Ngandela v Absa Bank Limited and another

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Dreyer AJ
• Judgment Date: 31 January 2023
• Docket Number: EL 1637/2021
• Hearing Date: 11 August 2022
• Court: East London Circuit Local Division

Dreyer AJ:

Introduction:

[1]

In 2019, the applicant secured finance from the respondent, ABSA Bank Limited ("Absa Bank") for the finance of a 2018 Volkswagen Golf V11 GTI 2.1 SI, with engine number CHH 258470 and chassis number WVWWZZZAUZJW188818 ("the motor vehicle"). The finance for the purchase of the motor vehicle was regulated by an instalment sale

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agreement. The applicant failed to make certain monthly instalment payments. After issuing summons against the applicant, on 25 March 2022, the registrar of this court ("the Registrar"), granted Absa Bank default judgement which included inter alia the confirmation of the cancellation of the instalment sale agreement and that the applicant deliver the motor vehicle to Absa Bank.

[2]

This judgement concerns the validity the default judgement granted by the Registrar.

[3]

A number of recent decisions have considered the power of the registrar to grant default judgement relating to credit agreements. In the decisions of Theu v FirstRand Auto Receivables (RF) Limited and another [1]; Xulu v Standard Bank of South Africa Limited and Others [2]; and Seleka v Fast Issuer SPV (RF) Limited and Another [3], the courts have held that the registrar of the court is not empowered to grant such default judgement.

[4]

All these decisions refer with approval to the concurring majority decision Jafta J in Nkata v FirstRand Bank Limited and Others (Socioeconomic Rights Institution of South Africa as amicus curiae) [4] ("the Nkata decision") that the pre-emptory language of s130 of the

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National Credit Act [5] ("NCA") requires the court, not a registrar of the court, to consider the enforcement of a credit agreement. The credit provider, Jafta J held

"sought and obtained a default judgment from the registrar of the High Court, something that is incompatible with s 130(3) which requires such matters to be determined by the court." (my emphasis)

[5]

The outlier in the line of recent authorities regarding the powers of the registrar to grant default judgement relating to credit agreement is a full bench decision of the Mpumalanga Division, Middelburg, Nedbank Limited v Mollentze; FirstRand Auto Receivables (RF) Limited v Radebe and Another [6] ("the Mollentze decision"), which held that s23 of the Superior Courts Act [7] clothed the registrar with the authority of a court, enabling the registrar to deal with quasi-judicial functions, including a consideration and granting of default judgments under the NCA. [8]

[6]

The court in the Mollentze decision, considered the concurring judgement of Jafta J in Nkata decision as a minority and obiter decision (as, the Mollentze decision found, the Constitutional Court was not

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called on to interpret s130 of the NCA). This finding of the court is, respectfully, incorrect.

[7]

Firstly, Moseneke DCJ for the majority in Nkata specifically states in the introductory paragraph of his judgement "I am also grateful for the concurring judgement of Jafta J and have noted the additional reasons he relies on". [9]

[8]

Jafta J in his concurring majority decision, echoes this:" Like Moseneke DCJ, I would uphold the appeal and set aside the order of the Supreme Court of Appeal, for mainly the reasons advanced by him in his judgement and to which I add mine".

[9]

It is clear that these two concurring judgements are the decision for the majority in the Nkata judgement.

[10]

Secondly, the question before the Constitutional Court was, whether the credit provider had met the provisions of s129 of the NCA (that is whether proper notice had been given to the credit receiver, prior to the credit provider instituting legal proceedings) to justify the grant of default judgement by the registrar of the court. The default judgement included the cancellation of the credit agreement. The question whether default judgement was properly granted, consequently the

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interpretation of s130 of the NCA, was an issue front and central for the Constitutional Court's determination.

[11]

I am bound by the Nkata decision, not the Mollentze decision.

The provisions of the NCA:

[12]

The NCA regulates instalment sale agreements. The long title of the NCA states that it was promulgated, inter alia, "to promote a fair non-discriminatory marketplace . . . [and] to provide for the general regulation of consumer credit and improve standards of credit information".

[13]

The purpose of the NCA is set out in section 3, recording that:

"The purposes of this Act are to promote and advance the social and economic welfare of South Africans, to promote a fair, transparent and competitive, sustainable, responsible, efficient, effective, and accessible credit market and industry and to protect consumers, by –

. . .

(i)

by providing for a consistent and harmonised system of debt restructuring, enforcement and judgment which places

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priority on the eventual satisfaction of all responsible consumer obligations under credit agreements."

[14]

The purpose of the Act to provide a harmonised system of enforcement and judgment is realised in s 130, which details the procedures a credit provider must follow to enforce a credit agreement. A credit provider may only approach the Court once it has complied with specific procedural steps and after giving notice as specified to the credit receiver in writing. S130(3) further specifies that "despite any provision of the law or contract to the contrary, any proceedings commenced in a court in respect of a credit agreement to which the Act applies, the court may only determine the matter if the court is satisfied that. . ." certain specific procedural requirements of the Act have been met.

[15]

As the Supreme Court noted, in FirstRand Bank Limited t/a Wesbank v Davel (University of the Free State Law Clinic as amicus curiae), [10] it is clear from these provisions that the legislature was intent on ensuring that sufficient protections are provided to ensure that, on termination of the credit agreement, a consumer is protected. These consumer protections include the court's oversight of the enforcement of credit agreements.

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[16]

The Absa Bank, argues that, despite the specific wording of the Act requiring the court to determine the enforcement of a credit agreement, the default judgment granted by the registrar of this court on 25 March 2022 was competent. Absa Bank relies on the Mollentze decision.

[17]

The applicant, in contrast, relies on the Nkata decision.

[18]

The applicant's argument is supported by an unreported decision of the Free State Division, Bloemfontein, Gcasamba v Mercedes-Benz Financial Services SA (Pty) Limited and Another [11] ("the Gcasamba decision"), handed down after I had heard argument in this matter. Snellenberg JA in the Gcasamba decision held that the Registrar of the High Court is not competent or empowered to grant any order or judgment in a matter where the NCA applies. [12] Snellenburg JA held that this question has been settled by the Constitutional Court in the Nkata decision and that a proper interpretation of the provisions of the NCA leaves no doubt that the legislature (NCA) entitled the court and only the court to grant judgments and orders in matters in which the NCA applies. [13]

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[19]

I agree. I referred the...