Janse van Vuuren v Roets and Others and a Similar Matter

• Jurisdiction: South Africa
• Court: Gauteng Local Division, Johannesburg
• Judge: Sutherland J, Carelse J and Maier-Frawley AJ
• Judgment Date: 03 September 2019
• Citation: 2019 (6) SA 506 (GJ)
• Hearing Date: 03 September 2019
• Docket Number: 37407/2018
• Counsel: S v W van der Hoven (attorney) for the applicants. CDA Loxton SC (with P Daniell) for the first amicus curiae. LM Maite for the second amicus curiae. D Whittington for the third amicus curiae. JJN Swart for the fourth amicus curiae.

Sutherland J (with Carelse J and Maier-Frawley AJ concurring):

Introduction

[1] This matter is about the interpretation of certain provisions of the I National Credit Act 34 of 2005 (NCA). A controversy exists about whether the High Court has jurisdiction, as a court of first instance, to address the alleged plight of the two applicants. Both sought relief from the High Court to release them from debt review, essentially on the premise that, since their initial applications in terms of s 86(1) of the J

Sutherland J (With Carelse J and Maier-Frawley AJ concurring)

NCA, A their financial positions had so improved that they could pay their way again, albeit that they had not discharged all of their indebtedness.

[2] Several decisions in different divisions of the High Court had taken a different approach to the question of such jurisdiction. In the Western Cape, KwaZulu-Natal and Limpopo there are decisions that no such B jurisdiction can exist. In Gauteng there are decisions that the High Court has such jurisdiction. As a result the Judge President of the Gauteng Division, acting in terms of s 14(1)(a) of the Superior Courts Act 10 of 2013, referred certain questions to a full court of the division to resolve the conflicts in the case law.

[3] C The Judge President's referral reads thus:

'6.

The following issues have been raised and are to be determined by the Full Court:

(a)

Is a High Court able to make an order confirming that an applicant is no longer over-indebted, where no valid declaration of over-indebtedness is before Court?

(b)

D Where fresh facts arise since a debt counsellor's notification to all credit providers and every registered credit bureau of the consumer's application for debt review, or after the assessment and conclusion that a consumer appears to be over-indebted, and new facts demonstrate material change in the circumstances of a consumer causing such consumer to no longer be over-indebted, E is the High Court the forum of first instance that the consumer should approach to provide an order to rectify his credit status with credit providers and credit bureaus?

(c)

Is the relief sought consistent with the scheme of the National Credit Act?

(d)

The concepts of "over-indebtedness" (including that of financial F difficulty falling short of "over-indebtedness" contemplated by s 86(7)(b)) and the attendant remedy of "debt review" within the meaning of the National Credit Act are statutory creations. How they work is governed entirely by the National Credit Act. In the absence of a challenge to their constitutionality, are the courts' powers delineated by these provisions?

(e)

G Does s 71 of the National Credit Act afford an adequate remedy in the circumstances to expunge the record that the applicants were in debt review?

(f)

Is the only remedy at the disposal of the applicants the limited relief provided for in terms of s 71 of the National Credit Act and is it further limited to be sought in the manner set out therein?

(g)

H Would the court in exercising its powers in terms of s 21 of the Superior Courts Act to grant such relief, be inappropriate considering the environment regulated by the National Credit Act?'

[4] Apart from the two applicants who were represented by one counsel, I the only other participants in the matter were four amici curiae: the Banking Association of SA; the National Credit Regulator; the Law Society of South Africa; and Ms Michelle Barnard, a registered debt counsellor.

[5] The relevant facts, in respect of the two applicants, which were J common cause are these:

Sutherland J (With Carelse J and Maier-Frawley AJ concurring)

Van Vuuren A

[5.1]

Van Vuuren applied for debt review on 11 May 2015. Roets, a registered debt counsellor, accepted the application. Roets informed the creditors and the credit bureaux of the application on 12 May 2015, using the prescribed form 17.1. On 15 June 2015 Roets decided that Van Vuuren was indeed overindebted. B Roets then submitted the obligatory form 17.2, notifying the creditors and the credit bureaux of the application. Such notice of the acceptance of an application has the effect of suspending legal process in respect of the debtor's obligations. On 23 July 2015 Van Vuuren's matter was sent to the magistrates' court and C an order was granted by the magistrate on 12 November 2015, as contemplated in s 87(1)(b)(ii), rearranging his repayment obligations. Van Vuuren complied with the order. On 1 November 2016, 18 months after the initial application, Van Vuuren's financial circumstances improved so that he was able to pay his creditors on the original terms of the agreements and no longer D needed to rely on the debt review relaxations of the order. The details of the order are lean and offer no clear picture of the details of the arrangement [HJ5.1 – P30]. Van Vuuren asked Roets to take the relevant steps to release him from debt review. Roets refused on the grounds that the circumstances did not E entitle him to issue a clearance certificate. Moreover, Roets told him that the magistrates' court had no power to release him; hence, the only option was to approach the High Court to do so.

Nel

[5.2]

Nel applied to Roets for debt review on 13 March 2016. F The application was accepted, and the creditors and credit bureaux were notified of the application on 16 March 2016. On 21 April 2016 Roets decided Nel was overindebted. He sent the creditors and bureaux the notification by means of form 17.1. On 20 May 2016 the matter was filed at the magistrates' G court. However, unlike with Van Vuuren, no order was ever made by the magistrate. Nevertheless, Nel paid his creditors in accordance with Roets' proposal to the magistrate. In July 2017 Nel 'voluntarily' withdrew from payments in accordance with the proposal and resumed payments in accordance with his H original agreements with his creditors. Like in the case of Van Vuuren, Nel asked Roets to release him and Roets refused on the basis that he lacked the power to do so, and informed him of the alleged dilemma.

[6] Thus, as to the predicament of the two applicants, their alleged plight I is that they contend that they are trapped in debt review when they no longer need to facilitate their financial rehabilitation through that process. In broad terms counsel for the applicants advanced an interpretation of the NCA that, so it was argued, conferred jurisdiction on the High Court to acknowledge they no longer 'need' to be subjected to the effects of debt review, ie barred from incurring further credit, and in J

Sutherland J (With Carelse J and Maier-Frawley AJ concurring)

consequence A the High Court must therefore order the termination of their status as persons subject to debt review. All the other participants contended that the NCA conferred no such jurisdiction on the High Court to grant the release as prayed. A close examination of the relevant sections of the NCA to assess these arguments is required.

[7] B How to conduct such an interpretation exercise is now trite. [1] A court must honour the text in the context of the statute and apply a purposive approach. The NCA has been often criticised for poor draftsmanship; however, the task remains to divine business sense out of the text and not to varnish the text with a gloss inspired by one's own value judgments.

The debt review scheme of the NCA C

[8] The NCA constitutes a scheme for the regulation of various aspects of the granting and receiving of credit. Among several models of regulation in the statute there is the model of 'debt review'. Its objective is plain — a D formal intervention into the contractual relationships of debtors (called consumers in the NCA) whose capacity to comply with their contractual obligations to their creditors is compromised, and a constructive rearrangement schedule to ultimately achieve payment to their creditors. Whilst the debt review process prevails, the consumers cannot incur credit and their creditors cannot sue them. The pertinent sections are E contained in ch 4 of the NCA, part D (ss 78 – 88). Also implicated in this model is s 71, which deals with the removal of the record of debt adjustment or judgment, and s 138, which addresses court consent orders.

[9] Although the locus of the present controversy is about how to exit the F debt review process, it is necessary, for coherence, to traverse the model as a whole to grasp how one gets into debt review, no less than how to exit the process.

[10] There are distinct portals to three channels of access to debt review and a rearrangement of consumers' obligations.

[11] G The primary channel is that through the portal of s 86(1), in which the consumer takes the initiative to approach a debt counsellor. By con- trast, the second and third channels facilitate the prospects of debt review when a court (any court) is seized with consideration of a credit agreement. These latter two channels are regulated, respectively, by H ss 83(1) and ss 85(1). The addressing of reckless lending is the burden of s 83. Overindebtedness is the burden of s 85. Naturally, the circumstances of a reckless credit agreement and overindebtedness can be wholly distinct but also often are intertwined.

[12] The distinctions between the criteria necessary to access debt I review in these three channels are important. In s 86(1) the consumer 'claims' to be overindebted to a debt counsellor. In s 83(1) or 85(1) the trigger is a particular credit agreement being raised in litigation; typically,

Sutherland J (With Carelse J and Maier-Frawley AJ concurring)

this litigation would not be at the instance of the consumer, but rather a A creditor seeking some form of relief which the consumer resists by alleging a reckless credit agreement or overindebtedness, or both.

[13] Each channel is...