ARTICLES

The application of section 85 of the National Credit Act in an application for summary judgment

Die toepassing van artikel 85 van die Nasionale Kredietwet in 'n aansoek om summiere vonnis

Mareesa Kreuser

LLB Lecturer, University of Pretoria

OPSOMMING

Voor die inwerkingtreding van die Nasionale Kredietwet 34 van 2005 (NKW) in 2007 was dit ietwat ongehoord om in Suid-Afrika te hoor van wetgewing gerig op verbruikersbeskerming. Een van die NKW se hoofdoelstellings is die beskerming van skuldenaars. Skuldberading ingevolge artikel 86 is een van die wyses waarop die wetgewer aan sodanige beskerming uiting gee. Artikel 85 bepaal dat 'n hof, in enige verrigtinge waarin 'n kredietooreenkoms ter sprake kom en indien die skuldenaar beweer dat hy oorverskuldig is, die kredietooreenkoms na 'n skuldberader mag verwys of self die skuldenaar oorverskuldig verklaar en sy skuld herstruktureer. In die praktyk word artikel 85 hoofsaaklik by aansoeke om summiere vonnis met betrekking tot ontroerende eiendom deur skuldenaars geopper. Artikel 85 verleen aan die hof die diskresie om die kredietooreenkoms na 'n skuldberader te verwys met die gevolg dat summiere vonnis uitgestel of gewysig kan word. Die onus rus op die skuldenaar om die hof te oortuig om sodanige verwysing te beveel. Die howe het 'n aantal aspekte geïdentifiseer wat oorweeg moet word by die toepassing van die hof se diskresie. Hierdie artikel is 'n kritiese bespreking van artikel 85 asook die uitleg daarvan deur die howe.

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1 34 of 2005.
2 75 of 1980.
3 73 of 1968.
4 In terms of the Insolvency Act 24 of 1936.
5 In terms of s 74 Magistrates' Courts Act 32 of 1944.
6 Ss 86(6) & 86(7)(c).
7 "National Credit Regulator Debt Review Task Team" 2010 http://ncr.org.za (accessed 2011-09-15).
8 Ch 4 is titled "Consumer Credit Policy" and includes provisions on consumer rights, consumer credit information and records, the credit market, over-indebtedness and reckless credit.
9 2010 6 SA 429 (GSJ).
10 434. See also Nedbank Ltd v The National Credit Regulator 2011 3 SA 581 (SCA) par [2] in which Malan JA noted that the NCA cannot be described as the "best drafted Act of Parliament ever passed", and that there are a number of drafting errors and "untidy expressions" which make the NCA particularly difficult to interpret.
11 See Standard Bank of SA Ltd v Kruger 2010 4 SA 635 (GSJ); SA Taxi Securitisation (Pty) Ltd v Nako case no 19/2010 (ECB) (unreported); Wesbank Ltd v PapierCase no 14256/2010 (WCC) (unreported) in which the courts discuss the credit provider's right to terminate a debt review in terms of s 86(10) after the debt counsellors have set the matter down in the Magistrate's Court in terms of s 86(7)(c).
12 National Credit Regulator v Nedbank Ltd 2009 6 SA 295 (GNP). This judgment was taken on appeal: see Nedbank Ltd v The National Credit Regulator 2011 3 SA 581 (SCA).
13 See Otto & Otto The National Credit Act Explained (2010) par 4.
14 See Scholtz et al Guide to the National Credit Act (loose leaf 2008) par 2 3.
15 In Taxi Securitisation (Pty) Ltd v Nako case no 19/2010 (ECB) (unreported) par 35 Kemp JA held that "[t]o interpret the NCA trough the lenses of 'the promotion and protection of consumers'" loses sight of the NCA's other objectives.
16 FirstRand Bank Ltd v Seyffert 2010 6 SA 429 (GSJ).
17 FirstRand Bank Ltd v Seyffert 2010 6 SA 429 (GSJ) 434. See Desert Star Trading 145 (Pty) Ltd v No 11 Flamboyant Edleen CC 2011 2 SA 266 (SCA) 268 in which the court noted that consumer protection legislation, such as the NCA, seeks to achieve a balance between the interests of the credit provider and the consumer.
18 2010 4 SA 597 (SCA).
19 601-602.
20 See First Rand Bank Ltd v Olivier 2008 JOL 22139 (SE) 6 where Erasmus J held that one of the purposes of the NCA is to "provide for the debt reorganisation of a person who is over-indebted," and that the debt review process was constructed with this in mind.
21 See Ex Parte Ford2009 3 SA 379 (WWC) 381 where Binns-Ward AJ notes
22 The reference in s 130(1) to s 86(9) is wrong and should be to s 86(10). See Scholtz et alpar 12 5.
23 Nedbank Ltd v The National Credit Regulator 2011 3 SA 581 (SCA) par 8.
24 See Scholtz et al parr 11 3 3 2 & 12 4 12. See Otto & Otto par 44 2.
25 2011 3 SA 581 (SCA).
26 Nedbank Ltd v National Credit Regulator 2011 3 SA 581 (SCA) par 14.
27 Nedbank Ltd v National Credit Regulator 2011 3 SA 581 (SCA) par 11. The effectiveness of the s 129(1)(a) notice will depend on the credit provider's willingness to negotiate prior to taking legal action. The NCA makes no provision for a procedure to be followed once a s 129(1)(a) notice has been sent. The credit provider is thus under no obligation to negotiate with the debt counsellor and may proceed to court if it is unsatisfied with the offer made by the debt counsellor. In reality, given the interpretation of s 86(2), s 129(1)(a) has not amended the status quoof pre-litigation procedures prior to the NCA. The NCA places no time restriction on the sending ofa s 129(1)(a) notice. Therefore a consumer may be only one day in default before such a notice is sent. See also Standard Bank of SA Ltd v Hales 324.
28 The consumer must address the court as to whether or not he received a s 129(1)(a) notice and whether he has responded thereto. The mere disregard of the notice may reflect negatively on the consumer's good faith. See FirstRand Bank Ltd v Olivier 11 and Standard Bank of SA Ltd v Hales 2009 3 SA 315 (D) 324-325.
29 In FirstRand Bank v Olivier 2008 JOL 22139 (SE) 11 Erasmus J noted that the NCA encroaches significantly on the credit provider's common law rights and that the court will only allow such an encroachment to the extent that it is justifiable whilst still promoting the purpose of the NCA.
30 2009 3 SA 379 (WWC).
31 Ex parte Ford 2009 3 SA 379 (WWC) 381.
32 Rule 32(3)(a) & (b).
33 2008 JOL 22139 (SE).
34 FirstRand Bank Ltd v Olivier 2008 JOL 22139 (SE) 16.
35 2009 3 SA 363 (W).
36 2008 JOL 22139 (SE).
37 372-373.
38 See par 3.2.
39 S 130(1)(a) provides that the credit provider must wait ten business days after such a notice has been delivered to the consumer before proceeding with enforcement.
40 S 86(11) may also be used in such proceedings. If a credit provider has terminated the debt review in terms of s 86(10) and proceeds to enforce the agreement, s 86(11) allows the court in which the matter is being heard to make an order for the debt review to resume. S 85 provides the court with a wider discretion as it allows the court to declare the consumer over-indebted and restructure the consumer's debt obligations.
41 If the credit provider has already proceeded with legal action, the court hearing the enforcement proceedings may use s 85 to adjourn the matter pending the final decision of the court adjudicating the debt review. See SA Taxi Securitisation (Pty) Ltd v Ndobela Case no 9162/2010 (GSJ) (unreported) par 16.
42 S 8 is entitled "Credit Agreements" and gives a closed list of the types of credit agreements to which the NCA applies and their definitions.
43 S 4 is entitled "Application of Act" and provides for agreements that will be excluded from the NCA. See Scholtz et al par 4.
44 Standard Bank of SA Ltd v Panayiotts 2009 3 SA 363 (W) 368. See also FirstRand Bank Ltd v SwartsCase no 15699/2009 (WCC) (unreported) par 7, where Cleaver J held that the consumer did not place sufficient evidence before the court to prove his over-indebtedness and that merely setting out his income and expenditure is not sufficient. See BMW Financial Servicers SSA) pPty) Ltd v Mudaly 2010 5 SA 618 (KZN) 628-629.
45 It is submitted that a consumer will also be over-indebted if, at the time when the determination is made, the information available indicates that the consumer will, in the near future, not be able to meet his financial obligations timeously. See Scholtz et al parr 11 3 1 & 11 3 2.
46 Reg 24(7) provides that a consumer is over-indebted if his total monthly debt payments exceed the balance derived by deducting his living expenses form his net income. See Scholtz et al par 11 3 3 2.
47 See Roestoff et al "The Debt Counselling process - Closing the loopholes in the National Credit Act 34 of 2005" 2009 PER 269-373. Also see Scholtz et al par 11 3 3 2 for an overview of the debt review process.
48 2009 6 SA 295 (GNP).
49 301.
50 311 & 313.
51 In Standard Bank of SA Ltd v Panayiotts 2009 3 SA 363 (W) 370 Masipa J held that in a summary judgment rule 32(2) requires a consumer to raise a bona fide defence and that the same requirement is also applicable in a request by the consumer in terms of s 85 of the NCA.
52 2009 3 SA 363 (W) 369.
53 366.
54 S 127 provides that a consumer may surrender the goods under an instalment agreement and that the proceeds of the sale of the goods must be used as payment towards the consumer's outstanding balance on the agreement. S 127 does not compel the consumer to return the goods, but merely allows for the procedure to follow should a consumer wish to do so.
55 FirstRand Bank Ltd v Olivier2008 JOL 22139 (SE) 11-12.
56 Standard Bank v Hales 2009 3 SA 315 (D).
57 Standard Bank of SA Ltd v Hales2009 3 SA 315 (D)321.
58 2002 4 SA 176 (C).
59 First National Bank of SA Ltd v Myburghi 2002 4 SA 176 (C) 184.
60 FirstRand Bank Ltd v Olivier 2008 JOL 22139 (SE) 10.
61 11-13.
62 13. See also Nedbank Ltd v National Credit Regulator 2011 3 SA 581 (SCA) par 11.
63 FirstRand Bank Ltd v Olivier 2008 JOL 22139 (SE) 14-15.
64 Standard Bank of South] Africa Ltd v Panayiotts 2009 3 SA 363 (W) 369.
65 Standard Bank of South Africa Ltd v Panayiotts 2009 3 SA 363 (W) 369.
66 371 & 375.
67 375.
68 Ibid 375.
69 Ibid.
70 Ss 89 & 90 provide a prohibition on the conclusion of certain agreements or the inclusion of certain provisions in a credit agreement. Ss 100-106 place limitations on interest, charges and fees that a credit provider may charge in a credit agreement. In terms of s 130 a credit provider must comply with certain procedural steps before commencing with legal action.
71 In Absa Bank Ltd v Prochaska 2009 2 SA 512 (D) 516 Naidu AJ held: "It is abundantly clear, in my view, that the Act has introduced innovative mechanisms and concepts directed more at the protection and in the interest of credit consumers than that of credit providers."
72 2009 3 SA 315 (D).
73 Standard Bank of SA Ltd v Hales 2009 3 SA 315 (D) 317-318.
74 325.
75 319.
76 312-313.
77 324-325.
78 325.
79 Haupt et al "Debt Counselling Principles and Guidelines" (2008) http://www.ncr.org.za/27-30 (accessed 2011-09-15).
80 Roestoff et al 2009 PER 272.
81 Constitution of the Republic of South Africa, 1996.
82 See Standard Bank v Hales 2009 3 SA 315 (D) 326 in which the court held
83 2005 2 SA 140 (CC). The facts in Jafta relate to the sale in execution of a residential home for the payment of an unsecured debt. Mokgoro J noted (par 58) that the circumstances in which the debt was incurred must be taken into consideration and that if the property involved was for the security of a debt that would ordinarily warrant a sale in execution.
84 In FirstRand Bank Ltd v Maleke 2010 1 SA 143 (GSJ) 157 Claassen J noted that s 85(a) constitutes an "other alternative" as referred to by Mokgoro J in Jaftha supra.
85 Jafta v Schoeman 2005 2 SA 140 (CC)158 & 162.
86 162.
87 Ibid.
88 163.
89 In Standard Bank of SA v Hales 2009 3 SA 315 (D) 320 the court held that recourse to s 85(a) is a dilatory plea as the debt counsellor is requested to make a recommendation to the court.
90 Reg 24.
91 S 86(7).
92 S 86(1).
93 Standard Bank of SA Ltd v Panayiotts 2009 3 SA 363 (W).
94 374.
95 Standard Bank of SA Ltd v Hales 2009 3 SA 315 (D).
96 324.
97 2009 3 SA 363 (W).
98 As mentioned in par 3 2 above, a s 129(1)(a) notice will exclude an agreement from debt review in terms of s 86(2). If the parties fail to come to a suitable arrangement in terms of s 129(1)(a), s 85(a) will be the only available method of restructuring the agreement in terms of s 86.