FirstRand Bank Ltd v Nkata

• Jurisdiction: South Africa

FirstRand Bank Ltd v Nkata
2015 (4) SA 417 (SCA)

2015 (4) SA p417

Citation	2015 (4) SA 417 (SCA)
Case No	213/2014; [2015] ZASCA 44
Court	Supreme Court of Appeal
Judge	Maya JA, Cachalia JA, Majiedt JA, Willis JA and Saldulker JA
Heard	March 6, 2015
Judgment	March 26, 2015
Counsel	A Gautschi SC (with MJ Sawyer) (heads of argument by D van Reenen) for the appellant.; L Dzai for the respondent.

Flynote : Sleutelwoorde B

Credit agreement — Consumer credit agreement — Reinstatement of agreement in default — Not possible after execution of court order enforcing agreement — Meaning of 'execution' — Sale in execution at public auction — National Credit Act 34 of 2005, s 129(4)(b). C

Headnote : Kopnota

A consumer brought an application in the High Court for the rescission of a default judgment and cancellation of the sale in execution of her property after she had made good her arrears. The court did not rescind the judgment but, relying on s 129(3)(a) of the National Credit Act 34 of 2005 (NCA), declared that the loan agreements had been reinstated — the default judgment and the writ in execution had accordingly, by operation of D law, ceased to have any force and effect. The central issue in an appeal by the credit provider to the Supreme Court of Appeal (SCA) was the meaning of 'execution' in s 129(4)(b) of the NCA. The section provides that 'a consumer may not re-instate a credit agreement after . . . the execution of any other court order enforcing that agreement'. The High Court concluded that 'execution' only took place when the proceeds of the sale in E execution were paid over to the judgment creditor. In contrast the SCA —

Held, that reinstatement could only occur before a sale in execution at a public auction. The debtor (consumer) had fallen foul of this provision and the order of the High Court had therefore been wrongly made. Appeal upheld. (Paragraphs [44] – [45] at 432F – H.) F

Since the matter was decided on the basis of s 129(4)(b), it was not necessary to deal with the High Court's reasons and findings in respect of s 129(3)(a). (Paragraph [9] at 420G – I.)

Cases Considered

Annotations

Case law

Southern Africa G

Absa Bank Ltd v Van Eeden and Others 2011 (4) SA 430 (GSJ): referred to

Bellville-Inry (Edms) Bpk v Continental China (Pty) Ltd 1976 (3) SA 583 (C): referred to

Bothma-Batho Transport (Edms) Bpk v Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) ([2014] 1 All SA 517; [2013] ZASCA 176): H referred to

Falcon Investments Ltd v CD of Birnam (Suburban) (Pty) Ltd and Others 1973 (4) SA 384 (A): referred to

Ferris and Another v FirstRand Bank Ltd and Another 2014 (3) SA 39 (CC) (2014 (3) BCLR 321; [2013] ZACC 46): referred to

Finbro Furnishers (Pty) Ltd v Registrar of Deeds, Bloemfontein and Others I 1985 (4) SA 773 (A): referred to

Liquidators Union and Rhodesia Wholesale Ltd v Brown & Co 1922 AD 549: referred to

Loader v De Beer 1947 (1) SA 87 (W): referred to

Maharaj Brothers v Pieterse Bros Construction (Pty) Ltd and Another 1961 (2) SA 232 (N): dictum at 238C – D applied J

2015 (4) SA p418

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): referred to A

Nedbank Ltd v Fraser and Another and Four Other Cases 2011 (4) SA 363 (GSJ): referred to

Nkata v FirstRand Bank Ltd and Others 2014 (2) SA 412 (WCC): reversed on appeal

Reid and Another v Godart and Another 1938 AD 511: considered B

Rennie NO v Registrar of Deeds and Another 1977 (2) SA 513 (C): distinguished

Shalala v Bowman NO and Others 1989 (4) SA 900 (W): referred to

Simpson v Klein NO and Others 1987 (1) SA 405 (W): distinguished

Sookdeyi and Others v Sahadeo and Others 1952 (4) SA 568 (A): referred to

Strydom NO v MGN Construction (Pty) Ltd and Another: In re Haljen (Pty) Ltd (in Liquidation) 1983 (1) SA 799 (D): referred to C

Syfrets Bank Ltd and Others v Sheriff of the Supreme Court, Durban Central, and Another; Schoerie NO v Syfrets Bank Ltd and Others 1997 (1) SA 764 (D): referred to

Van Rhyn v Reef Developments A (Pty) Ltd 1973 (1) SA 488 (W): referred to

Walker v Syfret NO 1911 AD 141: dictum at 166 applied. D

England

Blackman v Fysh [1892] 3 Ch 209 (CA): considered

Fagot v Gaches [1943] 1 KB 10 (CA) ([1942] 2 All ER 476): considered

Re Overseas Aviation Engineering (GB) Ltd [1963] Ch 24 (CA) ([1962] 3 All ER 12): E considered.

Statutes Considered

Statutes

The National Credit Act 34 of 2005, s 129(4)(b): see Juta's Statutes of South Africa 2013/14 vol 2 at 1-484.

Case Information

A Gautschi SC (with MJ Sawyer) (heads of argument by D van Reenen) for the appellant. F

L Dzai for the respondent.

An appeal from the Western Cape High Court, Cape Town (Rogers J), now reported as Nkata v FirstRand Bank Ltd and Others 2014 (2) SA 412 (WCC). G

Order

1.

The appeal is upheld with costs, including the costs of two counsel.

2.

The following is substituted for the order of the High Court: 'The H application is dismissed with costs.'

Judgment

Willis JA (Maya JA, Cachalia JA, Majiedt JA, and Saldulker JA concurring):

I [1] The appellant appeals, with the leave of the Western Cape High Court (Rogers J), against the judgment and order which it delivered on 16 January 2014. The respondent, Ms Nomsa Nkata (the debtor), had brought an application for the rescission of a default judgment which the appellant, FirstRand Bank Ltd, trading as First National Bank (the bank), had obtained against her, together with an application for the J cancellation of the sale in execution of an immovable property (the

2015 (4) SA p419

Willis JA (Maya JA, Cachalia JA, Majiedt JA, and Saldulker JA concurring)

property). The property was erf 8832, Durbanville, situated at A 35 Vin Doux Street, Durmante, Durbanville, Western Cape, under deed of transfer No T42327/2005. A first mortgage bond had been registered over the property in order to secure a loan that the bank had given the debtor to assist her to buy it. The loan is subject to the provisions of the National Credit Act 34 of 2005 (the NCA). Although the High Court B dismissed the application for rescission of the default judgment it, mero motu, reinstated the credit agreement, purportedly in terms of s 129(3) of the NCA. Not only the bank but also the debtor applied for leave to appeal. Although the bank was given leave to appeal, the debtor was not.

[2] The rescission application was the second that the debtor had C brought in respect of the property. The first had been brought in November 2010. Arising from the first application, the parties settled the matter in terms of which a previously scheduled sale in execution of the property was cancelled, the debtor agreed to pay her arrears and, in the event that the debtor failed to make good her arrears, the bank would be able to proceed forthwith to sell the property in execution. The D settlement was reflected in a draft order of court. The debtor herself applied for the draft to be made an order of court but the judge on duty at the time declined to do so as there had not been notice given to the bank. Neither the debtor nor the bank took any further steps in this regard. Nevertheless, in that draft the debtor clearly agreed that the E property could subsequently be sold in execution, should she once again default in respect of the payments that were due.

[3] The property was undeveloped at the time when the debtor bought it in 2005. The debtor, who describes herself as a 'businesswoman', built F a house on the property, taking occupation with her two daughters during 2007. She is a supplier of hospital equipment. She obtained financial assistance from the bank, which was secured by a first mortgage bond registered over the property in May 2006 and a second in 2007. The property is what is colloquially known as 'upmarket'. From the time when the debtor bought the property in 2005 until she took occupation G in 2007 she had been living in a block of flats in Rondebosch, known as Devonshire Hill. It was the address at this flat which she had chosen as her domicilium citandi et executandi.

[4] Between March and November 2010 the debtor received numerous H calls from the bank concerning her arrears. Two letters were addressed by its attorneys to the debtor in terms of s 129(1) of the NCA: the first on 1 June 2010 and the second on 4 June 2010. The debtor claims not to have received these notices and the summons in respect of which the default judgment was obtained. Be this as it may, the debtor approached a debt counsellor on 4 August 2010 and applied for debt review on I 20 August 2010. The debtor acknowledges that she had learned of the default judgment and the first pending sale in execution during the first half of October 2010. This led to her issuing the first application for rescission on 19 November 2010. That application was opposed by the bank but, as has already been mentioned, the matter was settled as reflected in the draft order of court. J

2015 (4) SA p420

Willis JA (Maya JA, Cachalia JA, Majiedt JA, and Saldulker JA concurring)

A [5] The bank debited the debtor's account with costs related to the recovery of the debt. These were R9050 on 25 October 2010, R14 498 on 21 February 2011 and R4000 on 1 March 2013. The total was therefore about R28 000 — less than the sum of approximately R33 000 which the debtor owed in respect of arrears at the time of the B sale in execution.

[6] The summons was issued on 27 July 2010. Default judgment was granted, in terms of rule 31(5) of the Uniform Rules of the High Court, by the registrar on 28 September 2010, the property being declared executable. The writ of attachment was issued on the same day.

C [7] In May 2012 the debtor informed the bank that she was experiencing difficulties meeting...