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					IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
                                                                                CASE NO: 6688/2010
In the matter between


FIRSTRAND BANK LIMITED                                                                       Applicant
(trading as Wesbank)


and



STACY-LEE ANN TALANA ALBERTYN                                                             Respondent




                        Judgment handed down on 10 February 2011



Sven Olivier AJ

1. This is an application for summary judgment wherein the plaintiff claims an order

directing the defendant to return a Volkswagen City motor vehicle and costs. It is common

cause that the lease agreement is a credit transaction as defined in section 1 of the

National Credit Act, 34 of 2005 ("the NCA").



2. The application is opposed and the defendant has filed an opposing affidavit wherein

she in essence contends that she is under debt review and her application for debt review

has been set down for hearing on 16 September 2010 in the Wynberg Magistrates' Court.

She states that debt review proceedings were initiated in a notice1 sent by her debt

counsellor sent out on 23 October 2009. She contends, accordingly, that there were no

grounds on which to terminate the debt review process.

3. In view of this defence it is appropriate to first set out the time line against which this

defence is to be adjudicated.




1
  Form 17.1 of the prescribed forms set out in Schedule 1 in the Regulations made in terms of the National
Credit Act, Act 34 of 2005.
4. Although there was some debate at the bar regarding the date on which the defendant

had applied for a debt review in terms of the provisions of section 86(1) of the National

Credit Act, and whether it was on 2 November 2009, (as was alleged in the particulars of

claim) or 23 October 2009 (as was alleged in the opposing affidavit and the annexures

thereto), I accept, that the notice in terms of section 86(4) was given to all credit providers,

including the plaintiff, on 23 October 2009 and that this is the date on which the debt

review had commenced.



5. This notification triggered the provisions of section 88(3) of the NCA.



6. On 27 January 2010 the plaintiff gave notice in terms of section 86(10) to terminate the

debt review.



7. On 16 April 2010 the summons was served. Therein the plaintiff conveyed its election to

cancel the credit agreement between it and the defendant. It is common cause that the

defendant is in default under the credit agreement and that she has been so for at least 20

business days as is envisaged in terms of the provisions of section 130(1) of the NCA.



8.         Section 129 under Part C (which part deals with "debt enforcement by

repossession or judgment') provides that legal proceedings to enforce an agreement may

only be commenced with if notice in terms of, inter alia, section 86(10) has been provided

and the requirements of section 130 had been met. Section 130, in turn, provides that the

credit provider may approach a court for an order to enforce a credit agreement only if the

consumer is in default and has been in default for at least 20 business days and at least 10

business days have elapsed since the credit provider delivered a notice to the consumer

as contemplated in section 86(10).2



9. These requirements have been met.




2
     The section states section 86(9), but it seems to be common cause that it should be read as section 86(10).
      10. Though not stated in the papers, it is common cause that the application in terms of

      section 86(7)(c)3 was issued in the Wynberg Magistrates' Court on 7 June 2010.



      11. In passing I point out that Mr Noor, the debt counsellor, came to the conclusion that the

      defendant was over-indebted and that her obligations were to be rearranged by extending

      the periods of the agreements and reducing the amounts of each payment due

      accordingly.

12. At issue between the parties was whether the plaintiff was entitled to terminate the debt

      review process in terms of section 86(10) of the NCA.



      13. Section 86(10) of the National Credit Act provides that:

                        "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."


      14. The starting point of this debate is to be found in the provisions of the section and

      those of section 88(3) of the NCA.



      15. Section 88(3) provides that:



                        "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 to security under that credit agreement until - (a) the
                        consumer is in default under the credit agreement; and (b) one of the
                        following has occurred:



      3
        "(7) If, as a result of an assessment conducted in terms of subsection (6), a debt counsellor reasonably
      concludes that -... (c) the consumer is over-indebted, the debt counsellor may issue a proposal recommending
      that the Magistrates' Court make either or both of the following orders - (i) ...; and (ii) that one or more of the
      consumer's obligations be rearranged by - (aa) extending the period of the agreement and reducing the
      amount of each payment due accordingly;"
                  (i)        an event contemplated in subsection (1)(a) through (c); or


                  (ii)     the consumer defaults on any obligation in terms of a rearrangement
                  agreed between the consumer and credit providers, or ordered by a court or
                  the Tribunal."


16. As is already set out above, notice was given in terms of section 86(4)(b)(i) on 23

October 2009. It is also common cause that the defendant was in default under the credit

agreement.



17. None of the events contemplated by

        (a)       section 88(1 )(a) through to (c), that is, the debt counsellor had not rejected

        the application, the court had not determined that the defendant was not

        over-indebted, nor had the court made any order for the rearrangement of the

        defendant's obligations and had such an order been fulfilled; nor



        (b)      subsection (ii) of section 88(3)(b)



        had occurred.



18. It is therefore only if notice is given as contemplated in terms of section 86(10) that the

plaintiff could proceed to court.



19. In terms of section 86(10) the plaintiff may withdraw from the debt review process after

the expiry of a period of 60 days. The defendant, however, must be in default in regard to

the relevant credit agreement and applications in terms of subsections 86(8)(b)4 or section

86(9)5 should not be pending. This, by necessary implication, means that the credit

provider can thereafter proceed with legal action to enforce its rights in terms of its credit

4
   "(a) If a debt counsellor makes a recommendation in terms of subsection (7)(b) and -...
(b) ... the debt counsellor must refer the matter to the Magistrates' Court with the recommendation" made in
terms of subsection (7)(b), namely that "the consumer and the respective credit providers voluntarily consider
and agree on a plan of debt rearrangement".
5
   "(9) If a debt counsellor rejects an application as contemplated in subsection (7)(a), the consumer, with leave
of the Magistrates' Court, may apply directly to the Magistrates' Court, in the prescribed manner and form, for
an order contemplated in subsection (7)(c)."
agreement.

20. A full court in this division in Wesbank v Papier (The National Credit Regulator as

        amicus curiae) case no 14256/10, handed down on 1 February 2011, held as

        follows



                  "[17] The subsection contains no limitation on a creditor's right to give notice
                  of termination, save for the two jurisdictional requirements postulated,
                  namely (a) the consumer must be in default under the credit agreement;
                  and (b) at least 60 business days must have elapsed after the date on
                  which the consumer applied for the debt review. In the present instance, it is
                  common cause that both these requirements have been met: the defendant
                  was already in default when he applied for debt review on 29 September
                  2009. On 4 June 2010, ie more than 60 business days later, the plaintiff
                  gave the requisite notice in terms of s 86(10). Moreover, more than 10 days
                  have elapsed after the plaintiffs notice before summons was issued, as
                  required by s 130(1). The plaintiff, relying on a literal interpretation of s
                  86( 10), accordingly submitted that it is entitled to enforce the terms of the
                  credit agreement in question by claiming summary judgment.

                  …........



                  [21] It would be an unduly onerous and tedious task to analyse and discuss
                  individually the reasoning in each of the ever-growing number of judgments
                  on the topic. Instead, I propose briefly to set out the reasons why I agree
                  with the approach followed in the second line of cases regarding the
                                               6
                  interpretation ofs 86(10)

                ….......
[22] Having regard to the context in which they appear, it is clear to me that a literal
interpretation of the provisions of s 86(10), read in isolation, would amount to a 'blinkered'
approach7 which could easily lead to the wrong answer. Those provisions deal with one
aspect of an elaborate process described in the heading to s 86 as 'Application for debt
review'. The process commences with an application by the consumer 'in the prescribed
6
   "Standard Bank of South Africa Limited v Kruger; Standard Bank of South Africa Limited v Pretorius 2010 (4)
SA 635 (GSJ) paras 13, 24 (per Kathree-Setiloane AJ). She subsequently reiterated these views in SA
Securitisation (Pty) Limited v Matlala [2010] ZAGPJHC 70 (29 July 2010), where she specifically disagreed with
the approach of Kemp AJ in SA Taxi Securitisation v Nako, supra. Other cases following the same approach
include the judgments of Binns-Ward J in this Division in Changing Tides 17 (Pty) Ltd NO v Erasmus &
another, and two similar cases [2009]
ZA WCHC 175 (12 November 2009); and Wesbank v Martin [2010] ZA WeRe 173 (13 August 2010)."
7
   With reference to Bato Star Fishing (Pty) Ltd v Minister o/Environmental Affairs 2004 (4) SA 490 (CC) para
90.
manner and form' to a debt counsellor to have the consumer declared over-indebted 8 The
debt counsellor is thereupon required to notify all credit providers listed in the application
as well as every registered credit bureau.9 The consumer and each credit provider must
thereafter 'participate in good faith in the review and in any negotiations designed to result
in responsible debt re-arrangement'.10 A debt counsellor must determine within 30 days
whether the consumer appears to be over-indebted.11
….......
[24] However, if the debt counsellor concludes that the consumer is indeed over-indebted,
the procedure described in s 86(7)(c) must be followed. This means that the debt
counsellor 'may issue a proposal recommending that the magistrate's court make an order,
inter alia, that one or more of the consumer's debts be 're-arranged' in one or more of a
number of specified ways.12 (In the National Credit Regulator case, supra,13 these
provisions were interpreted to mean that the debt counsellor must refer the matter to the
magistrate'scourt,14 which referral takes the form of an ordinary application regulated by
Magistrates' Courts rule 55.)15
[25] Thus, s 86(7)(c) sets in motion a 'debt re-arrangement by the court', as opposed to a
'voluntary re-arrangement' in terms of s 86(8)(a).16 Unlike the position with regard to s
86(9), the Act as well as the regulations are silent as to the time period within which the
debt counsellor may (must) issue the requisite 'proposal' in terms of s 86(7)(c). However, if
one has regard to the context, then the answer to the question posed above becomes
clear. The process of 'debt review' requires of the debt counsellor to determine, within 30
business days, whether or not a consumer is over-indebted.17 If not, the debt counsellor
must advise the consumer of his or her right 'to approach the courf within a further 20
business days for the necessary order.18 This leads me the conclusion that he period of 60
business days referred to in s 86(10) was introduced with the abovementioned timeframe
in mind so as to allow the consumer and/or debt counsellor sufficient time to 'approach the
                                                 19
court' for the necessary relief in terms ofs 87.
….......
[34] To sum up, applying a purposive approach to the relevant provisions, and having due
regard to the context in which they appear, I am satisfied that, on a proper interpretation of
subsec 86(10), the consumer is protected against enforcement proceedings by the credit
provider, not only once a re-arrangement order has been made by a magistrate in terms of
s 87, but also whileproceedings for such an order are pending. The corollary is that
delivery of a notice of termination by a credit provider in terms of s 86(10) is not competent
once any of the steps referred to in ss 86(7)(c), 86(8) or 86(9) have been taken. Obviously
this impediment will cease to exist, once a magistrate's court has dismissed the application
for re-arrangement or the application has been withdrawn or abandoned.

…..........
[36] In view of these conclusions, it follows that it is not necessary, for purposes of this
case, to consider the provisions of subsec 86(11),20 or to pronounce on the correctness or


8
 6 Section 86(1)
9
  Section 86(4)(b)
10
     Section 86(5)(b)
11
     Section 86(6)(a) read with Regulation 24(6)
12
     Section 86(7)(c)(ii).
13
   National Credit Regulator v Nedbank Ltd & Others 2009 (6) SA 295 (GNP)
14
    at 304B-C and 307A-B.
15
     Ibid at 310C-D; 310H-3111A; 320G-H
16
     Ibid at 301E-302A.
17
     Reg 24(6).
18
   Reg 25(5)
19
     "cf Martin's case, supra, para 8. See also A Boraine & S Renke Some practical and comparative aspects of
the cancellation of instalment agreements in terms of the National Credit Act 34 of 2005 (Part 2),2008 De Jure
1 at p 4 n 147."
20
    Section 86(11) 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.'
otherwise of the interpretation attached to those provisions in Dunga's case21 supra.'22


21. As already set out above, the application in terms of section 86(7)(c) was only brought

on 7 June 2010, that is well after the date upon which the plaintiff had given notice

terminating the debt review process, and well after the date upon which the summons was

served cancelling the credit agreement. This takes the present application well outside the

factual matrix of the Papier case.



22. In Mercedes Benz Financial Services South Africa (Pty) Limited v Dunqa (9222/2010)

[2010] ZA WCHC 208 (20 September 2010) no application for a debt review was pending

before the Magistrate's Court at the time when the section 86(10) notice was given.

Blignault J found that the delay of more than seven months in filing the new application for

a debt review as not a reasonable way to prosecute a debt review. Accordingly, so

Blignault J found, the plaintiffs termination of the debt review in terms of section 86(10)

was valid.



23. Accordingly I have to come to the same conclusion on the facts as presented to me in

the instant application as did Blignault J in Dunpa.



24. Blignault J, however, continued as follows at paragraph [58]:



                 [58] That is, however, not the end of the road for defendant. Upon my
                 interpretation of section 86(11) defendant would be able to ask for an order
                 in the present proceedings that the debt review resumes. In summary
                 judgment proceedings, therefore, defendant would have been able to raise
                 the defence that he intends to ask h an order. In order to show that he has
                 a bona fide defence he would presumably have to allege that he has
                 reasonable prospects of obtaining a favourable order in the debt review
                 application.


                 [59] It is apparent from defendant's opposing affidavit in the summary

21
   Paragraphs 33 - 44 of the judgment.
22
   Mercedes Benz Financial Services South Africa (Ptv) Limited v Dunqa (9222/2010) [2010] ZA WCHC 208
(20 September 2010)
                judgment proceedings that he did not have in mind a defence based on
                section 86(11). In view of the fact that defendant's debt review application
                had already been referred to the Magistrate's Court and that its withdrawal
                thereof was perhaps not due a lack of any belief on his part in its prospects
                of success, defendant may yet be able to set out a defence based on the
                provisions of section 86(11)"
25.    Section 86(11) provides as follows:



                       "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 Magistrates' Court hearing the
                       matter may order that the debt review resume on any conditions the
                       court considers to be just in the circumstances."


26. It does appear from the papers that there is pending, as part of the section 86(7)(c)

application, an application in terms of section 86(11).



27. As set out above, there is pending an application in terms of section 86(11) before the

Magistrate's Court as part of the debt review application. The defendant contended that

that application be disposed of before that Court.



28. Mr Noor's affidavit concludes "I kindly request the Honourable Court to invoke its

powers in terms of section 86(11) of the National Credit Act to order that all credit providers

who have sent notices of termination of the debt review process, in terms of section 86(10),

to resume with the debt review on any conditions that the court considers to be just and

equitable in the circumstances". In manuscript is added "I received a termination notice

from Wesbank".



29. Before me the parties were ad idem that this Court had no jurisdiction in terms of

section 86(11). This common assumption, by virtue of what Blignault J had found in Dunqa,

namely that

              [347 It is my view that a literal interpretation of section 86(11) is untenable.
              There is, as stated above, a casus omissus here which could and should be
             addressed by reading in the words "or High Court" immediately after
             "Magistrate's Court." Such a reading in would give effect to the object of the
             debt review provisions of the NCA and render section 86(11) sensible,
             workable and linguistically appropriate."


      was, accordingly, wrong.



30.   Blignault J continued as follows at paragraphs [45] -



             [45] I return then to the interpretation of section 86(10). The question to be
             determined is whether section 86(11), on my construction thereof, provides
             such meaningful protection for the consumer that it would justify the literal
             interpretation of section 86(10).


             [46] In my view it would not. Upon a literal interpretation of section 86(10)
             the consumer may find that the debt review is arbitrarily terminated by the
             credit provider. It would be in the consumer's interest that the debt review
             resume as soon as possible but he will have to wait for the credit provider to
             institute enforcement proceedings. The consumer will have to defend the
             enforcement action in a litigatory environment. He will be saddled with an
             onus to show at least that he has prospects of success in the debt review
             application. The parties will be involved in time consuming, costly, and, for
             many consumers, unaffordable litigation, the very event which the debt
             review procedure seeks to avoid.


              [47] It is my view therefore that the suggested protection afforded to the
              consumer in terms of section 86( 11), is fraught with difficulties, costs and
              delays which are contrary to the purpose of debt review

             proceedings. It is not a factor that can justify a literal interpretation of section
             86(10).


             [48] The solution suggested by me is the implication of a proviso into section
             68(10) to the effect that a credit provider may only terminate a debt review if
             he is acting in good faith. The implication of such a proviso would be
             consistent with the purpose of the debt review provisions of the NCA and
             avoid the unfortunate results of a literal interpretation. It would not
             jeopardise the workability of section 86(10) and it would fit in with the
               language of section 86 as a whole, in particular section 86(5) (b).




               [52] For these reasons I conclude that it is necessary to imply a proviso into
               section 86(10) to the effect that a credit provider may only terminate a debt
               review if he is acting in good faith."


31. It seems to me that, based on Dung a, the defendant should have raised a defence in

terms of section 86(11) before this Court. She has done so, but asked for that hearing to

take place before the magistrate. For the very reasons set out by Blignault J that would be

undesirable. Dung a, however, concerned both a claim for the vehicle, as well as the

payment of the balance. In casu the plaintiff only seeks delivery of the vehicle.



32. Claims B and C, pertaining to the payment of money, should, in applying the principles

set out in Dunga, accordingly be refused, as the defendant, in my view, has some

prospects of success. The same, however, does not apply to the claim for delivery of the

vehicle.

33. In Matimba Management & Labour CC and Others v SA Taxi Securitisation (Pty) Ltd

and Another, Case No. 36490/2009, Blieden J, sitting in the South Gauteng High Court,

had to consider an application for rescission of judgment. In that matter, as in the matter

before me, it was not in dispute that the defendant (the applicant for rescission) had been

in default, and that the plaintiff (the respondent in the application for rescission) had

cancelled the agreement and claimed the return of the vehicle forming the subject-matter

thereof. It was also not in dispute that a notice, as required, was given in terms of section

86(10) of the National Credit Act. As in the case before me, a restructuring "proposal" was

made, but not accepted. No further steps were taken by the debt counsellor or the

defendant in the debt review process. Thereafter the plaintiff delivered its notice in terms of

section 86(10) terminating the debt review. It was only on 11 March 2009, after the

summons had been served on 24 February 2009, that the applicant had made an
application for an order contemplated in terms of section 87 of the National Credit Act. The

plaintiff contended that it had already cancelled the debt review process in terms of section

86(10).



34. In the matter before Blieden J it was the plaintiffs case, accordingly, that at the time of

the institution of the action, there was not in existence an application in terms of section

86(7)(c) of the National Credit Act which precluded the action. As in the case before me,

the defendant sought the revival of the debt review process as contemplated in section

86(11).



35.       On behalf of the defendant, it was submitted that reliance on the provisions

of section 86(11) ignores the significant fact that the agreement of lease hadbeen validly

terminated by the defendant. Mr Justice Blieden agreed with the submission that:



                 "There is no provision in the NCA which entitles a Magistrates' Court (or,
                 indeed, any court) to reinstate an agreement that has been validly
                 terminated. The only remedy available to the applicant in those
                 circumstances is to invoke the provisions of section 86(11) in order to obtain
                 a revival of the debt process in relation to whatever amounts may remain
                 outstanding by him after return of the vehicle to the respondent and after the
                 respondent has utilised the provisions of section 127 of the NCA which
                 deals with the surrender of goods by the consumer, being the present
                 applicant. In such case the applicant would be entitled to be credited with
                 the price received on the sale of the goods by the respondent which is in
                                                                  23
                 excess of the debt at that time outstanding. '




36.    Blieden J continued as follows at paragraph 24:



                 "In my view counsel for the respondent is correct in his submission that
                 once the debt review process has terminated in the circumstances already
                 referred to, the only remedy remaining available to a consumer such as the


23
 At pages 11 - 12 of the unreported judgment.
                  applicant is that contemplated in section 86(11) of the NCA which allows for
                  the resumption of the debt review process by the Magistrates' Court hearing
                  the matter on such terms and conditions as that court considers to be just in
                  the circumstances. It is plain that the section contemplates an application
                  for that relief."


37.       There was no suggestion in the opposing affidavit, or in the argument

advanced by Mr Joubert, who appeared for the defendant, that the debt

counsellor had not complied with his duties and that there was a basis uponwhich to apply

the discretion as did Binns-Ward J in Changing Tides 17 (Pty) Ltd N.O. v Erasmus and

similar cases24 As Davis J remarked in Nitro Securitisation 1 (Pty) Ltd v Christians25 the

matter before him had important distinctions with the Changing Tides case, namely, first,

that the debt was in respect of a motor vehicle, and section 26 of the Constitution therefore

did not apply; second, there is an absence of any specific details concerning the lack of

bona fides on the part of the credit provider. Davis J, accordingly, found that there was no

evidential basis upon which a court could or should exercise its discretion along the lines

suggested by Binns-Ward J in the Changing Tides judgment (at page 9 of the unreported

judgment).



38. In SA Taxi Securitisation (Pty) Ltd v Mishack and similar cases, Case No. 51330/09,

South Gauteng High Court, Levenberg AJ considered the purpose of the Act with regard to

its preamble and the express provisions of section 3 of the Act. He points out that a major

purpose of the Act is to assist over-indebted consumers to pay off their indebtedness. And

stressed that all of these objectives are directed at the consumer's indebtedness, that is,

the claim for the outstanding deficiency after realisation of the lender's securities ("the

deficiency claim"). The intention of the Act is not to unfairly deprive lenders of their security

(paragraph [35]).



39. Levenberg AJ concluded that where a consumer is over-indebted, the credit providers'


24
     A judgment delivered on 12 November 2009 in the Western Cape High Court.
25
     Case No. 20768/09, Western Cape High Court, 14 December 2009.
prospects of recovering from the consumer are often effectively limited to the recovery of

the creditor's security. "If lenders are unable to recover deteriorating security, such as

motor cars, promptly the consequences would be economically disastrous for asset base

lenders, especially those lending to the less affluent" (at paragraph [36]).



40.    In the premises I am satisfied that a proper case has been made out for the grant of

summary judgment and I grant an order as follows:



        1.    The defendant is directed to forthwith return to the plaintiff a 2007

              Volkswagen     City   Rhythm     1.4   motor   vehicle   with    chassis   number

              AAVZZZ17ZU024913, and engine number BSC223343, failing which the

              Sheriff is authorised to attach the vehicle wherever he may find same and

              hand the vehicle to the plaintiff.



        2.    In respect of prayers B and C of the particulars of claim summary judgment is

              refused and the defendant is granted leave to defend.



  3.          The respondent is to pay the costs of the application.




Sven Oliver, AJ

				
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