FirstRand Bank Ltd t/a First National Bank v Moonsammy t/a Synka Liquors

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: De Villiers AJ
• Judgment Date: 27 February 2020
• Court: Gauteng Local Division, Johannesburg
• Hearing Date: 27 February 2020
• Citation: 2021 (1) SA 225 (GJ)
• Counsel: C Denichaud for the applicant. R Zimmerman for the respondent.
• Docket Number: 07747/2018

De Villiers AJ:

Introduction

[1] There are two issues for determination in this application for summary judgment relating to (a) a defence that the summons is excipiable; and (b) non-compliance with ss 129 and 130 of the National Credit Act 34 of 2005 (the NCA) and its effect at summary judgment stage. In the end the defence on the merits and the NCA defence overlap. When I refer to ss 86, 129 and 130 below, it is in each case a reference to the section in the NCA.

[2] The defence on the merits in essence is that the contract required a prior demand before the debt became payable. No such notice was given. If such a notice was necessary, it had to be given, and it had to be alleged as having been given, before a default notice could be given

De Villiers AJ

under s 129. Other defences on the merits were raised, but they need not be addressed in this judgment. The defence on non-compliance with s 129 is that it is clear from the wording of the so-called 'track-and-trace' report, that the default notice was sent to the incorrect post office.

[3] The matter came before me in the opposed summary judgment court as one of two similar matters on successive days. The counsel for the applicants in both cases relied on SA Taxi Development Finance (Pty) Ltd v Phalafala[1] to the effect that there was proper compliance with the NCA if the s 129 default notice is attached to the summons. Counsel for both applicants knew of no further cases in point. I questioned the correctness of the submissions on the law. The counsel for the applicant in this matter argued that judges (in the plural) accept the case as setting out the law. The representatives for the respondents could not refer me to authority to the contrary in this division. In fact, the attorney in this matter referred me to no authority.

[4] I did not reserve judgment in the second matter. I did so because the only defence raised was non-compliance with s 129. I postponed the matter in terms of s 130(4) for reservice of the s 129 notice at an agreed stipulated address, acting in terms of my residual discretion in summary judgment matters. By then I had already reserved judgment in this matter where a defence on the merits was raised. I first address that defence.

Defence on the merits

[5] In issue in this case was a loan granted under a written so-called 'overdraft facility agreement'. The particulars of claim did not reflect any obligation on the defendant to make 'regular and sufficient deposits and credits into the facility account to repay interest, costs, fees and charges debited', yet the plaintiff relied upon alleged non-compliance with such an obligation as a breach of contract by the defendant, entitling it to call up the loan. I could not find such a term in the written agreement. In addition, the contract contained notice terms that the plaintiff had to comply with, before the loan became repayable. Those terms were not pleaded, but clause 5.1.2 of the applicable terms reads (emphasis added):

'5.1

An event of default shall occur should:

. . .

5.1.2

the Client, fail to comply with any term or condition of this Agreement and fail to remedy that breach within five days after having been called upon to do so . . . .'

[6] As such, notice to the defendant in terms of clause 5.1.2 was required before it could be alleged that the defendant was in breach of the repayment obligation and that thus an event of default had occurred, entitling the plaintiff to call up the loan. No notice in terms of clause 5.1.2 has been pleaded. This case therefore is one that is governed by

De Villiers AJ

Caltex Oil (SA) Ltd v Crescent Express (Pty) Ltd and Others, [2] in which it was held that although the defendant may be indebted to the plaintiff, it does not follow that that indebtedness is due and payable. In a summary judgment context, the learned judge held:

'For there to be a verification of a cause of action within the meaning of Rule 32(2) it seems to me that there must be made to appear a complete cause of action. Unless a complete cause of action is made to appear it does not seem to me that it can be said to be verified.'

[7] This statement of the law accords with Bentley Maudesley and Company Ltd v 'Carburol' (Pty) Ltd and Another.[3] The facts of this matter do not apply in every case where the claim is based on an overdraft agreement, but arises from the wording of the contract. In a case addressed later herein, Amardien and Others v Registrar of Deeds and Others, [4] the Constitutional Court also makes the point that it is only after a debt has become due that the credit consumer is obliged to make payment. [5]

[8] Accordingly, the plaintiff did not plead a completed cause of action, such a cause of action was not verified, and the particulars of claim are excipiable. Added thereto, is that the defendant is not alleged to have been in default when the s 129 default notice was attached to the summons.

[9] In the circumstances I ought to refuse summary judgment and I do as the summons is excipiable. See too Buchner and Another v Johannesburg Consolidated Investment Co Ltd.[6] The matter does not end here. The applicant alleged that it has complied with ss 129 and 130. It may amend its particulars of claim, and in that case, compliance with ss 129 and 130 will have to be addressed again. Accordingly I address the issue.

Sections 129 and 130 of the NCA

[10] Thirteen years ago, these two sections in the NCA came into effect and four years ago important changes were made to them by the National Credit Amendment Act 19 of 2014, as reflected in the footnotes below (emphasis added):

'129 Required procedures before debt enforcement

(1) If the consumer is in default under a credit agreement, the credit provider —

(a)

may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date; and

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(b)

subject to section 130(2), may not commence any legal proceedings to enforce the agreement before —

(i)

first providing notice to the consumer, as contemplated in paragraph (a), or in section 86(10), [7] as the case may be; and

(ii)

meeting any further requirements set out in section 130.

. . .

(5) [8] The notice contemplated in subsection (1)(a) must be delivered to the consumer —

(a)

by registered mail; or

(b)

to an adult person at the location designated by the consumer.

(6) [9] The consumer must in writing indicate the preferred manner of delivery contemplated in subsection (5).

(7) [10] Proof of delivery contemplated in subsection (5) is satisfied by —

(a)

written confirmation by the postal service or its authorised agent, of delivery to the relevant post office or postal agency; or

(b)

the signature or identifying mark of the recipient contemplated in subsection (5)(b).

130 Debt procedures in a court

(1) Subject to subsection (2), a credit provider may approach the court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under that credit agreement for at least 20 business days and —

(a)

[11]at least 10 business days have elapsed since the credit provider delivered a notice to the consumer as contemplated in section 86(10), or section 129(1), as the case may be;

(b)

in the case of a notice contemplated in section 129(1), the consumer has —

(i)

not responded to that notice; or

(ii)

responded to the notice by rejecting the credit provider's proposals; and

(c)

in the case of an instalment agreement, secured loan, or lease, the consumer has not surrendered the relevant property to the credit provider as contemplated in section 127.

. . .

(3) Despite any provision of law or contract to the contrary, in any proceedings commenced in a court in respect of a credit agreement to which this Act applies, the court may determine the matter only if the court is satisfied that —

(a)

in the case of proceedings to which sections 127, 129 or 131 apply, the procedures required by those sections have been complied with;

. . .

De Villiers AJ

(4) In any proceedings contemplated in this section, if the court determines that —

(a)

the credit agreement was reckless as described in section 80, the court must make an order contemplated in section 83;

(b)

the credit provider has not complied with the relevant provisions of this Act, as contemplated in subsection (3)(a), or has approached the court in circumstances contemplated in subsection (3)(c) the court must —

(i)

adjourn the matter before it; and

(ii)

make an appropriate order setting out the steps the credit provider must complete before the matter may be resumed; . . . .'

[11] Section 129(1)(b)(i) and s 130(1)(a) refer to a notice in terms of s 129(1), the notice in issue in this case, or to one in terms of s 86(10). A notice under s 86(10) is a notice by the credit provider to terminate certain debt review procedures.

[12] Although the NCA is the subject-matter of repeated criticism in our courts due to the poor quality of its drafting, such criticism cannot be levelled against the sections I have to interpret. One does not need to address the other drafting difficulties in the NCA to give effect to them. In summary on the issues of this case:

[12.1]

If the credit consumer is in default under a credit agreement, the credit provider must [12] draw the default to the notice of the credit consumer in writing;

[12.2]

the credit provider may not commence any legal proceedings to enforce the agreement before giving such a notice of default;

...