Absa Bank Limited v Kriel and Another (54240/09) [2015] ZAGPPHC 999 (7 October 2015)

REPUBLIC OF SOUTH AFRICA

OFFICE OF THE CHIEF JUSTICE

(GAUTENG DIVISION, PR ETORIA)

CASE NO: 54240/09

DATE: 7/10/2015

In the matter between

ABSA BANK LIMITED APPLICANT

and

FRANCOIS KRIEL FIRST RESPONDENT

NORMA PATRICIA KRIEL SECOND

RESPONDENT

JUDGMENT

FOURIE AJ

1 On 4 September 2009 the applicant instituted action against the respondents for payment of R695,804.17, being arrears in respect of a mortgage loan agreement, an order declaring the immovable property mortgaged as security for the aforesaid loan executable, and ancillary relief. The agreement is subject to the provisions of the National Credit Act, 34 of 2005 (" the Act").

2 In its declaration, delivered on 25 June 2014, the plaintiff pleaded the following:

"18. The defendants have been in default of the aforesaid agreement far more than 20 days, same constituting default as contemplated by s 130 of the Act.

19. During or about January 2008 the defendants, in terms of s 86 of the Act, referred the matter to a debt counsellor for debt review.

20. On or about 24 N ovember 2008 the plaintif f, in terms of s 86(10) of the Act, terminated the abovementioned debt review process.

21. A letter of demand, in terms af s 129 of the Act, was addressed to the defendants and delivered to the d efend ants in the prescribed manner. Copies af the letters addressed ta the first defendant and the second defendant are attached hereto as Annexures "05" and "06" respectivel y . ....

22. The aforesaid letters were delivered to the relevant post office, and in the normal course, the Post Office would have secured d elivery of a registered item notification slip, informing the defendants that registered articles were available far collection. Notification of the I letters' arrival has reached the defe{l dants and a reasonable defendant would have ensured the retrieval from the relevant Post Office.

23. Notwithstanding the above, the defendants have not responded to the abovementioned letters, alternatively have responded to the abovementioned letters by rejecting the plaintif f's pro posals.

24. The plaintif f has complied with the provisions of the N ational Credit Act, 34 of 2005."

3 The defendants filed a special plea in the following terms:

"1.1. The defendants submit that the plaintif f foiled to compl y with s 86(10) of the Notional Credit Act (NCA) prior to instituting legal proceedings against the defendant.

1.2. The plaintiff only states in paragra ph 20 of the declaration that on or about 24 November 2008 the plaintif f terminated the debt review process in terms of s 86(10).

1.3. The defendants' plea that the plaintif f failed to attach a cop y of the I notice of termination sent in terms of s 86(10).

1.4. The letter of default, attached to the summons as onnexure "05" and "06", is not a notice of termination in terms of s 86(10), but a Jetter of demand in terms of s 129 of the NCA.

1.5. Therefore, the defendants plead that the plaintif f failed to deliver a notice in terms of s 86(10) of the Act and the plaintif f foiled to provide any proof thereof.

1.6. The defendants deny receipt of a notice of termination in terms of s 86(10}.

1.7. It is the defendants' plea that the plaintif f did not lawfully terminate the debt review in terms of s 86(10).

1.8. Therefore, the plaintif f has not complied with s 130(3)(c) which prohibits the plaintif f from enforcing a credit agreement when the matter is pending before a debt counsellor or in the M agistrate's Court and has not complied with s 129(1)(b )(i).

…..

1.11 The defendant therefore submits that the plaintif f did not compl y with s 129(1)(b)(i) of the NCA and therefore may not have commenced with any legal action to enforce the instalment agreement."

4 This gave rise to the present application for an order declaring that the applicant on or about 24 November 2008 and in terms of s 86(10) of the Act had terminated the respondents' debt review, alternatively that the applicant by service of the summons had completed the necessary steps in terms of s 130(4)(b)(ii) and that the action may resume, and further alternatively that the action be adjourned and the applicant be authorised to give notice in terms of s 86(10) of the Act to the respondents by

serving a copy of the notice on the respondents, on their debt counsellor and the National Credit Regulator, within ten days of the order.

5 The applicant's case is that the respondents' debt counsellor provided a debt rearrangement proposal to the applicant. The applicant rejected the offer for reasons specified in the founding affidavit and informed the counsellor thereof. The applicant contended that it had taken the necessary steps to terminate debt review in a letter addressed to the respondents, their debt counsellor and the NCR, prior to institution of the action, but conceded that it may not be able to prove this on trial as it did not have proof of posting the notice of termination to the respondents. The notice was dated well before the judgments given by the Constitutional Court in Sebola v Standard Bank of South Africa Limited 2012 (5) SA 142 (CC) and Kubyana v Standard Bank of South Africa Limited 2014 (3) SA 56 (CC), which clarified the process to be followed and the evidence required to demonstrate compliance with the provisions of s 86(10) and s 129(1)(a). It is for this reason, the applicant says, that proof of dispatch was not retained and cannot be produced.

6 In the alternative it contended that the service of the summons, to which was attached the notice of termination, constituted compliance. If that was not so, it contended that the court could grant the applicant leave to deliver the notice on the respondents' attorney of record in terms of s 130(4)(b)(ii) prior to the trial commencing. In the applicant's replying affidavit, the deponent stated that the applicant had now, subsequent to receipt of the respondents' answering affidavit, delivered notice of termination to the respondents, their debt counsellor and the NCR, and proof of such delivery, by registered post, was attached.

7 The application was opposed on the ground that the declaration did not disclose a cause of action as the plaintiff had not pleaded that at least 60 days had expired since the respondents had applied for debt review, that the notice of termination had been sent to the respondents, the debt counsellor and the NCR and that registered slips as proof of dispatch of the notices were attached to the declaration. It was submitted that a substantive application to amend in terms of Rule 28 was required in order to remedy the defects, and that the applicant was precluded from adding evidence not pleaded, by way of this application.

8 In the heads of argument it was also submitted that if service of the summons constituted substantial compliance with s 86(10), then service of a letter of termination would never be a pre-requisite for compliance with s 129(1)(b)(i). In argument, counsel for the respondents, Mr Schoeman, had a further string to his bow - the process for restructuring their debt is pending n the Magistrates' Court, and under those circumstances, the credit provider may not terminate the debt review.

9 Although the procedure adopted by the applicant appeared to be unusual, there is precedent to be found for it in this Division. In Firstrand Bank Ltd v Phiri [2013] ZAGPPHC 90 (4 April 2013), the credit provider brought an interlocutory application for leave to comply with s 129{1)(a). The respondent contended that it is the trial court that must grant an order giving directions for compliance. Tolmay J was however of the view that there is nothing that prevents a party to approach the court prior to the hearing of the matter for directions as ensvisaged in s 130{4)(b)(ii), that the legislators' intention could not have been that only the trial

court is empowered to postpone and give directions in this regard or that the matter should be adjourned by the trial court only. Such a narrow interpretation of s 130(4)(b), the court said, will not assist the credit provider or the consumer as it will only delay the process and cause further costs. The court in which the action has been launched remains vested with the discretion and power set out in section 130(4)(b) and this can include the court hearing an application for default judgment or for summary judgment, the trial court itself or even the court in an interlocutory application. I agree with these views and accordingly find that the objection to the procedure adopted by the applicant cannot be upheld.

10 The next question is whether the respondents are correct that the declaration does not disclose a cause of action due to the applicant's failure to make the allegations contended for by the respondents. It is clear from that which was pleaded that the required 60 days had lapsed, and all that was missing, essentially, were allegations identifying the parties to whom notice had been given, together with proof thereof.

11 This court in Standard Bank of SA Ltd v Ngcobo (2014) ZAGPPHC 431 (26 June 2014) held that dispatch of a s 129 notice is a prescribed preliminary step to be complied with before commencing an action and does not form part of the cause of action. The compliance or non-compliance w·1th this

requirement is a facta probantia, and not /acta probanta (sic). In Blue Chip 2 (Pty) Ltd t/1 Blue Chip 49 v Ryneveld and Others (201 5) ZAFSHC 70 (19 March 2015), it was also held that compliance with s 129{1)(a) does not form

part ofthe credit provider's cause of action but that it is merely a peremptory procedural requirement and the plaintiff has to allege compliance therewith.

12 In the premises this basis of opposition can also not be upheld.

13 The SCA in Collett v Firstrand Bank Ltd 2011 (4) SA 508 (SCA) held that a credit provider is entitled to terminate a debt review in terms of s 86(10) after the debt counsellor had referred the matter to the Magistrates' Court for an order envisaged by ss 86(7)(b) and (c), and while the hearing in terms of s 87 is still pending. The credit provider's rights to give notice in terms of s 86(10) and to legitimately terminate the debt review process continues until the court has made an order in terms of s 87.

14 The amendment to s 86(10) by the National Credit Amendment Act has no bearing on the proceedings before this court as the respondents have not stated that the application for review has already been filed in

a court or in the Tribunal and accordingly there are no facts to support the argument of Mr Schoeman that the debt review is pending

in the Magistrates' Court and may therefore not be terminated. In any event, the amendment upon he relies for his argument, came into force on a date subsequent to the most recent notice of termination.

15 As I have already pointed out, the applicant is unable to prove dispatch of the notice of termination of the debt review to the respondents. The respondents have denied that they had received the notices of termination. The transmission report attached as proof that the notice of termination was faxed to the debt counsellor, did not contain any information demonstrating that this had in fact occurred, and no reliance can be placed thereon.

16 I can accordingly not find that the applicant terminated the respondents' debt review on 24 November 2008 and prayer 1cannot succeed.

17 The summons was not served on the NCR or the respondents' debt counsellor, and service of the summons can accordingly not be held to constitute notice in terms of s 86(10). Prayer 2 can also not be sustained.

18 In Sebola, Cameron J stated that in opposed proceedings, if the consumer disputes receipt of the notice (in that case a notice in terms of s 129), and the court finds the consumer's allegations to be true, then in that event the court must adjourn the proceedings in terms of s 130(4)(b). The purpose of the adjournment in terms of s 130(4)(b) is to provide to the applicant an opportunity to comply with s 86(10).

19 Had the applicant not dispatched the notices of termination in accordance with s 86(10) on 30 January 2015, an order in terms of prayer 3 of the notice of motion would have been appropriate (ignoring for a moment the effect of the amendment to the Act). However, where this has now been done, and proof of dispatch in an acceptable manner has been provided, no purpose will be served by adjourning the matter for that purpose.

20 Mr Schoeman argued that dispatch of a belated notice of termination constituted ma/a fides on the part of the applicant. He contended that the respondents were precluded from filing any response thereto in the present proceedings by virtue of the provisions of Rule 6. I cannot agree with him. A respondent may file a further affidavit to address new matter raised in the replying affidavit and the court may in its discretion permit the filing of further affidavits in terms of Rule 6(5)(e). The respondents did not seek leave to file a further affidavit and did not dispute the allegation that they would have received the notices of termination.

21 The applicant sought relief curing its faH ure to comply with the requirements of the NCA and in so doing accepted that it was liable to pay the costs of the application. This was premised on the respondents' not opposing the application. The respondents' opposition was unsuccessful. There is no reason why costs should not follow the result.

22 The following order is made:

22.1 It is declared that the applicant on 30 January 2015 gave notice to terminate the respondents' debt review in accordance with section 86(10) of the National Credit Act, 34 of 2005;

22.2 The matter may be resumed and the applicant is given leave to apply for a trial date;

22.3 The respondents are ordered to pay the costs occasioned by their opposition to the application .

…......................................................:...

H R FOURIE

ACTING JUDGE OF THE HIGH COURT