Absa Bank Limited v Murray
| Jurisdiction | South Africa |
| Judge | GH Bloem J |
| Judgment Date | 23 August 2016 |
| Docket Number | 4188/2015 |
| Court | Eastern Cape Division |
| Hearing Date | 28 July 2016 |
| Citation | 2016 JDR 1528 (ECG) |
Bloem J:
On 11 February 2016 Cossie AJ issued an order for the provisional sequestration of the first respondent's estate. At the request of the first respondent, who delivered answering affidavits prior to the issue of the above order, the learned judge gave reasons for the issue of the order. [1] This is an application for an order that the first respondent's estate be placed under final sequestration. The first respondent opposed the application.
The applicant is ABSA bank Ltd. The first and second respondents are
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married out of community of property to each other. The second respondent was joined in these proceedings insofar as she might have an interest in them. I shall hereinafter refer to the first respondent simply as the respondent, as the second respondent played no part in these proceedings.
The undisputed facts are that the respondent is indebted to the applicant in the sum of R13 521 636.48, plus interest thereon at the rate of 8.5% per annum calculated and capitalised monthly in arrears. The respondent's indebtedness arises as a result of moneys lent and advanced by the applicant to the respondent at the latter's special instance and request. The moneys lent to the respondent were secured by four covering mortgage bonds registered in the applicant's favour over an immovable property in East London, the respondent being the registered owner thereof, for a sum of R11m.
The applicant is a credit provider and the respondent a consumer as defined in the National Credit Act [2] (the NCA). The NCA applies to the loan agreement.
During 2009 a debt counsellor notified the applicant and other of the respondent's credit providers that the respondent had applied for debt review in terms of section 86 of the NCA. The debt counsellor conducted an assessment in terms of section 86 (6) (a) of the NCA to determine whether the respondent appeared to be over-indebted. He concluded that the respondent was over-indebted. On 19 July 2009 the respondent made
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an application to the magistrate's court at East London for an order that the respondent be declared over-indebted and that his debt obligations be re-arranged, as envisaged by section 86 (7) on the NCA. The applicant did not oppose that application. On 3 September 2009 the magistrate at East London made an order in terms of section 87 (1) (b) (ii) of the NCA rearranging the respondent's obligations by extending the period within which to repay the loan in terms of the loan agreement and reducing the monthly instalments from R174 047.19 to R47 303.73. The magistrate furthermore ordered the respondent to make monthly payments to his creditors through the National Payment Distribution Agency. The magistrate's order has to date hereof not been set aside.
On 4 September 2013 the applicant issued summons against the respondent in the East London Circuit Local Division of the High Court for payment of the sum of R13 521 636.48 plus interest thereon being in respect of moneys lent and advanced by the applicant to the respondent, that the immovable property be declared executable and costs. The respondent delivered a special plea wherein he pleaded inter alia that, because of the order granted against him by the magistrate on 3 September 2009 and his compliance therewith, the applicant was barred from instituting that action against him [3]. The applicant did not take any further steps to prosecute that action.
On 26 August 2015 the applicant instituted these sequestration proceedings against the respondent. It claims that the respondent is
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factually insolvent and committed acts of insolvency, as contemplated in section 8 (c), (d) and (g) of the Insolvency Act [4] .
The respondent opposes the application on the basis that the applicant failed to make out a case against him in its founding affidavit. He nevertheless denies that he is factually insolvent or that he committed an act of insolvency. He also opposes the application on the basis that, because he makes punctual payments in terms of the re-arrangement order, the applicant is barred by the provisions of section 88 (3) of the NCA from enforcing the loan agreement by the sequestration proceedings. For the sake of convenience I will start with the last contention first.
Section 88 of the NCA deals with the effect of debt review or re-arrangement order or agreement between a credit provider and a consumer. Section 88 (3) reads as follows:
"(3) 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 or security under that credit agreement until-
the consumer is in default under the credit agreement; and
one of the following has occurred:
an event contemplated in subsection (1) (a) through (c); or
the consumer defaults on any obligation in terms of a re-arrangement agreed between the consumer and credit providers, or ordered by a court or the Tribunal." (own underlining)
It has been held that an application by a credit provider for the sequestration of a debtor does not constitute litigation or other judicial process by which the credit provider exercises or enforces any right under the credit agreement between itself and the consumer. [5] In Kona Meyer
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AJA concluded at 242B that an application by a credit provider for the sequestration of a consumer's estate does not constitute litigation or other judicial...
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