Kaknis v Absa Bank Ltd and Another

• Jurisdiction: South Africa
• Judge: Shongwe JA, Willis JA, Mathopo JA, Van der Merwe JA and Nicholls AJA
• Judgment Date: 15 December 2016
• Citation: 2017 (4) SA 17 (SCA)
• Docket Number: 08/16
• Hearing Date: 11 November 2016
• Counsel: PWA Scott SC (with KD Williams) for the appellant.JG Richards for the respondents.
• Court: Supreme Court of Appeal

Shongwe JA (Willis JA concurring) (dissenting judgment):

[1] This appeal is against the judgment and two orders of the Eastern Cape Local Division of the High Court (Msizi AJ) (the High Court) granting summary judgments against the appellant, Mr Pontelis Kaknis. F The respondents, Absa Bank Ltd (Absa) and MAN Financial Services SA (Pty) Ltd (MFS), are the two judgment creditors in whose favour these two orders were granted and are the respondents in this appeal. The High Court dismissed the appellant's defence that the respondents' claims against him had prescribed. For this assertion, the appellant had relied on s 126B(1)(b)(ii) of the National Credit Act 34 of 2005 (the G Act). The High Court held that s 126B(1)(b)(ii) did not apply retrospectively. The appeal against this narrow point of law is with leave of the High Court.

[2] The crisp question in this appeal accordingly is the interpretation and application of the provisions of s 126B of the Act which came into H operation with effect from 13 March 2015. Specifically, it is whether or not s 126B(1)(b) of the Act applies retrospectively.

Background

[3] I turn to deal briefly with the background before delving into I the relevant legal principles of interpretation. During the period March 2006 to March 2008 the appellant concluded ten instalment sale agreements with Absa, in terms of which Absa sold and delivered to the appellant various movable assets comprising inter alia motor vehicles and trailers. The appellant also concluded an instalment sale agreement with MFS, in terms of which it sold and delivered to the appellant a J

Shongwe JA

2007 A MAN truck. The appellant honoured both transactions by paying regularly. However, after a few years of compliance the appellant got into financial difficulties, which resulted in his failure to pay.

[4] As a result of his financial woes, the appellant approached a debt counsellor to apply for a debt review as contemplated in s 86 of the Act. B On 12 June 2010 he obtained an order from the magistrates' court for the district of Port Elizabeth in terms of which his obligations to his various credit providers were rearranged in accordance with the provisions of s 86(7)(c)(ii)(aa) and (bb) of the Act. The appellant faithfully complied with the court order, until 8 July 2011 when the last payment C was made by the payment distribution agent. It is common cause that the claims against the appellant became prescribed on 8 July 2014 in terms of s 11(d) of the Prescription Act 68 of 1969 (the Prescription Act), due to the fact that more than three years had lapsed since the last payment was made by the appellant in reduction of his indebtedness under the D sale agreements.

[5] In the meantime the respondents continued attempts to recover the amounts owed to them by demanding payment. The appellant, however, remained unable to repay the outstanding amounts. On 3 October 2014, after the respondents' claims had become prescribed, the appellant E concluded an acknowledgement of debt in favour of the respondents. In terms of this agreement, the appellant acknowledged his indebtedness to Absa in an amount over R2,7 million, plus interest, and an amount of R702 496, plus interest, in respect of MFS. The appellant failed to pay in terms of the acknowledgement of debt, and he also did not surrender any of the assets as was agreed in the agreements. On 30 April 2015 the F respondents issued summons against the appellant claiming confirmation of the cancellation of the sale agreements, return of the assets and leave to prove damages later. The appellant entered an appearance to defend but did not deliver a plea. Subsequently, the respondents brought separate applications for summary judgment, alleging that the appellant G lacked a bona fide defence. The appellant opposed both applications. He averred that the claims had become prescribed. He also contended that, by virtue of the provisions of s 126B(1)(b) of the Act, the respondents were precluded from continuing the collection of the debt by relying on the acknowledgement of debt which the respondents alleged revived the prescribed debt. The appellant further stated that he H had not been aware that the respondents' claims against him had become prescribed, and that if he had been aware of the defence of prescription he would not have concluded the acknowledgment of debt. As mentioned, the two applications for summary judgment were considered together for purposes of judgment by the High Court.

[6] I As prefaced earlier, the court a quo granted the respondents' applications and concluded that the claims had not prescribed. The court reasoned that the legislature would have expressly stipulated that the provisions of s 126B of the Act apply retrospectively if it intended them to be applied retrospectively. Unhappy with the court's J findings, the appellant sought leave to appeal, which leave was granted.

Shongwe JA

[7] Before us the appellant persisted that the claims had become A prescribed and contended that s 126B of the Act must be read in conjunction with sch 3 to the Act, in particular item 4(2), all falling under ch 6 of the Act which deals with collection, repayments, surrender and debt enforcement (ss 124 – 133). In essence, sch 3 deals with transitional provisions which relate to pre-existing credit agreements — B meaning agreements that were made before the effective date of the Act, and to which this Act applies. The appellant further contended that in the absence of an amendment of sch 3 to the Act, the entire ch 6 had retrospective effect, which includes s 126B of the Act. The respondents' case on appeal was that the appellant, by concluding the acknowledgement of debt, had renounced his right to rely on prescription. They C further contended that s 126B did not apply retrospectively, as its language and context did not support such an interpretation. The respondents went on to contend that, because s 126B of the Act takes away rights which accrued to them upon the conclusion of the acknowledgement of debt, the section cannot be construed to apply retrospectively. D

[8] As mentioned earlier, the nub of this appeal is whether the court a quo was correct in interpreting the provisions of s 126B to apply retroactively as opposed to retrospectively.

Interpretation of s 126B of the Act E

[9] Section 126B came into operation on 13 March 2015, being introduced by the National Credit Amendment Act 19 of 2014. It reads as follows:

'126B Application of prescription on debt

(1)(a) No person may sell a debt under a credit agreement to which F this Act applies and that has been extinguished by prescription under the Prescription Act, 1969 (Act 68 of 1969).

(b) No person may continue the collection of, or re-activate a debt under a credit agreement to which this Act applies —

(i)

which debt has been extinguished by prescription under the Prescription Act, 1969 (Act 68 of 1969); and

(ii)

where the consumer raises the defence of prescription, or would G reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.'

[10] I must mention from the outset that I am alive to the existence of a strong presumption that legislation is not intended to be retroactive H — nor retrospective. See S v Mhlungu and Others1995 (3) SA 867 (CC) (1995 (2) SACR 277; 1995 (7) BCLR 793; [1995] ZACC 4) paras 65 – 67, where Kentridge AJ observed that:

'[65] First, there is a strong presumption that new legislation is not I intended to be retroactive. By retroactive legislation is meant legislation which invalidates what was previously valid, or vice versa, ie which affects transactions completed before the new statute came into operation. See Van Lear v Van Lear (supra). It is legislation which enacts that as at a past date the law shall be taken to have been that which it was not. See Shewan Tomes & Co Ltd v Commissioner of Customs and Excise1955 (4) SA 305 (A) at 311H, per Schreiner ACJ. There is also a J

Shongwe JA

presumption A against reading legislation as being retrospective in the sense that, while it takes effect only from its date of commencement, it impairs existing rights and obligations, eg by invalidating current contracts or impairing existing property rights. See Cape Town Municipality v F Robb & Co Ltd1966 (4) SA 345 (C) at 351, per Corbett J. The general rule therefore is that a statute is as far as possible to be B construed as operating only on facts which come into existence after its passing.

[66] There is a different presumption where a new law effects changes in procedure. It is presumed that such a law will apply to every case subsequently tried no matter when such case began or when the cause C of action arose" — Curtis v Johannesburg Municipality 1906 TS 308 at 312. It is, however, not always easy to decide whether a new statutory provision is purely procedural or whether it also affects substantive rights. Rather than categorising new provisions in this way, it has been suggested, one should simply ask whether or not they would D affect vested rights if applied retrospectively. See Yew Bon Tew v Kenderaan Bas Mara (supra at 563 (AC)); Industrial Council for Furniture Manufacturing Industry, Natal v Minister of Manpower and Another (supra at 242).

[67] There is still another well-established rule of construction namely, that even if a new statute is intended to be retrospective insofar as it E affects vested rights and obligations, it is nonetheless presumed not to affect matters which are the subject of pending legal proceedings. See Bell v Voorsitter van die Rasklassifikasieraad en Andere (supra); Bellairs v Hodnett and Another (supra at 1148).'

[11] It is clear from the above exposition in Mhlungu above...