Standard Bank of South Africa Ltd v Hales and Another
| Jurisdiction | South Africa |
| Judge | Gorven J |
| Judgment Date | 11 February 2009 |
| Citation | 2009 (3) SA 315 (D) |
| Hearing Date | 02 February 2009 |
| Docket Number | 8278/2008 |
| Court | Durban and Coast Local Division |
| Counsel | V Naidu appeared for the plaintiff. Ms L Olsen appeared for the defendants. |
Gorven J:
[1] The plaintiff seeks to foreclose on a mortgage bond registered on 10 July 2007 in its favour over the immovable property of the defendants as security for a loan by the plaintiff to the defendants. C
[2] The parties agreed a stated case in terms of rule 33(1) of the Uniform Rules of Court. The stated case reads as follows:
The defendants applied to the plaintiff for finance in order to purchase an immovable property in Kingsburgh, KwaZulu-Natal. Their application was successful and it was a condition of the loan D that a first mortgage bond would be registered against the said immovable property.
The defendants accordingly purchased the immovable property and a first covering mortgage bond was registered against the property on 10 July 2007 in the sum of R790 000 plus an additional sum of E R197 500.
The defendants fell in arrears with the payment of their bond instalments which as at 18 April 2008 amounted to R53 611,88.
The defendants have failed to pay any further bond instalments.
On 18 April 2008 the plaintiff gave the defendants notice in terms of ss 129 and 130 of the National Credit Act, 2005 (the Act). F
The defendants admit receiving such notice.
On 4 July 2008 the plaintiff instituted action against the defendants in which the plaintiff seeks judgment for payment of the sum of R868 889,31 together with interest thereon at the rate of 13,40% per annum calculated in advance and compounded monthly from 4 July 2008 to date of payment, together with an order declaring the G immovable property executable, plus costs on an attorney and client scale.
The summons was served on the defendants on 14 July 2008.
The defendants entered an appearance to defend on 15 September 2008. H
The plaintiff applied for summary judgment on 23 September 2008 and the defendants deposed to affidavits in opposition to the application on 6 November 2008.
In the affidavit deposed to by the second defendant, she alleges that she and the first defendant are over-indebted and that they have engaged the services of a debt counsellor. I
On 17 November 2008 the plaintiff filed a declaration.
On 19 November 2008 the defendants filed and served a plea.
In para 1 of the defendants' plea they admit all of the allegations contained in the plaintiff's declaration but in para 2 they allege that they are over-indebted as contemplated in s 79 of the Act and they J
Gorven J
A apply for relief from over-indebtedness in terms of s 85 of the Act. This is the only defence raised to the plaintiff's claims.
The loan agreement between the parties is a credit agreement in terms of s 1 of the Act.
The plaintiff complied with the provisions of ss 129 and 130 of the B Act.
The defendants are over-indebted in terms of s 79 of the Act.
The defendants' over-indebtedness is set out in the document contained in the defendants' discovery documents at pages 5 - 7 thereof.
The defendants did not apply for debt relief in terms of s 86 of the C Act prior to the institution of proceedings by the plaintiff against them.
The defendants ask for relief in terms of s 85 of the Act.
The plaintiff asks that the court exercise its discretion by not granting the defendants relief in terms of s 85 but prays that D judgment be granted in its favour in terms of prayers (a) - (d) of its declaration.
In the event that this court declines to grant the defendants relief in terms of s 85, it is admitted that plaintiff is entitled to judgment, as prayed.
It is agreed that both parties and the court may have reference to the E pleadings and the discovery documents.
[3] At the hearing a bundle of documents was handed up, and it was indicated to me that both parties admitted the documents as true. The only relevant document is that mentioned in para 18 of the stated case. It shows that the joint monthly income of the defendants after employer F deductions is R21 769,55 and their joint monthly expenses are R33 255,66. There is therefore a monthly shortfall of R11 486,11. As regards their debt commitments, they are obliged to pay a monthly bond instalment to the plaintiff of R10 034,94 and monthly instalments on the other debt commitments of the defendants totalling R2 793,37. There G are, in addition, other debt commitments which do not have monthly repayment figures against them and are ignored in the monthly expenses of the defendants. These include an overdraft indebtedness to the plaintiff in the sum of R29 845,22, an amount of R1 857,56 due to the Ethekwini Municipality and indebtedness to Wesbank in the sum of H R108 640,15.
[4] The crisp issue in the stated case is whether or not the court should take the step referred to in s 85(a) of the Act.
[5] Section 85(a) reads as follows:
Despite any provision of law or agreement to the contrary, in any court I proceedings in which a credit agreement is being considered, if it is alleged that the consumer under a credit agreement is over-indebted, the court may -
refer the matter directly to a debt counsellor with a request that the debt counsellor evaluate the consumer's circumstances and make a recommendation to the court in terms of section 86(7); or
J . . . .
Gorven J
The date of commencement of this section was 1 June 2007. It is A common cause that it applies to this indebtedness.
[6] There are two factors required by s 85(a) prior to a court being empowered to refer a matter to a debt counsellor, viz:
Proceedings in which a credit agreement is being considered; and
An allegation that a consumer under the credit agreement is B over-indebted.
The parties are ad idem that both factors are present. The parties agree that the agreement on which the plaintiff sues is a credit agreement as envisaged in the Act. The defendants allege that they are over-indebted as envisaged in the Act. This is admitted by the plaintiff in the stated C case.
[7] Once the two factors are present, the section provides that 'the court may' take the step of referral to a debt counsellor. The word 'may' vests the court with a discretion as to whether or not to take that step. It is clear, therefore, that the need to exercise a discretion in this matter has D been triggered by the presence of these two factors. The plea delivered by the defendants asks only that the court take the step referred to in s 85(a), viz to refer the matter directly to a debt counsellor with a request that the debt counsellor evaluate the consumer's circumstances and make a recommendation to the court in terms of s 86(7). They do not rely on s 85(b). E
[8] Section 86(7) of the Act reads as follows:
If, as a result of an assessment conducted in terms of subsection (6), a debt counsellor reasonably concludes that -
the consumer is not over-indebted, the debt counsellor must reject the application, even if the debt counsellor has F concluded that a particular credit agreement was reckless at the time it was entered into;
the consumer is not over-indebted, but is nevertheless experiencing, or likely to experience, difficulty satisfying all the consumer's obligations under credit agreements in a timely manner, the debt counsellor may recommend that the G consumer and the respective credit providers voluntarily consider and agree on a plan of debt re-arrangement; or
the consumer is over-indebted, the debt counsellor may issue a proposal recommending that the Magistrate's Court make either or both of the following orders -
that one or more of the consumer's credit agreements be H declared to be reckless credit, if the debt counsellor has concluded that those agreements appear to be reckless; and
that one or more of the consumer's obligations be re-arranged by -
extending the period of the agreement and reducing I the amount of each payment due accordingly;
postponing during a specified period the dates on which payments are due under the agreement;
extending the period of the agreement and postponing during a specified period the dates on which payments are due under the agreement; or J
Gorven J
A recalculating the consumer's obligations because of contraventions of Part A or B of Chapter 5, or Part A of Chapter 6.
[9] Since it is common cause that the defendants are over-indebted, paras (a) and (b) of s 86(7) do not apply. No allegation has been made B by the defendants that any of the credit agreements should be declared to be reckless credit, nor have the defendants claimed that there have been contraventions of Part A or B of Ch 5 or Part A of Ch 6. This means that the recommendations which could be made by a debt counsellor in terms of s 86(7)(c), in the event of a referral, are limited in the present instance to an extension of the mortgage bond and concomitant C reduction in instalments, a suspension of instalments for a period or a combination of these two measures.
[10] The first question to deal with is the basis on which to approach the exercise of the discretion. In the pleadings the defendants have admitted the entire claim and...
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