a re-arrangement
order. In
Papier
the
court concluded that the lawmaker had selected a 60-day period in
s 86(10) to allow the debt counsellor 30 days, and thereafter
the consumer 20 days, to approach the magistrates’ court for a
re-arrangement order. Only if this was not done could the
credit
provider (effectively after a further 10 days – 60 days in all)
terminate the process. Malan JA rejected this interpretation
of the
section (the underlining is mine):
‘
[12] …
I do not think that s 86 requires the consumer or his debt
counsellor to “approach the court”
within the period of
60 days. Indeed no time period is specified within which the debt
counsellor must make application to the
magistrates’ court. Nor
does the NCA require the process of debt-restructuring to be complete
within the period of 60 days
after the application was made. To do so
would obviously be unrealistic… 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 that the
credit
provider is “derailing” the process when he
terminates the debt review: it is the consumer that is in breach of
the
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.’
[15]
The underlined words
formed the foundation of Mr Tredoux’s argument.
[16]
The same point was
considered and rejected by Meer J in
Gelderbloem
& Another v Changing Tides No 17 (Pty) Ltd
[2011]
ZAWCHC 396.
The learned judge, after quoting the paragraphs above,
said the following (para 13):
‘
Whilst
in the above 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 a
termination 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
proceedings in
terms of s 86(10) of the Act after 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.’
[17]
I agree.
[1]
One must guard against reading a judgment as if it were a statute. A
judgment must be read in the context of what the court was
asked to
decide. As I have said, in
Collett
the consumer was in
default when he applied for debt review and that is the more usual
case. The court was not called upon to decide
the question whether
termination was precluded if the default did not exist at the time
the consumer applied for debt review.
[18]
The question in the
present case turns on the proper interpretation of s 86(10).
That section starts thus (my emphasis): ‘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…’. There is nothing in this formulation
to
suggest that the default must exist at the time the consumer applied
to be declared over-indebted. The present tense is used
in relation
to the default, indicating that the requirement is that the default
should exist when the credit provider terminates
the debt review.
[19]
There are no other
considerations to suggest that a different interpretation should be
given to s 86(10). Where a consumer
is in default and the credit
provider wishes to take legal action, the latter is ordinarily
required to give the notice contemplated
in ss 129 and 130 of
the Act and to refrain from instituting action until ten business
days have elapsed without response
from the consumer. As in s 86(10),
ss 129(1) and 130(1) use the present tense in relation to the
requirement of default
(‘If the consumer is in default …’),
indicating that the default must exist at the time of the giving of
the
notice. The purpose of the notice is to draw to the consumer’s
attention his right to refer the credit agreement to a debt
counsellor, alternative dispute resolution agent, consumer court or
ombud with a view to the parties’ resolving any dispute
under
the agreement or developing and agreeing a plan to bring the payments
up to date. However, the lawmaker evidently considered
that if the
consumer has already availed himself of the right to refer the
agreement to a debt counsellor for debt review it is
unnecessary to
require the credit provider to comply with ss 129 and 130 –
the consumer has already shown knowledge
of and exercised his
statutory right. It is sufficient, in these circumstances, to require
the credit provider to wait at least
60 days before terminating the
debt review and taking legal action. As in the case of ss 129
and 130, the credit provider
naturally cannot take enforcement action
unless the consumer is in default but in the absence of clear
language one would not expect
it to be a mandatory requirement that
the default should not only exist at date of termination and
enforcement but also when the
consumer applied for debt review.
[20]
If Mr Tredoux’s
argument were sound, it would give rise to unequal treatment of
credit providers without a rational basis.
At the time a consumer
applies for debt review he may be in default of his obligations to
some but not all of his credit providers.
On Mr Tredoux’s
argument those credit providers in respect of whose agreements the
consumer was in default when he applied
for debt review would be
entitled to terminate the debt review in respect of their agreements
after 60 days while other credit
providers, in respect of whom the
consumer may have fallen into default very shortly after applying for
debt review, would have
to await the finalisation of the whole debt
review process, something which experience shows can take a very long
time (as the
present case illustrates).
[21]
Mr Tredoux suggested
that the distinction between the two classes of credit providers may
have been drawn with a view to preventing
a ‘flood’ of
litigation following upon the termination of debt reviews. The first
point, of course, is that the legislation
itself apparently draws no
such distinction; Mr Tredoux relies on the passage in
Collett
rather than on the
wording of s 86(10). Accordingly, if the lawmaker was intent
upon making the distinction it did so in a
very obscure way. But in
any event, I have some difficulty in following the rationale put
forward by Mr Tredoux. I understood him
to suggest that there would
be a ‘flood’ of debt review terminations, with resultant
enforcement litigation, if s 86(10)
were held to apply to credit
agreements in relation to which the consumer was not in default at
the time of seeking debt review.
I would have thought just the
opposite. Experience indicates that more often than not consumers are
already in default of their
various credit agreements by the time
they seek debt review yet admittedly the credit providers in question
are permitted by s 86(10)
to terminate the debt review in
respect of those credit agreements. To extend this right also to
credit providers in respect of
whose agreements the consumer only
fell into default after seeking debt review would not add much to the
volume of terminations;
it is the former class of terminations,
rather than the latter, which constitutes the ‘flood’ (if
this is the correct
metaphor).
[22]
Mr Tredoux’s
argument would also allow unscrupulous consumers to apply for debt
review without yet being in default, then
to apply for debt review,
stop paying their credit providers and delay the finalisation of the
resultant debt review process for
months or even years. It is true,
as Mr Tredoux pointed out, that it is the debt counsellor rather than
the consumer who in law
controls the process of debt review and
brings the application for debt re-arrangement. However, debt
counsellors are not always
as diligent as they should be and depend
to some extent upon the cooperation given by the consumer.
[23]
I am satisfied that
Malan JA in
Collett
did not intend to
hold that the default must exist at the time the consumer applies for
debt review in order for the credit provider
to be entitled to
exercise the right of termination conferred by s 86(10). He did
not examine the language of s 86(10)
with this question in mind.
Had he been called upon to decide this particular question, I have no
doubt that the second last sentence
of para 12 of his judgment would
have been amplified to read as follows: ‘If the consumer
applies for debt review before
he is in default the credit provider
may not terminate the process
unless
the consumer thereafter falls into default
.’
[24]
If, however, Malan JA’s
judgment indeed purports to decide the point which arises in this
appeal, I would respectfully regard
the decision on that point as
obiter
.
On the distinction between
ratio
and
obiter
Mr Tredoux referred us to
Pretoria
City Council v Levinson
1949
(3) SA 305
(A). In that case Schreiner JA referred to conflicting
statements as to the status of the ‘reasons’ which a
judge gives
for his or her decision, a conflict which he suggested
might be due to uncertainties of definition (at 316-317). He
concluded:
‘
As
I understand the ordinary usage in this connection, where a single
judgment is in question, the reasons given in the judgment,
properly
interpreted, do constitute the
ratio
decidendi
,
originating or following a legal rule, provided (a) that they do
not appear from the judgment itself to have been merely
subsidiary
reasons for following the main principle or principles, (b) that
they were not merely a course of reasoning on
the facts … and
(c) … that they were necessary for the decision, not in
the sense that it could not have been
reached along other lines, but
in the sense that along the lines actually followed in the judgment
the result would have been different
but for the reasons.’
This approach to identifying the
ratio
of a
judgment was approved and applied more recently in
True Motives 84
(Pty) Ltd v Mahdi & Another
2009 (4) SA 153
(SCA) paras 37-39
(per Heher JA) and paras 103-106 (per Cameron JA).
[25]
I have indicated that I
do not regard Malan JA’s judgment, on a proper interpretation,
as holding that a debt review cannot
be terminated in respect of the
particular credit agreement if the consumer was not in default at the
time he sought debt review.
However, if Malan JA did intend to make
such a finding, it cannot be regarded as part of the
ratio
of the judgment,
having regard to proviso (c) and perhaps also proviso (a) in
Levinson
.
It did not matter to the outcome of
Collett
whether in law the default had to exist at the time the consumer
applied for debt review or only at the date of the s 86(10)
termination because in fact the consumer was in default on both
occasions. If in law there had to be default at the time the consumer
applied for debt review in order for there to be a valid s 86(10)
termination, the consumer in
Collett
was at that time in
default, so the termination was not on this account bad; if in
law there did not need to be default at
the time the consumer applied
for debt review, the fact that the consumer happened at that time to
be in default would obviously
not make the termination bad. The
ratio
was whether it
mattered that there was a pending application for a debt
re-arrangement order at the date of termination, because
in
Collett
there was such a
pending application. The binding
ratio
of
Collett
is that a valid
s 86(10) termination is not precluded because there is a pending
debt-rearrangement application. But for that
conclusion of law, the
outcome in
Collett
would have been
different
.
Other
points
[26]
Mr Tredoux advanced two
other arguments, namely (i) that the track-and-trace report in
respect of the s 86(10) notice
showed that the notice could not
have been received by the defendants; (ii) that the plaintiff’s
termination of the
debt review was not in good faith. Neither of
these points is open to the defendants on appeal. The notice of
appeal, which followed
precisely the application for leave to appeal,
raised only the
Collett
point. There is no application to amend the notice of appeal (cf
Hugo
v Loubser
1920 CPD
469
at 471). If there had been such an application, the defendants
would have been required to explain why their notice of appeal was
limited as it was and whether they consciously limited themselves to
one point, abandoning the others (cf
Bredenkamp
v Du Toit
1924 GWL
15
at 19).
[27]
I wish simply to add
that neither of the further points has any self-evident merit. As to
the delivery of the notice of termination,
the defendants did not
state in their affidavits opposing summary judgment that they did not
receive the notice. It was sent to
the correct address. The
track-and-trace report does not convey that the notice only arrived
at the relevant post office on the
same day it was returned to
sender; on my reading of the track-and-trace report the registered
item may have been received at the
Ottery post office at any time
between 7 May 2012 and 13 June 2012, the latter being the date
containing the return-to-sender comment.
[28]
As to the supposed
absence of good faith, and assuming that good faith is a legal
requirement for a valid s 86(10) termination
(as to which, see
Absa Bank Ltd v
Walker
[2014]
ZAWCHC 92
paras 10-11), the evidence does not point to an absence of
good faith by the plaintiff. The defendants rely on the fact that the
plaintiff in September 2010 accepted the debt counsellor’s
second proposal insofar as it related to the first defendant but
rejected it insofar as it related to the second defendant, this
despite the fact that the defendants were married in community
of
property and jointly and severally liable for the debt. However, the
question is not whether the acceptance and rejection in
September
2010 were in bad faith but whether the termination, which happened
about 18 months later in May 2012, was in bad faith.
The apparent
inconsistency in the acceptance and rejection of the proposal in
October 2010 may have been an administrative error
– the
plaintiff, given the nature of the proceedings, was not entitled to
file an explanatory affidavit. Mr Jonker also directed
our attention
to the fact that there were differences (unexplained by the
defendants) between the proposals forwarded to the plaintiff
in
respect of the two defendants. Be that as it may, I cannot see how
the plaintiff can be criticised for having decided to terminate
the
debt review in May 2012, given the lengthy delay in the finalisation
of the debt review process. Even if the plaintiff had
accepted the
second proposal in respect of both defendants, it would still have
been entitled to terminate the debt review at a
later stage if there
was no finality on the debt review process as a whole.
Conclusion
[29]
The appeal is dismissed
with costs.
ERASMUS
J
ROGERS
J
MANTAME
J
APPEARANCES
For Appellants: Mr Paul Tredoux
Instructed by:
KJ Bredenkamp Attorneys
Ground Floor, The Chambers
50 Keerom Street
Cape Town
For Respondent: Mr Wynand Jonker
Instructed
by: Minde Shapiro & Smith Inc
Tygervalley
Office Park 2
Cnr
Willie van Schoor & Old Oak Road
Bellville
[1]
See also
Motor
Finance Corporation (a Division of Nedbank) v Petersen
[2014]
ZAWCHC 79
para 50, where in an obiter dictum I expressed
considerable doubt as to whether the relevant passage in para 12 of
Collett
had
the meaning for which Mr Tredoux now contends.