Firstrand Bank Limited v Horing and Another (2134/2017) [2017] ZAFSHC 142 (31 August 2017)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case number: 2134/2017

In the matter between

FIRSTRAND

BANK LIMITED

Plaintiff

and

JACOB

HORING First

Defendant

ANNIE

HORING Second

Defendant

CORAM:

NAIDOO, J

HEARD ON: 10 AUGUST 2017

DELIVERED ON: 31 AUGUST 2017

[1] This is an application for summary judgment. The plaintiff issued summons against the defendants for payment of the amount of R261 085.81, interest thereon, an order declaring the defendants’ immovable property executable and costs. The debt allegedly arises from the defendants’ breach of a loan agreement between the parties. The defendant opposed the summary judgment application. Mr J Els represented the plaintiff and Mr R Coetzee represented the defendants.

[2] The plaintiff alleges, in its Particulars of Claim, that the parties entered into two loan agreements on 12 September 1996 and 19 July 2007 respectively. The defendants registered mortgage bonds, in favour of the plaintiff, over their immovable property as security for the loans. The plaintiff alleges that the defendants failed to make punctual payments of their instalments in terms of the loan agreements and were consequently indebted to the plaintiff in an amount of R261 085.81, and remained so indebted as at the date that the summons was issued.

[3] The plaintiff further alleged that the defendants applied for debt review in terms of the National Credit Act 34 of 2005 (NCA) and that its claim was subject to the debt review process. The plaintiff, however, terminated the debt review in terms of section 86(10) of the NCA as a result of the defendants’ failure to comply with the provisions of the debt review process, and proceeded to enforce the loan agreements entered into between the parties.

[4] The defendant disputes the jurisdiction of this court on the basis that the parties agreed that any action or legal proceedings would be instituted in the Magistrate’s Court and that in terms of section 90(2)(k)(vi) of the NCA it would be unlawful to institute action in any other court, as the Magistrate’s Court has concurrent jurisdiction. Furthermore the amount claimed falls within the jurisdiction of the Magistrate’s Court. The defendant raised the further defence that the Magistrate’s Court, Bloemfontein granted, in their favour, a debt restructuring order on 8 September 2011 and that their obligations to the plaintiff in terms of the loan agreements were restructured in terms of the debt restructuring proposal. The defendants denied being in default of the payments in terms of the debt re-arrangement order, and asserted that the plaintiff was not permitted, in terms of section 88(3) of the NCA, to enforce their rights in terms of the credit agreements where the defendants were not in breach of the debt re-structuring agreement.

[5] Uniform Rule 32(3)(b) provides the defendant may

“satisfy the court by affidavit (which shall be delivered before noon on the court day but one preceding the day on which the application is to be heard) or with the leave of the court by oral evidence of himself or of any other person who can swear positively to the fact that he has a bona fide defence to the action; such affidavit or evidence shall disclose fully the nature and grounds of the defence and the material facts

relied upon therefor”.

The defendant is therefore required to have a bona fide defence that is good in law. In the matter of Breitenbach v Fiat SA (Edms) Bpk 1976(2) SA 226 (TPD), Colman J stated at p227 G

"One of the things clearly required of a defendant by Rule 32(3)(b)is that he set out in his affidavit facts which, if proved at the trial, will constitute an answer to the plaintiff's claim".

[6] In order for the court to assess whether the defence raised by a defendant is bona fide he/she must provide adequate information

about such defence, which amounts to a full disclosure of his/her defence. While the sub-rule requires the defendant to "disclose fully the nature and grounds of the defence and material facts relied upon", it does not, however, demand the impossible and it will suffice "if the defendant swears to a defence, valid in law, in a manner which is not inherently and seriously unconvincing". (See Breitenbach above)

[7] It is clear that the debt re-structuring order was granted by the Magistrate’s Court in September 2011. The summons in this matter was issued in May 2017. One can only assume that the defendants were complying with the debt re-structuring agreement for a number of years. The plaintiff’s Particulars of Claim are devoid of any details of the debt review and restructuring process, how the defendants are alleged to have defaulted in respect thereof and what amount would then have been outstanding. The plaintiff proceeds, ostensibly in respect of the arrears under the credit agreements, without providing details of the indebtedness of the defendants, taking account of the fact that their obligation to the plaintiff was the subject of the debt restructuring arrangement and that payments in respect thereof must have been made. If the amount claimed in the summons takes into account the payments received in terms of the debt re-structuring arrangement, this is not made clear in the summons.

[8] I turn to deal with the defence regarding jurisdiction of this court. I am in agreement with Mr Els’ submission that consent to jurisdiction of the Magistrate’s Court by the defendant does not oust the jurisdiction of the High Court. Mr Coetzee referred to the matters of Nedbank Ltd v Mateman & Others; Nedbank Ltd v Stringer & Another 2008(4)SA 276 (T) (also referred to by Mr Els) and Absa Bank Ltd v Myburgh 2009(3) SA 340 (T) to support his contention that this court does not have jurisdiction because the defendants consented to the jurisdiction of Magistrate’s

Court. The court in the Nedbank matter held that a clause in which the defendant consents to the jurisdiction of the Magistrate’s

Court, and the plaintiff merely reserves its right to approach the High Court (which is the position in this matter), does not

contravene the provisions of section 90(2)(k)(vi), and is not unlawful. I pause to note that section 90(2)(k)(vi)(aa) makes

it unlawful to have a provision in a credit agreement consenting to the jurisdiction of the High Court while the Magistrate’s Court has concurrent jurisdiction. This is not the situation in this matter, so that contention on behalf of the defendants has no merit.

[9] Mr Coetzee argued that the Absa Bank matter gave the defendants the leeway to argue that it is unlawful to institute proceedings in the High Court while the Magistrate’s Court has concurrent jurisdiction. The court remarked at p346 paragraph 52 that section 2 of the NCA commands an interpretation of the Act that gives effect to the purposes of the Act set out in section 3. In the court’s opinion (para 53), this “must be read as declaring unlawful ‘the practice of instituting action in the High Court to enforce the credit provider’s

rights in terms of a credit agreement while a magistrates’ court has concurrent jurisdiction’.”

[10] While I do not venture as far as to say that the practice must be declared unlawful, I agree with the court’s sentiments in para 54 that this practice flies in the face of the stated aims of the Act to lighten, as much as possible, “the financial burden that the conclusion of a credit agreement may impose on the consumer”, and that it should not be tolerated. In circumstances where the credit provider chooses to proceed in the High Court, especially where the claim falls within the jurisdiction of the Magistrate’s Court, the court should show its displeasure by making an appropriate costs order. Therefore a plaintiff who chooses to proceed in the High Court, while the Magistrate’s Court has concurrent jurisdiction should not complain if he is awarded costs on the Magistrate’s Court scale, or if a punitive order for costs is made against him, should the circumstances warrant it. The defence, in this matter, that this court does not have jurisdiction is, in my view not a proper defence and does not avail the defendants.

[11] It is well settled in our law that summary judgment should only be granted where the plaintiff has established his claim clearly and the defendant has failed to establish a bona fide defence. In considering whether the plaintiff in this matter is entitled to summary judgment, it must be determined whether the plaintiff has shown not only that it has a claim which falls within the ambit of Uniform Rule 32, but that it has taken all steps to perfect its claim and make it unanswerable. Mr Els did not raise any substantial argument when the court pointed out that the plaintiff’s Particulars of Claim was lacking in detail regarding the debt review process, and the default by the defendants in terms thereof. The defence that the defendants are not in breach of the debt re-structuring arrangement, and therefore the plaintiff was not entitled to terminate the debt review and enforce the credit agreements is, in my view, one which, if established at the trial, will constitute a good and, possibly, a complete defence to the plaintiff’s claim.

[12] To my mind, the evidence before me, indicates that the plaintiff has not clearly established its claim. Section 32(5) gives the court a discretion to grant or refuse summary judgment. In this matter it is reasonably possible that the defendants have a good defence in that they will be able to establish either that they do not owe the plaintiff the amount that it claims or that it was not entitled to issue summons against them. (Mowshenson & Mowshenson v Mercantile Corporation of SA Ltd 1959 (3) SA 362 (W) at 366F-G). The granting of summary judgment is based upon the supposition that the plaintiff's claim is unimpeachable and also that the defendant's defence is bogus or bad in law – per Corbett JA in Maharaj v Barclays National Bank Ltd 1976(1) SA 418 (A) at 423G-H.

[13] In this matter, I am unable to find that the defence put forward by the defendants is bad in law. I am of the view that granting summary judgment would amount to unsuiting the defendants and would be unduly prejudicial to them. In my view, therefore, summary judgment ought not to be granted. With regard to the further conduct of this matter, the plaintiff will be well advised to transfer the matter to the Magistrate’s Court in order to mitigate the costs herein and to give effect to the purposes of the NCA mentioned above.

ORDER

[14] In the circumstances, I make the following order:

14.1 The summary judgment application is dismissed

14.2 The defendants are given leave to defend the action

14.3 Costs to be costs in the action.

14.4 Should the plaintiff transfer the matter to the Magistrate’s Court, a copy of this judgment is to be placed in the court file at the Magistrate’s Court

________

S.

NAIDOO J

On behalf of Plaintiff :

Adv J Els

Instructed by:

Roussouws Attorneys

119 President Reitz Ave

Westdene

Bloemfontein

(Ref: FIR50/1285(JHC/MMA))

On behalf of Defendant:

Mr R Coetzee

Instructed by:

Dteenkamp & Jansen Inc

60 Krause Street

Oranjesig

(Ref: R Coetzee/TOY/HOR2/ 0003)