Jili v FirstRand Bank Ltd t/a Wesbank

• Jurisdiction: South Africa
• Judge: Maya JA, Shongwe JA, Leach JA, Willis JA and Mocumie AJA
• Judgment Date: 26 November 2014
• Citation: 2015 (3) SA 586 (SCA)
• Docket Number: 763/13 [2014] ZASCA 183
• Hearing Date: 13 November 2014
• Counsel: PJ Blomkamp for the appellant. N Konstantinides for the respondent. AJ van Lapaan for the amicus curiae.
• Court: Supreme Court of Appeal

Willis JA (Maya JA, Shongwe JA and Mocumie AJA concurring):

[1] The appellant appeals, with the leave of this court, against the order of summary judgment which was granted against her in the KwaZulu-Natal High Court, Durban (Kruger J). The appellant was ordered to J

Willis JA (Maya JA, Shongwe JA and Mocumie AJA concurring)

A return a motor vehicle, which was a 2007 Volkswagen Jetta 1.6 Trendline, to the respondent (the bank), failing which the sheriff was authorised to attach it. The High Court postponed, sine die, the question of judgment in respect of the damages which the bank may have suffered. The High Court ordered the appellant to pay the costs of the application for summary judgment, as well as the costs of the action to the date of the B judgment.

[2] The National Credit Regulator has been admitted to these proceedings as an amicus curiae. It supports the appellant in her appeal but entered the fray only with regard to the correct interpretation of s 88(3) C of the National Credit Act 34 of 2005 (the NCA).

[3] In November 2007 the appellant and the bank concluded an instalment (spelt with one 'l' in the NCA and agreement) sale agreement in respect of the motor vehicle. By March 2011 the appellant was experiencing difficulties in meeting her financial obligations to the bank, D which had arisen as a result of the instalment sale agreement. The appellant approached a debt counsellor, applying for debt review in terms of s 86(1) of the NCA. The debt counsellor thereupon, in terms of s 84(6) of the NCA, notified all the credit providers to whom the appellant was indebted, as well as every registered credit bureau.

E [4] The debt counsellor found that the appellant was overindebted and, in April 2011, forwarded a proposal to all the appellant's creditors, including the bank, for the rescheduling of the repayment of the appellant's debt. The debt counsellor proposed that the appellant's repayments in terms of her agreement with the bank be reduced to R1714,44 per month. The bank accepted the proposal.

F [5] In October 2011 the debt counsellor brought an application, on behalf of the appellant, in the magistrates' court in Pietermaritzburg for an order that she was over-indebted and rescheduling her debt to various credit providers in terms of ss 86(8) and 87(1)(b)(ii) of the NCA. The magistrate granted the order on 4 November 2011.

G [6] In March and April 2012 the appellant fell into arrears in respect of her rescheduled repayments to the bank but made this default good in July 2012. In the meantime, on 25 May 2012, the bank instituted an action against the appellant for the return of the vehicle and recovery of the debt. The action was defended. On 24 August 2012 the bank applied H for summary judgment. The application was opposed. It was common cause that the appellant had not purged her default by the time the application for summary judgment was heard.

[7] In her affidavit resisting summary judgment the appellant said the following:

I 'On 11 June 2012 my attorney confirmed in writing a proposal that I would bring the arrears up to date by paying the arrears of R3428.86, and requested the plaintiff's attorneys to take instructions in this regard. . . . This proposal — which I respectfully submit was a most reasonable proposal — was made in the spirit of keeping alive the rearrangement order that had been made and enabling me ultimately J thereby to satisfy in due course all my financial obligations to all of the

Willis JA (Maya JA, Shongwe JA and Mocumie AJA concurring)

credit providers concerned, including the plaintiff. However, it was A summarily rejected by the plaintiff. . . .'

The appellant's defence is, in effect, a plea ad misericordiam. [1]

[8] The bank succeeded. Referring to the provisions of s 88(3) of the NCA, the High Court relied strongly on the judgment of Eksteen J in B FirstRand Bank Ltd v Fillis and Another [2] to hold that once a debtor has defaulted in terms of an order by a magistrate for the rearrangement of debt, the order is automatically terminated. Correspondingly and simultaneously, in the view of the court, the termination of the order gave rise to the requisite jurisdictional facts that enable a creditor to proceed to obtain judgment against the debtor. The High Court found that the C appellant had no bona fide defence to the application for summary judgment and, in the result, granted the relief sought by the bank.

[9] Counsel for the parties agreed that the case turns on the following points of law:

(a)

Could the bank rely on the appellant's default in March and April 2012 D to proceed as it did, without first obtaining an order setting aside the magistrate's order rearranging the repayment of the appellant's debt; and

(b)

if the bank could so rely upon the appellant's default, did the court have a discretion not to grant judgment in favour of the bank; and

(c)

in the event that the court had this kind of discretion, did the court E exercise it in a judicial manner, having regard to all the circumstances of the case?

[10] Counsel for the appellant submitted that even though the Constitutional Court had pronounced plainly on the interpretation of s 88(3) of F the NCA in Ferris and Another v FirstRand Bank Ltd, [3] this was merely obiter and should not be followed. Relying on the Constitutional Court's judgment in Sebola and Another v Standard Bank of South Africa Ltd and Another, [4] the appellant also submitted that an important purpose of the NCA is to promote non-litigious methods of resolving consumer defaults and that 'weight must be given to constitutional considerations in G assigning meaning to the statute's provisions'. The appellant furthermore contended that a court always had a discretion to refuse to grant summary judgment and that in this particular case the discretion should so be exercised. The amicus submitted that there was a lacuna in the provisions of s 88(3) that did not have regard to the interests of the other H credit providers. The respondent supported the Constitutional Court's reasoning in Ferris and Another v FirstRand Bank and submitted that the

Willis JA (Maya JA, Shongwe JA and Mocumie AJA concurring)

A discretion to refuse summary judgment was confined to situations where there was doubt about the indebtedness of the defendant, which obviously was not the position in the present case.

[11] Section 88(3) of the NCA provides as follows:

B '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 —

(a)

the consumer is in default under...