Ex parte Ford and Two Similar Cases
Jurisdiction | South Africa |
Judge | Binns-Ward AJ |
Judgment Date | 05 March 2009 |
Citation | 2009 (3) SA 376 (WCC) |
Docket Number | 21084/08, 1034/09 and 1035/09 |
Hearing Date | 30 January 2009 |
Counsel | A Heyns for the applicant. |
Court | Western Cape High Court, Cape Town |
Binns-Ward AJ:
[1] Three applications in terms of the Insolvency Act 24 of 1936, for the C voluntary surrender of the respective applicants' estates, came before me on the same day in the unopposed motion court.
[2] A consideration of the applicants' founding affidavits in each of the matters suggested that a considerable portion of each of their respective liabilities consisted of debt owed to financial institutions or money- D lenders, either by way of loans on overdraft or otherwise, or as a consequence of the extension of credit through credit-card facilities. On the face of it, therefore, it appeared on the papers that the major portion of each of the applicants' debts arose out of'credit agreements' within the meaning of the National Credit Act 34 of 2005 (the NCA). [1] It was also striking on the papers how disproportionately high the amount of E this type of debt was in each case in relation to the relatively modest incomes of the applicants. So, for example, the applicant in case No 21084/08 had a net monthly income of R10 849,29, after standard deductions, at source, for matters such as medical-aid and pension contributions. Notwithstanding this modest income, she disclosed F credit-card debt totalling R132 299,35 (spread over five different credit-card accounts) and loans totalling R281 910,50 (from five different lending institutions). In addition, the applicant disclosed a debt of R37 748,85 owed to a commercial bank, which she described as 'vehicle finance'. However, the indication that this debt is unsecured makes me believe that it does not arise out of a standard instalment sale or vehicle- G lease transaction, but is just another bank loan. A similar picture of gross over-indebtedness in respect of credit-agreement transactions presents on the other two applications under consideration.
[3] In each of the applications the respective applicants made averments H to the effect that they had'become insolvent by misfortune and due to circumstances beyond [their] control, without fraud or dishonesty on[their] part'. One must assume therefore that in applying for the credit which came to constitute the unaffordable burden that drove the applicants to seek the acceptance of the surrender of their respective estates, the credit grantors involved were fully informed of the apparent I limits of the ability of the applicants to service the debts, or could easily have ascertained the position had they made reasonable enquiries before granting the loan or credit facilities in question. This begs the question of how it was possible for the applicants each to be extended credit way
Binns-Ward AJ
beyond their ability to afford. The question is unanswered on the papers. A I should mention in this respect that nothing in the evidence indicates, save for the applicant in case No 1035/09, that any of the applicants' incomes was previously materially higher than it is now. In the case of the applicant in case No 1035/09, who did previously enjoy a much higher income, the evidence is that he incurred most of his debt after his B earnings had been diminished as a consequence of injuries suffered in a motor-vehicle accident. Grounds for cogent suspicion of at least some degree of reckless credit extension therefore present themselves strongly on the disclosed facts in each of the applications.
[4] One of the objects of the NCA is the discouragement of reckless C credit extension. The long title to the Act describes the statute as being intended to promote a fair and non-discriminatory marketplace for access to consumer credit and for that purpose, amongst other matters, to promote responsible credit-granting and use, and for that purpose to prohibit reckless credit-granting and to provide for debt reorganisation in cases of over-indebtedness. Section 3 of the NCA provides, amongst D other things:
The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by - E
. . .
promoting responsibility in the credit market by -
encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by consumers; and
discouraging reckless credit granting by credit providers and F contractual default by consumers;
. . .
addressing and preventing over-indebtedness of consumers, and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations; G
. . .
providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places...
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