Rossouw and Another v FirstRand Bank Ltd

• Jurisdiction: South Africa
• Judge: Mpati P, Navsa JA, Cloete JA, Maya JA and Ebrahim AJA
• Judgment Date: 30 September 2010
• Citation: 2010 (6) SA 439 (SCA)
• Docket Number: 640/2009
• Hearing Date: 07 September 2010
• Counsel: MC Erasmus SC (with DJ van Heerden) for the appellants. C da Silva SC (with AP Ellis) for the respondent.
• Court: Supreme Court of Appeal

Maya JA (Mpati P, Navsa JA, Cloete JA and Ebrahim AJA concurring): I

[1] This is an appeal, with the leave of the court below, against summary judgment granted by the Pretoria High Court (Ellis AJ) against the appellants, in favour of the respondent (the bank), based on a loan J agreement and mortgage bond.

Maya JA

[2] The facts gleaned from the summons and summary judgment A affidavits are the following. On 8 June 2006 the appellants, who are married to each other, concluded a loan agreement with the bank. The latter is a registered credit provider [1] in terms of s 40 of the National Credit Act 34 of 2005 (the Act). In terms of this agreement the bank granted the appellants a loan in the sum of R1 030 000 repayable in B monthly instalments of R9003,88, which was secured by a mortgage bond of R1 800 000 over the appellants' immovable property (the mortgaged property).

[3] Some of the material terms of the mortgage bond were: C

'16.1.1

If the mortgagor(s) fail to pay any amount due in terms of this bond . . . on due date . . . then, at the option of the bank, all amounts whatsoever owing to the bank by the mortgagor[s] shall forthwith be payable in full . . . and the bank may institute proceedings for the recovery thereof and for an order declaring the mortgaged property executable.

. . . D

17.

A certificate purporting to be signed on behalf of the bank shall be proof until the contrary is proved of the balance owing and the fact that it is due and payable . . . and shall be valid as a liquid document for the purposes of obtaining . . . summary judgment.

. . . E

20.

For the purposes of this bond and of any proceedings which may be instituted by virtue hereof, and of the service of any notice, domicilium citandi et executandi is hereby chosen by the mortgagor[s] at the mortgaged property.

. . . F

21.1

Any notice given by the bank in terms of this bond may at the bank's option be addressed to the mortgagor[s] at the [chosen] domicilium . . . and may be served by registered post;

21.2

Notices so posted shall be deemed to be received by the mortgagor three days after posting;

21.3

A certificate signed on behalf of the bank, stating that a notice G has been given, shall be sufficient and satisfactory proof thereof, and the authority of the signatory and validity of the signature need not be proved.'

[4] About two years later the appellants fell into arrears in respect of their monthly repayments. In September 2008 the bank sent them a notice in terms of s 129(1)(a) of the Act informing them of their default. As a H

Maya JA

A result the appellants attended debt counselling and, subsequently, made a debt-restructuring proposal to the bank. On 7 October 2008 the bank countered the appellants' offer with its own revised payment plan to which the appellants agreed, but inexplicably abandoned, to pursue debt management. No payment appears to have been made by the appellants B until 23 March 2009. The amount then paid was only a sum of R20 450. It is not clear how this amount was computed, but it appears to be inadequate in terms of the requirements of both the agreement and the revised payment plan, having regard to the considerable period during which no payment was made.

C [5] On 23 April 2009 the bank allegedly delivered a fresh notice in terms of s 129(1)(a) (the notice). On 22 May 2009 it issued a summons to which was attached a certificate of compliance, dated 15 May 2009, stating that the bank had issued and delivered the requisite notice. The summons claimed payment of the sum of R1 117 180,65 from the D appellants and ancillary relief, including an order declaring the mortgaged property executable. The basis of the claim was that the appellants had failed to maintain regular instalments and that the full outstanding amount had thus become due and payable in terms of the agreement.

[6] The appellants entered an appearance to defend the action, prompting E the bank to apply for summary judgment in terms of rule 32. The appellants opposed the application on the bases that:

(a)

The summons was excipiable because s 130(2) of the Act precludes a credit provider from claiming a shortfall on a mortgage loan agreement since it is not among the types of agreement specified in the section, and that the only order the court below could have F granted was merely to declare the property executable;

(b)

they had not received the notice as envisaged in ss 129(1) and 130(1); and

(c)

the arrear amount claimed is incorrect since it ignores payment of sums amounting to R101 950 - which reduced the arrears to G R12 850 and the outstanding balance to R1 005 052.

[7] None of these defences found favour with the court below. As regards (a), the court found that whilst it is so that s 130(2) applies only to the pledge and cession of movables and has no application to mortgage agreements, the bank's claim fell within the ambit of s 130(1) H of the Act, which is not limited by s 130(2) insofar as mortgage agreements are concerned.

[8] In rejecting the appellants' second defence, that they did not receive the notice, the court adopted the approach set out in Munien v BMW Financial Services (SA) (Pty) Ltd and Another. [2] On that basis the court I held that in view of the legislature's omission to define 'deliver' in the Act, delivery of the notice occurred when it was sent by registered post to an address chosen by the appellants in the agreement, irrespective of whether it was actually received. This had to be so, the court reasoned,

Maya JA

as this method is one of six possible methods of delivery prescribed - as A contemplated in s 65(2) - by the Minister in the definition of 'delivered' set out in s 1 of the National Credit Regulations (the regulations). [3] The court also relied on the parties' agreement to a method of communicating set out in clauses 21.1 to 21.3 of their agreement, which provided for delivery of notices at the mortgagor's domicilium by registered post. B

[9] The court below found no substance in the defence that the appellants had paid a substantial sum towards liquidating the arrears, and held that their affidavit failed to show that they purged their default, thus entitling the bank to enforce its claim in full. Summary judgment was then granted against the appellants jointly and severally, the one paying the other to be absolved, as prayed. C

[10] The issues on appeal remain as they were in the court below, namely whether (a) the court below could have granted summary judgment when a mortgage bond is not included in the instances referred to in s 130(2) of the Act, which entitles specified types of credit provider D to approach a court for the enforcement of the consumer's remaining obligations; (b) the bank complied with s 129(1) read with s 130(1) of the Act by giving notice to the appellants; and (c) the appellants set out sufficient facts in the opposing affidavit to have constituted a defence against the application for summary judgment.

[11] Another issue which arose, with which I deal directly since it E courted no controversy, is an application to lead further evidence in the appeal proceedings launched by the bank on the eve of the hearing. Its basis was that the submission made in the appellants' heads of argument in the appeal, that the bank did not establish the method by which the notice was delivered, was not raised in the court below. It was contended F on the bank's behalf that the appellants' defence at the summary judgment hearing was merely that the appellants did not receive the notice, and that it was not disputed that the notice had been sent to them by registered mail since proof thereof was handed in without demur from their counsel.

[12] The evidence sought to be admitted, which it was contended G supported the bank's stance in this regard, was a transcript of the argument at that hearing during which the so-called proof was submitted to the court. The appellants did not oppose the application and the transcript was accordingly received in evidence.

[13] I turn to deal with the main issues. H

What meaning to ascribe to s 130(2) vis-à-vis mortgage agreements

[14] As mentioned above, the appellants took a point in limine that I s 130(2) limits a credit provider's claim under a mortgage agreement to the proceeds of the sale of the mortgaged property, and that the bank is precluded from claiming any shortfall if the full amount of the debt under the agreement is not realised after execution of such property. J

Maya JA

A This contention was based on an application of the expressio unius est exclusio alterius principle in interpreting the section.

[15] Section 130 provides:

'130 Debt procedures in a court

(1) Subject to subsection (2), a credit provider may approach the B court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under that credit agreement for at least 20 business days and -

(a)

at least 10 business days have elapsed since the credit provider delivered a notice to the consumer as contemplated in section 86(9), or section 129(1), as the case may be;

(b)

C in the case of a notice contemplated in section 129(1), the consumer has -

(i)

not responded to that notice; or

(ii)

responded to the notice by rejecting the credit provider's proposals; and

. . .

D (2) In addition to the circumstances contemplated in subsection (1), in the case of an instalment agreement, secured loan, or lease, a credit provider may approach the court for an order enforcing the remaining obligations of a consumer under a credit agreement at any time if -

(a)

all relevant property has been sold pursuant to -

(i)

an attachment order; or

(ii)

E surrender of property in terms of section 127; and

(...